CFD Markets News and Forecasts — 21-10-2024

• GBP/USD shed half of a percent as the Pound’s recovery against the US Dollar abruptly ends.
• Looming BoE appearances and global PMI figures to keep Pound momentum capped this week.
• Investors bucked on Monday after Fed officials cautioned that the pace of rate cuts may slow.

GBP/USD twisted into the low side on Monday, kicking off the new trading week with a fresh test south of the 1.3000 handle as Cable traders balk ahead of a hectic week that sees a slew of appearances from central bank figures, as well as an update on global Purchasing Managers Index (PMI) figures. 

Pound Sterling traders will be keeping an eye out for an appearance from Bank of England (BoE) Governor Andrew Bailey on Tuesday. However, the BoE head’s comments will be coming much later in the day as Bailey will be delivering speech notes at the Bloomberg Global Regulatory Forum in New York during the early US market session.

Global PMI figures are slated for a rolling release on Thursday, with UK figures kicking off the Cable docket. Median market forecasts are expecting a slight downtick in UK activity numbers, with October’s Services PMI specifically expected to ease to 52.2 from 52.4 the previous month.

GBP/USD price forecast

The GBP/USD pair continues to trade with a bearish bias, currently hovering near 1.2982 after failing to hold above the 1.3000 psychological level. The price is trading below the 50-day EMA at 1.3089, signaling that the bears are in control of the short-term trend. The next key support lies at 1.2845, where the 200-day EMA resides, offering potential downside protection. If sellers maintain pressure, a break below this long-term support could accelerate further losses towards 1.2800.

The MACD indicator paints a weak picture, with the histogram showing expanding negative momentum as the MACD line remains below the signal line, reinforcing the bearish outlook. Bulls are struggling to regain traction, and the pair's failure to break above the 50-day EMA adds to the downside risks. A daily close below 1.2900 could further confirm the bearish sentiment, while a bounce back above 1.3100 is needed to restore the pair's upside potential.

GBP/USD daily chart

Federal Reserve (Fed) Bank of San Francisco President Mary Daly noted late Monday that while she expects the Fed to continue slowly easing interest rates lower in the coming quarters, the Fed is still maintaining a data-dependent approach.

Key highlights

• NZD/USD plunges, technical outlook remains bearish.
• RSI nears oversold zone, hinting at potential correction.
• MACD suggests persistent bearish momentum.

In Monday's session, the NZD/USD pair extended its downward trajectory, depreciating by a significant 0.70% to settle at 0.6030. The technical indicators maintain a bearish stance, signaling a possible continuation of the selling pressure that has characterized recent trading.

The Relative Strength Index (RSI) remains near the oversold area, with a reading of 35 and a descending slope. This indicates a rise in selling pressure, suggesting that the bears continue to exert their influence. However, the proximity to the oversold zone raises the possibility of a corrective bounce if the selling momentum wanes. The Moving Average Convergence Divergence (MACD) histogram, displaying rising red bars, confirms the bearish trend. The histogram's upward movement indicates increasing bearish momentum, while the red color denotes a negative trend.

NZD/USD daily chart

The NZD/USD pair faces significant technical challenges, indicating a bearish outlook. The pair has been trading below key support levels, including the critical 100 and 200-day Simple Moving Averages (SMAs), which currently reside around 0.6100. The pair now stands in lows since mid-August and it may be set for further downside if buyers don’t step in.

If selling continues, the next support is around 0.6000. Conversely, a recovery might see immediate resistance emerging around 0.6060,0.6080 and 0.6100.

Federal Reserve (Fed) Bank of Kansas President Jeffrey Schmid hit newswires late Monday, noting that recent downturns in US data is more likely a normalization of US labor markets after a period of record over-employment and untenably low unemployment rates, rather than an outright deterioration in the overall US labor market.

Key highlights

• NZD/JPY sees modest gains on the day, and buying pressure rises somewhat.
• The uptrend momentum is capped by flat selling pressure, leading to neutral momentum.
• The 20-day SMA remains a crucial support level with bears unable to breach it.

In Tuesday's trading session, the NZD/JPY pair has risen by 0.20% to 90.95, reflecting a slight bullish sentiment on the session. On the bigger picture, the pair continues to trade within a narrow range, with buyers and sellers in a tussle for dominance.

Technical indicators provide a mixed outlook for NZD/JPY. The Relative Strength Index (RSI) for NZD/JPY has mildly climbed to 54, indicating a positive buying trend that is growing in strength. This suggests that buyers are regaining momentum and may push the pair higher.

On the other hand, the Moving Average Convergence Divergence (MACD) histogram remains flat and red, showing that selling pressure is currently weak but persistent. Due to the opposing signals from the RSI and the MACD, the pair's momentum can be considered neutral for now.

The key support and resistance levels remain unchanged, with support at 90.65, 90.95, and 91.15, and resistance at 91.35, 92.00, and 92.15. These price level are set to play a pivotal role in determining the pair's future direction. The 20-day SMA, a pivotal support level, has been instrumental in preventing the pair's slide and will likely continue to do so in the near term.

NZD/JPY daily chart

• Gold trades just below its record high, down 0.09%, as US Treasury yields rise over 10 basis points, reaching 4.192%.
• Safe-haven flows continue amid Middle East hostilities and US election uncertainty with polls showing a tight race between Harris and Trump.
• Fed officials hint at gradual rate cuts, but a 25 bps cut at the November meeting remains heavily priced in.

Gold prices hit another record high during Monday’s North American session, yet it paused its advance amid elevated US Treasury bond yields and a strong US Dollar. Tensions in the Middle East and uncertainty around the presidential election in the United States (US) increased flows toward safe-haven assets during the last five trading days. At the time of writing, XAU/USD trades at $2,718, slightly down 0.09%.

Market sentiment shifted negatively amid a close race in the US election. Reuters revealed that Vice President Kamala Harris leads former President Donald Trump 45% to 42% in the popular vote. However, the winner will be determined by the state-by-state results of the Electoral College.

“Polls have shown Harris and Trump are neck and neck in those battleground states, with many results within the margins of error,” via Reuters.

In the meantime, US Treasury bond yields soared over ten basis points higher to 4.192%. Consequently, the US Dollar Index (DXY), which tracks the buck’s value against a basket of six currencies, has risen 0.50%, hitting a new two-month peak at 104.01.

Hostilities in the Middle East continued as Israel revealed that a projectile from Lebanon hit an open area in central Israel. Meanwhile, Iran’s envoy to the United Nations said that Biden's remarks in Berlin on Israel’s plan to attack the country are “inflammatory.”

Federal Reserve (Fed) officials crossed the wires. Dallas Fed President Lorie Logan said they need to be nimble with monetary policy, adding to the chorus of gradually lowering borrowing costs.

Minneapolis Fed President Neel Kashkari has echoed Logan’s comments, saying that he sees modest cuts over the next quarters while adding that evidence of weakness in the labor market could spark faster rate cuts. He added that the Fed “definitely” wants to avoid a recession.

Despite that, the Fed is heavily expected to lower interest rates by 25 basis points at the November meeting. Odds remained at 87%, according to CME FedWatch Tool data.

Daily digest market movers: Gold price climbs, ignoring upbeat US data

• US Initial Jobless Claims for the week ending October 19 are expected to rise from 241K to 247K.
• US business activity in October is projected to improve in the manufacturing sector, according to S&P Global, while the Services PMI is expected to dip slightly from 55.2 to 55.
• Data from the Chicago Board of Trade, based on the December Fed funds rate futures contract, indicates that investors estimate 46 basis points (bps) of Fed easing by the end of the year, which is slightly lower compared to a week ago.

XAU/USD technical outlook: Gold price retraces below $2,720

Gold prices are set to extend the gains, though the formation of a ‘gravestone doji’ could open the door for a pullback.

Momentum shows signs that buyers remain in charge but are losing some steam as depicted by the Relative Strength Index (RSI). The RSI, despite being bullish, has shifted flat.

If XAU/USD clears the October 21 high at $2,740, the next stop would be $2,750, followed by $2,800.

Conversely, if XAU/USD retreats from record highs below $2,700, it could pave the way for a pullback. The first support would be the October 17 high at $2,696, followed by the October 4 high at $2,670.

• AUD/USD value has dropped due to consistent gains in the US Dollar.
• Monetary policy divergence between the RBA and the Fed could provide some relief to AUD/USD.
• Uncertainty surrounding China's economic outlook and stimulus efforts remains a key challenge for the Aussie.

The AUD/USD pair has declined in the Monday session, following consistent gains in the US Dollar. The pair fell by 0.80% to 0.6655 at the time of writing. The declines in the Aussie have been attributed to concerns over China's stimulus measures and recent weakness in copper prices.

However, monetary policy divergence between the Reserve Bank of Australia (RBA) and the Federal Reserve (Fed) could provide some support to AUD/USD, but the uncertainty surrounding China's economic outlook remains a key challenge for the currency. Investors remain vigilant to incoming Aussie data, as it might delay the start of the RBA’s easing cycle.

Daily digest market movers: Australian Dollar declines based on China, copper news

• Persistent weakness in copper prices and a modest decline in iron ore prices further weighed on the Australian Dollar.
• The RBA is keeping its cash rate steady at 4.35% and demands further data to start cutting rates.
• That being said, the latest meeting minutes revealed a more dovish outlook, increasing market expectations of a 25-basis-point rate cut by year-end.
• Elsewhere, deputy Governor Hauser warned that Australian rates would not drop as much or as soon as other central banks due to persistent inflation.
• This might benefit the Aussie as its peers have already started cutting rates. Higher rates might attract foreign investors, bolstering demand for the Australian currency.

AUD/USD technical outlook: Pair faces ongoing selling pressure

The technical outlook for the AUD/USD suggests ongoing selling pressure, indicated by the Relative Strength Index (RSI) close to the oversold area with a declining slope. This signals increasing momentum behind the sell-off. Furthermore, the Moving Average Convergence Divergence (MACD) histogram is red and rising, reinforcing the bearish bias.Significant support levels include 0.6650, 0.6630 and 0.6600, while resistance can be found at 0.6700, 0.6715 and 0.6750.

• The Canadian Dollar extended its recent declines against the Greenback.
• Bank of Canada rate call due on Wednesday, looming rate cut trims CAD.
• The CAD is down over 3% against the USD since September.

The Canadian Dollar (CAD) shed another quarter of a percent against the Greenback at the start of the new trading week. The Loonie backslid into a fresh eleven-week low as CAD markets brace for a widely-anticipated 50 bps rate trim from the Bank of Canada (BoC) during the midweek market session on Wednesday.

Daily digest market movers

• CAD traders continue to make a broad-market pivot out of the Loonie ahead of the BoC’s rate call on Wednesday.
• The BoC is widely expected to trim interest rates by a further 50 bps in an effort to shore up decaying economic figures.
• Fedspeak is a key driver in risk sentiment flows on Monday as key Fed officials make early-week appearances.
• Read more:
  Fed's Kashkari: I see modest cuts over the next quarters
  Fed’s Logan: Gradual rate cuts on the cards if economy meets forecasts
• US Retail Sales due Thursday to drive late-week Greenback market momentum.
• Canadian Retail Sales figures due on Friday to serve as a post-rate cut signal of where the Canadian economy is headed in spite of moves from the BoC.

Canadian Dollar price forecast

The USD/CAD pair continues its bullish march, trading around 1.3833 on the daily chart after successfully breaching key resistance levels in recent sessions. The price has risen decisively above both the 50-day EMA at 1.3645 and the 200-day EMA at 1.3617, confirming bullish momentum. These moving averages are now acting as significant support levels, reinforcing the upward bias. With the pair trading near its recent highs, the next psychological resistance to watch is the 1.3900 level, followed by a potential retest of 1.4000 if momentum continues.

The MACD histogram continues to expand in positive territory, suggesting strong bullish momentum. The MACD line has crossed above the signal line, reinforcing the positive outlook. However, the price is approaching overbought conditions, so traders should be cautious of a potential short-term pullback or consolidation phase before the next leg higher. A failure to maintain momentum could lead to a correction toward the 1.3700 area, aligning with the 50-day EMA as a key support zone for buyers to re-enter.

USD/CAD daily chart

The US Dollar accelerated its uptrend and traded at shouting distance from the area of three-month highs on the back of higher yields and the resumption of the “Trump trade” among market participants.

Here is what you need to know on Tuesday, October 22:

The US Dollar Index (DXY) climbed further and came at shouting distance from the key 104.00 barrier helped by rising US yields. The Richmond Fed Manufacturing Index is due along with the speech by the Fed’s Harker.

EUR/USD resumed its deep pullback and approached the 1.0800 region once again on Monday. All the attention will be on the ECB, as Lagarde, McCaul and Lane are all due to speak.

GBP/USD succumbed to the Dollar’s gains and broke below the key support at 1.3000 the figure. Public Sector Net Borrowing figures will be published followed by the speech by the BoE’s Bailey.

USD/JPY advanced to multi-week tops well north of the 150.00 hurdle following the firm performance of US and Japanese yields. Next on tap in Japan will be the weekly Foreign Bond Investment figures along with the preliminary Jibun Bank Manufacturing and Services Index on October 24.

AUD/USD deflated to six-week lows near 0.6650 on the back of usual concerns from China, the stronger Dollar and weaker commodity prices. The advanced Judo Bank Manufacturing and Services PMIs will be the next salient event in Oz on October 24.

Prices of WTI regained the smile and reversed six straight days of losses on Monday, this time reclaiming the area beyond the key $70.00 mark per barrel.

Prices of Gold rose to a record high around $2,740 mark per ounce troy in response to the stronger Greenback and rising US yields. Silver prices, on the flip side, rose past the $34.00 mark per ounce for the first time since November 2012, ending the day marginally on the upside.

Federal Reserve (Fed) Bank of Minneapolis President Neel Kashkari noted on Monday that while the Fed is on the lookout for a rapid destabilization in the US labor market, investors should expect a modest pace of rate cuts over the next few quarters.

Key highlights

• Mexican Peso falls to a six-week low as former President Trump leads US election polls, threatening a 200% tariff on Mexican cars.
• Fears of a constitutional crisis in Mexico intensify after President Sheinbaum defies a court ruling to remove a judicial reform decree.
• Investors shift focus to upcoming economic data from both Mexico and the US with Retail Sales and inflation figures in the spotlight.

The Mexican Peso plunges more than 0.90% against the US Dollar amid a risk-off impulse and increasing odds that former President Donald Trump leads the polls. Rising fears of a constitutional crisis in Mexico weighed on the emerging market currency, which extended its fall to a six-week low. At the time of writing, the USD/MXN trades at 20.03 after bouncing off a daily low of 19.82.

Financial markets' focus has shifted toward the US election. Traders are putting aside Q3 earnings until the election passes. Recently published polls suggest the race is tightening, and former President Donald Trump looks more capable of winning the presidential election on November 5. Last week, he said he would impose a 200% tax on Mexican-made cars. Such a move has weighed on the Mexican currency, which is about to hit three-month lows.

On the Mexican front, last Thursday the 19th District Court based in Coatzacoalcos, Veracruz, and led by Judge Nancy Juarez Salas, granted a definitive suspension, ordering Mexican President Claudia Sheinbaum and the director of el Diario Oficial de la Federacion (the Government’s official gazette) Alejandro Lopez Gonzalez to remove the decree that validates the judicial reform from the official gazette.

In response, President Sheinbaum said that the judge is “not above” the country and declared, “We are not going to lower the publication,” adding that they will file a complaint with the Federal Judicial Council.

As of writing, the decree hasn’t been removed from the Mexican official gazette, which has sparked fears of a probable constitutional crisis.

Meanwhile, an absent economic docket on both sides of the border keeps investors digesting China’s stimulus to boost the economy. China’s central bank, the People’s Bank of China (PBoC), lowered rates for the one and five-year Loan Prime Rate (LPR). Trump announced on the campaign trail that he would impose tariffs on the country if China invades Taiwan.

Meanwhile, Dallas Fed President Lorie Logan commented that money markets are close to or just above interest on reserves rate. She favors a gradual approach to easing policy if the economy meets forecasts.

Mexico’s economic schedule will be slightly busy ahead of the week with the release of the Economic Activity indicator, Retail Sales, and Mid-Month Inflation for October.

On the US front, Fed speakers, jobs data and S&P Global Flash PMIs should influence the USD/MXN direction.

Daily digest market movers: Mexican Peso on the defensive ahead of crucial data

• Mexico’s Economic Activity is expected to slow from 3.8% to 0.9%.
• October Mid-Month Inflation is expected to drop from 3.95% to 3.83%, and underlying inflation is expected to fall from 4.66% to 4.63%.
• The International Monetary Fund (IMF) projected the Mexican economy to grow 1.5% in 2024, lower than in its previous forecast. The IMF estimates a deeper economic slowdown for the next year, estimating 1.3% GDP growth, and forecasts inflation to hit Banxico’s 3% goal in 2025.
• The IMF said that a recent judicial reform creates "important uncertainties about the effectiveness of contract enforcement and the predictability of the rule of law."
• US Initial Jobless Claims for the week ending October 19 are foreseen rising from 241K to 247K.
• US business activity for October is expected to edge up in the manufacturing sector, according to S&P Global. Services PMI is foreseen dipping from 55.2 to 55.
• Data from the Chicago Board of Trade, via the December Fed funds rate futures contract, shows investors estimate 46 bps of Fed easing by the end of the year. This is somewhat lower than a week ago.

USD/MXN technical outlook: Mexican Peso dives as USD/MXN climbs above 19.90

The USD/MXN exotic pair is upwardly biased, and it could test the year-to-date (YTD) high at 20.22 in the near term. Momentum remains bullish, as the Relative Strength Index (RSI) portrays.

If USD/MXN clears the September 5 high at 20.14, the next resistance would be the YTD high at 20.22. On further strength, the next stop would be 20.50, followed by the 21.00 figure.

Conversely, if the USD/MXN tumbles below 20, the next support would be an October 18 low of 19.64. A breach of the latter will expose the October 10 daily peak at 19.61, followed by the October 4 swing low of 19.10 before testing 19.00.

• The US Dollar sees some gains, while markets continue looking for clues on the Fed’s next steps.
• Several Federal Reserve members will speak on Monday afternoon.
• Fed’s Beige Book, S&P figures and Initial Jobless Claims will be closely followed this week.

The US Dollar Index (DXY), which measures the value of the USD against a basket of six currencies, is slightly higher at the start of the week, supported by safe-haven flows amid geopolitical tensions. Some Federal Reserve (Fed) members are scheduled to speak later on Monday, and their comments will be closely watched for any clues on the Fed's monetary policy stance.

Daily digest market movers: US Dollar gains on Middle East tensions and Fed comments

• The US Dollar remains steady, inching up slightly due to escalating geopolitical tensions in the Middle East and supportive comments from Federal Reserve officials.
• However, profit-taking dampens the Greenback's gains as investors react to positive economic data from China and the government's stimulus package.
• Economic activity figures in this week’s S&P data on Thursday might shake the USD, as well as those in the Fed’s Beige Book report on Wednesday.
• Markets continue to bet on higher odds of two cuts in what remains of 2024.

DXY technical outlook: DXY momentum might have hit its ceiling

The DXY index is facing resistance at the 200-day Simple Moving Average (SMA). Despite resuming the gains, the momentum may not be enough to conquer it. Both the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) have flattened in positive territory, indicating a pause in buying momentum with the latter still in overbought territory.

As a result, the index may struggle to regain the 200-day SMA and may instead consolidate sideways in the near term.

• The Dow Jones shed 300 points, or 0.7%, as equities retreat from record highs.
• Bullish momentum is taking a breather, with the Dow Jones bearing the brunt of the load.
• Earnings season expectations are battling with elevated interest rate fears.

The Dow Jones Industrial Average (DJIA) backslid on Monday, tumbling 300 points and shedding seven-tenths of one percent as equity markets ease back from recent record highs. The Dow bore most of the bearish burden to kick off the new trading week, with losses consolidated largely within the major equity index.

Bond yields ticked higher and construction stocks swooned on the day, with fresh fears across the broader market that the Federal Reserve (Fed) would be forced to keep interest rates higher for longer. Despite delivering a jumbo rate cut of 50 bps in September, investors are balking at the fact that the US economy remains stubbornly resilient, implying it could take the Fed even longer than expected to finally drag core inflation down to the 2% annual target.

Earnings season is in full swing in equity markets, with roughly a fifth of the companies listed on the S&P 500 set to release Q3 revenue reporting through this week. A little under 20% of S&P 500 companies already reported third-quarter earnings last week, with nearly 80% of reporting companies beating Wall Street expectations. However, analysts have noted that the extreme beats come off the back of significantly downgraded expectations in recent months; with investing markets expecting so little, it’s difficult for firms to fail, with CFRA chief investment strategist Sam Stovall noting, “rarely does anybody injure themselves falling out of a basement window.”

Dow Jones news

Most of the securities listed on the Dow Jones are easing back on Monday, with all but five of the Dow’s constituent stocks seeing red for the day. Boeing (BA) rose over 3% to hit $160 per share ahead of the airline company’s earnings call slated for Wednesday, October 23. On the low side, American Express (AXP), Home Depot (HD), and Travelers Companies (TRV) lead the loser, with each decline over 2%. AXP fell 2.5% to $270 per share, with HD shedding 2.3% and falling below $405.50, and Travelers Companies declining 2.25%, falling below $260 per share in the process.

Dow Jones price forecast

The Dow Jones is giving mixed signals on daily candlesticks. Price action continues to grind deeper into bull country as bidding momentum outpaces long-term moving averages. However, technical indicators are going on the fritz after spending months flashing warning signs of overbought conditions.

The Dow backpedaled from a recent record high north of 43,200 set last Friday, testing back below 43,000 and shedding over 300 points. Despite the pullback, prices are pinned firmly on the high side, with the 50-day Exponential Moving Average (EMA) well below near-term price action at 41,740.

The Moving Average Convergence-Divergence (MACD) is currently above the zero line, a bullish signal, but the histogram shows a declining momentum. The fast MACD line is now close to crossing below the slower signal line, signaling that bearish momentum could soon take over. This could point to a short-term correction, especially if sellers manage to push the price below the 42,000 level.

Nonetheless, the MACD remains in positive territory with no decisive crossover observed yet, indicating that bulls still maintain some control. However, traders should monitor this indicator closely for additional confirmation of a possible bearish reversal.

Dow Jones daily chart

• USD/JPY climbs to 150.52, its highest level in 12 weeks, as rising US bond yields fuel demand for the Dollar.
• Technical outlook remains bullish, with potential for further gains if the pair breaks through 150.78 and heads toward the 200-DMA at 151.34.
• A close below 150.00 could trigger a pullback, with key support levels at 149.27 and the 50-DMA at 145.55.

The USD/JPY climbed in the mid-North American session on Monday, up by 0.62%. The pair printed a 12-week peak of 150.52, as US Treasury bond yields rose as traders trimmed odds that the Federal Reserve would embark on an aggressive easing cycle. At the time of writing, the pair fluctuates at around 150.50

USD/JPY Price Forecast: Technical outlook

The USD/JPY began the week on the front foot and extended its gains past 150.00. Momentum remains bullish as depicted by the Relative Strength Index (RSI), which is at the brisk of clearing the latest higher peak.

If USD/JPY clears the 100-day moving average (DMA) confluence and the top of the Ichimoku Cloud (Kumo) at 150.78, this could sponsor a leg-up towards the 200-DMA at 151.34. If cleared, buyers would eye 152.00.

Conversely, a daily close below 150.00 would pave the way for a pullback, exposing the Tenkan-Sen at 149.27. Once surpassed, key support levels would be exposed, like 149.00, followed by the Senkou Span at 147.16, before testing the 50-DMA at 145.55.

USD/JPY Price Action – Daily Chart

• EUR/USD edged back into the low end on Monday as the US Dollar bounces.
• A strong Greenback bid is bolstering the USD across the board.
• Easing equity prices and a simmering Middle East are boosting safe haven bids.

EUR/USD pivoted into early losses to kick off the new trading week, cutting a near-term recovery rally short and sending intraday bids tumbling back toward 1.0800. The US market session sees stock investors taking a breather from setting record highs multiple days in a row, and the downside push in equities is helping to send the US Dollar higher.

Middle East geopolitical tensions continue to simmer away in the background, giving the safe haven Greenback a boost and lending a leg higher to both Gold and Crude Oil prices. Market participants continue to wait and see if the US will successfully negotiate Israel into a ceasefire as the small country continues to wage war against Hezbollah and Hamas, showing a willingness to cross into other countries’ borders to do it.

Federal Reserve (Fed) Bank of Dallas President Lorie Logan hit most of the common narrative elements markets have received from Fed policy planners in recent weeks, however the Dallas Fed President made a point of noting that money markets are “cose to or just above interest on reserve rates”. Dallas Fed President Logan then proceeded to highlight the risks to the US labor market and the Fed’s dedication to maintaining a healthy employment rate, underlining the fact that the Fed will need not just a decline in inflation, but a significant uptick in the unemployment rate before markets would see accelerated rate cuts.

• EUR/GBP remains range-bound, consolidating recent losses as buying pressure stalls.
• Sellers take the foot off the gas after last Thursday’s losses
• RSI indicates recovering buying pressure, while MACD shows flat conditions.

EUR/GBP daily chart

In recent sessions, the USD150 area has been mostly capping the upside for the currency pair. At the start of the month USD/JPY was propelled higher by a remark from the then freshly installed PM Ishiba. He remarked that the economy was not ready for further rate hikes. This could have been a clumsy mistake by a politician unused to being in the market’s central view, Rabobank’s FX analyst Jane Foley notes.

USD/JPY to be lower on a 3-to-6-month horizon

“Since then, the government has made an attempt to provide reassurances about the BoJ’s independence, although the relatively sluggishness of Japanese economic data has ensured there has been no return of October rate hike speculation. Industrial production declined by a greater than expected -3.3% m/m in August, real cash earnings at -0.6% y/y dipped back into negative territory and September consumer confidence fell below the market consensus.”

“While the move back to the USD/JPY 150 level has also been supported by USD strength this month as Fed rate cut speculation was pared back, there would appear to be concern in the market about the risk of MoF intervention should USD/JPY break convincingly above the 150 level. This would likely commence with verbal push-back from the authorities, which underscores the likelihood that Ueda will refer to the impact of exchange rates on prices next week.”

“Indeed, any perceived lack of concern by the BoJ regarding currency weakness next week would likely be the green light for another leg higher in the currency pair. That said, following this summer’s volatility we would expect Ueda to choose his words very carefully to avoid sharp moves in the JPY.  We continue to expect USD/JPY to be lower on a 3-to-6-month horizon as the Japanese economic recovery continues. This assumes the BoJ will continue to hike rates next year.”

• GBP/USD begins the week down, struggling to hold above 1.3000.
• Sellers eye key support at last week’s low of 1.2973, with further downside targets at the 100-DMA and the 200-DMA, each at 1.2959 and 1.2796.
• Buyers must reclaim 1.3100 to challenge the 50-DMA at 1.3133 and aim for the YTD high of 1.3434.

The Pound Sterling is losing some ground against the Greenback. Increasing tensions in the Middle East are spurring a risk-off environment despite China’s efforts to propel its economy. At the time of writing, the GBP/USD trades at 1.2997, down 0.38%.

GBP/USD Price Forecast: Technical outlook

The GBP/USD begins the week on the back foot after opening at around 1.3039. Since then, the pair hit a 1.3057 high before sliding beneath the 1.3000 mark.

Momentum suggests that sellers are in charge, as portrayed by the Relative Strength Index (RSI). However, they must clear last week’s low of 1.2973 before challenging the 100-day moving average (DMA) at 1.2959, aiming to push prices toward the 200-DMA at 1.2796.

On the other hand, buyers must lift the GBP/USD spot price above 1.3100 so they can test the 50-DMA at 1.3133 as they prepare to challenge the year-to-date (YTD) high at 1.3434.

GBP/USD Price Action – Daily Chart

• Silver price posts a fresh high above 34.00 on multiple tailwinds.
• The white metal gains on the fresh escalation in the Middle East war and US presidential election uncertainty.
• The Fed is expected to reduce interest rates moderately.

Silver price (XAG/USD) jumps above $34.00 in Monday’s North American session for the first time in almost 12 years. The white metal strengthens on multiple tailwinds: continuing war between Israel and Iran, and growing uncertainty over United States (US) presidential elections.

Israel vowed to retaliate against Iran’s attack on October 1, as shown by leaked documents originating from the National Security Agency (NSA) and the Geospatial Intelligence Agency (GEOIN), which was authenticated by a US official, reported by The New York Times. The scenario of escalating geopolitical tensions improves the appeal of precious metals, such as Silver, as a safe haven.

The Silver’s safe-haven appeal has also been strengthened by neck-to-neck competition between US Vice President Kamala Harris and former US President Donald Trump for presidential elections on November 5.

Meanwhile, the US Dollar (USD) bounces back strongly after a mild correction on expectations that the Federal Reserve’s (Fed) policy-easing spell will be moderate in the remainder of the year. The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, aims to recapture the 11-week high around 104.00.

Going forward, investors will pay close attention to the United States (US) flash S&P Global PMI data for October, which will be published on Thursday.

Silver technical analysis

Silver price strengthens after a breakout above the horizontal resistance plotted from the May 21 high of $32.50 on a daily timeframe. Upward-sloping 20- and 50-day Exponential Moving Averages (EMAs) near $30.70 and $31.70, respectively, signals more upside ahead.

The 14-day Relative Strength Index (RSI) oscillates above 60.00, points to an active bullish momentum.

Silver daily chart

• EUR/JPY trades near the top of a ten-week range as the Euro remains supported by ECB Kazimir’s comments. 
• Kazimir said the governing council would be watching the data closely in December and decide then what to do. 
• The Yen comes under pressure as analysts see it at fair value and the governing ADP party underperforms in opinion polls. 

EUR/JPY is trading at the top of a ten-week range in the upper 162.00s on Monday as the Euro (EUR) retains strength after comments from a European Central Bank (ECB) official suggested policymakers may not be in such a rush to lower interest rates whilst the Japanese Yen (JPY) remains under pressure following the release of lower-than-expected inflation data last week. 

ECB policymaker and Slovakian central bank Governor Peter Kazimir noted on Monday that the December policy meeting is wide open, with all options remaining on the table. "If new information points in the direction of higher inflation risks, we can still slow down the pace at which we remove restrictions in the coming meetings," he said. 

Kazimir also said that the ECB will be in a "strong and comfortable position" to continue the policy-easing cycle if the accelerated pace in disinflation is confirmed, per Reuters.

His comments follow more dovish market assessments of the trajectory of interest rates in the Eurozone after the ECB’s decision to cut its prime rates by 25 basis points (bps) (0.25%) at its meeting last Thursday. 

Many analysts saw the ECB’s decision to enact two rate cuts in a row as a sign that the bank was accelerating its easing cycle and would therefore be likely to follow up with a cut and each of its next meetings until it had brought interest rates down to the “neutral level” of around 2.00%.

EUR/JPY keeps its upside as the Yen remains under pressure after opinion polls show the ruling ADP party lacks support and risks being replaced by the opposition who are likely to pursue a low-interest rate policy, according to Bloomberg News. The expectation of lower interest rates is likely to be negative for the Yen as it increases foreign capital outflows. 

According to analysts at Scotiabank the Yen may be more or less at the level of its fair value, “The spot US Dollar/Yen is about where it should be, according to our fair value estimate (150.20).” They said in a recent note. The next main event for the Yen could be Bank of Japan (BoJ) Governor Ueda speaking at an International Money Fund (IMF) event on Wednesday.

Lower-than-expected Japanese inflation data released on Friday showed that Japan’s headline and core inflation rates slowed to a five-month low of 2.5% and 2.4%, respectively, in September. This could encourage the BoJ to keep interest rates low, further weighing on the Yen (supporting EUR/JPY).  

The Yen’s recent bout of weakness prompted Japan’s top currency diplomat Atsushi Mimura to reiterate government warnings that they are closely watching currency moves and that excess volatility is undesirable. Japanese authorities intervened in the currency markets earlier this year. 

• EUR/MXN has probably formed a Bull Flag price pattern. 
• Such patterns signal the likelihood of more upside evolving. 

EUR/MXN appears to be forming a Bull Flag price pattern, most clearly visible on the daily and weekly charts. Bull Flags are bullish continuation patterns. 

EUR/MXN Daily Chart 

The “flag pole” part of the pattern probably began at the August 15 lows and the “flag square” part has been developing since price peaked on September 5. 

A breakout from the flag square would confirm the completion and activation of the Bull Flag. This, in turn, would and probably signal more upside towards a target at around 22.52 (Grey dashed line). This is equal to the length of the pole extrapolated higher. A break above the 22.07 September 26 high would confirm the extension. 

• USD/CHF drops to near 0.8630 even though the US Dollar resumes its upside journey.
• The SNB is expected to cut interest rates again in December.
• Investors expect the Fed to reduce interest rates gradually.

The USD/CHF pair drops to near 0.8630 from the two-month high of 0.8370 in Monday’s North American session. The Swiss Franc pair corrects even though the US Dollar (USD) rebounds after a mild sell-off on Friday, suggesting sheer strength in the Swiss currency.

Investors have underpinned the Swiss Franc against the Greenback despite the Swiss National Bank (SNB) is expected to cut interest rates again in December. This would be the fourth straight interest rate cut in a row.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, bounces back to near 103.70 and aims to extend its upside above the 11-week high around 104.00. The appeal of the Greenback has strengthened as investors expect the Federal Reserve (Fed) to cut interest rates at a moderate pace.

According to the CME FedWatch tool, the Fed is expected to cut interest rates by 25 basis points (bps) in November and December. Earlier, traders were anticipating the Fed to deliver a larger-than-usual rate cut of 50 bps in November. However, they priced out the scenario after a slew of upbeat United States (US) economic data for September.

The upside move in the USD/CHF pair appears to have paused for a while. However, the upside move could resume after it breaks above October 17 high of 0.8670. A breakout move will drive the asset toward the round-level resistance of 0.8700 and the August 15 high of 0.8750.

In an alternate scenario, a downside move below the September 12 low of 0.8550 will drag the asset toward the psychological support of 0.8500, followed by the October 2 low of 0.8450.

The near-term trend is expected to remain upbeat as the asset trades above the 20- and 50-day Exponential Moving Averages (EMAs), which trade around 0.8580.

The 14-day Relative Strength Index (RSI) oscillates near 60.00. A bullish momentum would trigger if the RSI (14) sustains above 60.00.

USD/CHF daily chart

Federal Reserve Bank of Dallas President Lorie Logan argued on Monday that she anticipates further interest rate cuts by the Fed. She also indicated there are no obstacles to continuing the Fed's balance sheet reduction.

Key Quotes

Rightmove House Price data for October were released over the weekend and showed a moderate (0.3%) rise in house prices last month, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

GBP holds trading range around 1.30

“Prices were up 1.0% in the year (down a little from September’s 1.2% gain). Sterling is just along for the ride this morning, tracking losses among the core majors against the USD absent any market-moving news.”

“Cable is soft but holding within its recent trading range. The technical undertone remains weak, leaving spot prone to renewed losses and a retest of last week’s 1.2974 low. Resistance (minor bull trigger potentially) is 1.3065 on the day.”

Dovish comments from ECB Governors Simkus and Kazaks support market expectations for a further reduction in ECB rates in December, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

EUR capped by 200-day MA in upper 1.08s

“But there is little appetite for large reductions in rates, comments suggest, which perhaps means markets expectations are a little stretched (32bps priced in for December at this point). EUR/USD is likely to remain under pressure in the short run but bargain hunters may become a bit more active around 1.08.”

“A decent rebound in the EUR late last week does not appear to signal a reversal in the EUR’s recent slide. The sell-off is looking over-extended on the intraday and daily oscillators but a firm cap appears to have been set on spot rebounds at 1.0872, where the 200-day MA sits currently.”

“Minor gains from Thursday’s low appear corrective ahead of renewed losses. Support is firm at 1.0780/00. Weakness below there targets 1.0650/00.”

The Canadian Dollar (CAD) is one of the better-performing currencies on the session when looking at overall ground lost versus the USD on the session but it is trading at session lows against the USD as our trading day gears up, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

CAD weak but little changed in low 1.38s

“Wider spreads remain the primary drag on the CAD, as bond and swap spreads extend recent gains on firmer US yields generally and ahead of the BoC policy decision Wednesday. Markets have all but fully priced in a 50bps cut now, leaving the door wide open for the Bank to deliver. Could that mean the CAD gets a ‘sell the mystery, buy the history’ rebound after the fact? USD/CAD fair value is estimated at 1.3840 this morning.”

“The CAD looks soft and vulnerable to more losses on the charts. The only thing in the CAD’s favour is perhaps that this USD move higher is about as overcooked now as the USD sell-off was in August, oscillators suggest. That does not necessarily mean the USD will drop in the near term but it does mean the path higher may be a little harder from here.”

“Resistance remains 1.3850 and 1.3950. Support is 1.3750 and 1.3650.”

European Central Bank (ECB) policymaker and Slovakian central bank Governor Peter Kazimir said on Monday that they will be in a "strong and comfortable position" to continue the policy-easing cycle if the accelerated pace in disinflation is confirmed, per Reuters.

Kazimir further noted that the December policy meeting is wide open, with all options remaining on the table. "If new information points in the direction of higher inflation risks, we can still slow down the pace at which we remove restrictions in the coming meetings," he added.

Market reaction

These comments failed to trigger a noticeable market reaction. At the time of press, EUR/USD was down 0.15% on the day at 1.0850.

• USD/JPY broke out of its Wedge pattern but failed to fall far and has recovered. 
• Underlying weakness shows up in the RSI’s divergence with price and could be a precursor to more weakness. 

USD/JPY broke down and out of its Rising Wedge pattern on Friday but has since recovered and returned back inside. 

The trend is at a delicate point and it is ambiguous. It is possible that the uptrend could be resuming and pushing price back up in a “last hurrah”. 

USD/JPY 4-hour Chart 

Alternatively, the bearish divergence between the Relative Strength Index (RSI) momentum indicator and price (red dotted lines) when comparing the October 16 and 21 lows is indicative of underlying bearish pressure, which, in turn, could suggest the pair could roll over and begin weakening again. 

A break below the 149.09 low formed after the breakout would provide confirmation of more weakness and a change in the short-term trend. This would probably lead to a target at 148.40 as a minimum, which is the 61.8% Fibonacci extrapolation of the height of the wedge lower. 

More downside could lead to support at 148.27 (October 10 low) or 147.23 (September 2 high). 

The JPY is soft, near 150, reflecting the rebound in US yields and less supportive spreads, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

JPY trades around 150

“Spot US Dollar/Yen is about where it should be, according to our fair value estimate (150.20) but Japanese officials are still likely to step up verbal support for their currency around these levels.”

“It’s a quiet start to the week for global markets data-wise. Over the balance of the week, global PMIs, the Fed’s Beige Book and (potentially) more China stimulus will move markets. BoJ Governor Ueda is expected to speak at an IMF event Wednesday.”

Will the markets can see higher EUR/USD levels again in the coming weeks? These questions are hardly surprising, given the weeks-long slide in EUR/USD that has taken the markets from 1.12 at the end of September to below 1.09. Moreover, as the end of the year approaches, this is a vital question for anyone who wants or needs to hedge, Commerzbank’s FX analysts Michael Pfister notes.

EUR/USD is likely to stabilise around current levels

“Looking at these data, it is not surprising that the movement since the end of September has been clearly driven by the US dollar, which has appreciated significantly since then. Perhaps more surprising is the fact that the euro has actually appreciated slightly against the G10 average over the same period, although this is not comparable to the huge appreciation of the US dollar. This means that in order to see significantly higher EUR/USD levels, we would probably need to see an end to the USD rally.”

“It is likely that the strong increase in jobs at the beginning of October will be revised downwards and, if our economists are right, the Fed will also make another rate cut. This should take some of the wind out of the dollar's sails. But it will be a few weeks before that happens. In addition, Donald Trump's chances of becoming US President again have increased recently. His economic proposals have the potential to trigger a strong USD rally, which could overshadow the labor market and the interest rate decision.”

“This does not mean that we will not see higher EUR/USD levels in the coming weeks. On Friday we saw already a small recovery. However, the risks are still clearly on the downside, which means that EUR/USD is likely to stabilise around current levels. At least until the US employment report comes in weaker and sends shockwaves through the market again.”

The US Dollar (USD) remains firm, supported by softer risk appetite and rising US Treasury yields, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

USD firmer, supported by rising yields

“Global bonds are under pressure on the day but the rise in US 10Y yields through the October peak suggests that rebound may extend a little more at least. Bloomberg notes one analyst suggesting that the 10Y could reach 5% in the next six months on worries over persistent inflation and weak US fiscal policy.

“Fiscal excess is, in my opinion, a growing risk for the USD broadly but the impact of weak fiscal policy settings may be relatively slow-moving issue for FX—and may not factor in to markets until after the US election.’

• AUD/USD appears to be resuming its downtrend after a brief pull back. 
• Should the pair break to lower lows it will signal a continuation of the trend south to lower targets. 

AUD/USD seems to be resuming the downtrending move it began at the late-September highs, following a brief pull back.  

AUD/USD Daily Chart 

On Monday it is down by a third of a percent and is threatening to break below the October 16 low at 0.6658. 

A break below that level would set a lower low and confirm the pair’s medium and short-term downtrending bias. Such a move would probably reach a target at the green 200-day Simple Moving Average (SMA) at 0.6628. Further weakness would be dependent on breaking below that level as well as the key September 11 swing low and support level, at 0.6622. 

However, if successful, the next bearish target would come in at the 0.6565 August 15 swing low. 

The trend is bearish on the short and medium term timeframes – indicating a bias towards more selling – but sideways on the long-term. 

SMEI returned to expansionary territory at 50.7 in October, after staying below 50 for two months. Overall performance sub-index edged up to 50.2, the first above 50-reading since May. Manufacturing continued to outperform; real estate, construction and retail sales remained key drags. Easing monetary policy supported SME access to bank credit; funding costs from NBFIs fell further, Standard Chartered’s Hunter Chan and Shuang Ding note.

Demand outlook improved

“Our proprietary Small and Medium Enterprise Confidence Index (SMEI; Bloomberg: SCCNSMEI <Index>) edged up to 50.7 in October from 49.7 in September, leaving contractionary territory after two months on a broad-based improvement in the three key sub-indices. The performance sub-index rose to 50.2 in October from 48.9, ending four straight months of contraction. While sales remained subdued, the new orders, employment and profitability sub-indices bounced to above-50 levels. The expectations sub-index recovered to 50.3 from 49.6 prior.” 

“While production activity declined m/m partly due to the National Day holidays, the manufacturing performance sub-index picked up on a solid increase in new orders. External demand remained robust. Cross-border trading SMEs reported a recovery in sales and higher new orders. Meanwhile, non-manufacturing performance remained soft, with real estate, construction, retail sales and wholesale, and other services SMEs continuing to report a m/m decline in overall activity.” 

“The credit sub-index climbed to a five-month high of 51.7 in October, as banks were more willing to lend to SMEs. The People’s Bank of China (PBoC) lowered its policy rate and reserve requirement ratio (RRR) in late September. In addition, borrowing costs from non-bank financial institutions (NBFIs) fell for a second month. Expectations of CNY appreciation against the USD picked up again among SMEs.”

US Dollar (USD) net short positions have increased. Euro (EUR) net long positions have halved. GBP net long positions have decreased for the second week in a row, and JPY net long positions have decreased for three consecutive weeks, Rabobank’s FX analysts Jane Foley and Molly Schwartz note.

Longs decrease, shorts increase

“USD net short positions have increased, driven by an increase in short positions. US CPI inflation printed on October 10th, and registered higher than expected in both the headline and core measures, destroying investor hopes of a 50bps cut at the next meeting. On the spot market the USD is the best performing G10 currency in the month to date.”

“EUR net long positions have halved, driven by an increase in short positions. EUR/USD reached its lowest levels since August on October 17th, trading at lows of 1.0811. Greenback strength in the spot market has dominated in October and the EUR has slipped to the position of fourth strongest performing G10 currency month-to-date.”

“GBP net long positions have decreased for the second week in a row, driven by a decrease in long positions. GBP is still the best performing G10 currency year-to-date. The BoE is expected to cut rates by 25 bps in November, but it is still far from certain if the MPC can pick up the pace of rate cuts. JPY net long positions have decreased for three consecutive weeks, driven by an increase in short positions. The market is pricing in a no-change decision for the October 31st.”

• The Oil price recovers to near $70.00 after PBoC’s bigger-than-expected cut in its Loan Price Rate.
• Iranian oil and nuclear facilities are expected to remain safe from Israel’s attack.
• Investors await the S&P Global PMI for fresh guidance on the Oil demand outlook.

West Texas Intermediate (WTI), futures on NYMEX, bounces back to near $70.00 in Monday’s European session. The Oil price recovers strongly after a big boost from the People’s Bank of China’s (PBoC) larger-than-projected dovish decision on interest rates.

The PBoC cuts its one-year Loan Prime Rate by 25 basis points (bps) to 3.1%, with an intention to uplift economic growth, boosting spending and revive the realty sector. Additionally, the Chinese central bank cut the five-year LPR from 3.85% to 3.60%. Economists expected the PBoC to reduce its key borrowing rates by 20 bps. 

A larger-than-usual PBoC interest rate cut has improved the Oil demand outlook as China is the largest importer of the black gold in the world. The overall action in the Oil price remained bearish in the past week as Beijing didn’t provide clarity on how the massive stimulus by China’s ministry will be allocated.

On the geopolitical front, comments from Israeli Prime Minister Benjamin Netanyahu last week that they will not attack on Iran’s non-military sites, which pointed to safety of Iran’s oil and nuclear facilities, has diminished fears of supply disruption.

Going forward, the Oil price will be influenced by the preliminary S&P Global Purchasing Managers’ Index (PMI) data for October of various nations, which will be published on Thursday.

China’s 3Q24 GDP growth was largely in line with consensus expectations at 4.6% y/y, 0.9% q/q sa (Bloomberg’s est: 4.5% y/y, 1.1% q/q; UOB est: 4.7% y/y, 1.1% q/q). September data showed improvement in momentum but no respite for housing market yet. UOB Group’s economist Ho Woei Chen notes.

3Q24 GDP growth moderation largely in line with consensus

“China’s 3Q24 GDP growth was largely in line with consensus expectations and clocked a growth of 4.8% YTD. Nominal GDP growth has remained below the real GDP growth rate, indicating that deflationary pressure has yet to abate which was also evident in Sep CPI and PPI.”

“September data was largely positive with an acceleration in momentum for industrial production, retail sales and urban fixed asset investment while the unemployment rate unexpectedly fell. However, sustained pace of declines in property prices and sales values put a dampener on the recovery outlook.”

“We maintain our growth forecast for China at 4.9% this year and 4.6% in 2025. Anticipation is building around the meeting of the Standing Committee of the National People’s Congress (NPC) later this month to announce the details of the fiscal stimulus following the approval process. This will have an impact on the China’s growth outlook, especially for next year.”

• The US Dollar trades flat to mildly up as the possible escalation in the Middle East conflict drives flows towards the Greenback. 
• Fed speakers are starting to align with market expectations for gradual to no rate cuts in the near future. 
• The US Dollar Index rally could pick up steam if Donald Trump leads further in the polls. 

The US Dollar (USD) opens broadly flat on Monday as three main factors provide some support for the Greenback. The first one is geopolitics,  with Israel’s Prime Minister Benjamin Netanyahu vowing to step up retaliations after an Iranian drone struck near his private residence over the weekend. The second driver is coming from the Federal Reserve (Fed) after a few of its officials called for a gradual approach to reduce interest rates (or even no rate cuts) in order to retain control of inflation. Finally, the third driver is the upcoming US presidential election on November 5 with a small lead on the betting websites for former US President Donald Trump, which supports a stronger US Dollar. 

The US calendar is very light in terms of economic data on Monday. Besides the US Treasury set to issue some more debt into the markets, four Fed members will speak. Markets will want to look for further confirmation from the Fed on the rate cut projections for the meetings in November and December after Atlanta Fed President Raphael Bostic said last week that the Fed should refrain from cutting. 

Daily digest market movers: The ball is rolling

• Federal Reserve Bank of Dallas President Lorie Logan is set to speak at 12:55 GMT. Logan participates in a conversation at the 2024 SIFMA (Securities Industry and Financial Markets Association) Annual Meeting.
• At 17:00 GMT, Federal Reserve Bank of Minneapolis President Neel Kashkari participates in a town hall event hosted by the Chippewa Falls Chamber of Commerce in Chippewa Falls, Wisconsin.
• At 21:05 GMT, Federal Reserve Bank of Kansas City President Jeffrey Schmid delivers remarks about the US economic and monetary policy outlook at an event organized by the Chartered Financial Analyst Society in Kansas City.
• Federal Reserve Bank of San Francisco President Mary Daly is set to participate in a moderated Q&A session with the Wall Street Journal's Nick Timiraos at the 2024 WSJ Tech Live at 22:40 GMT.
• Equities are taking a breather on Monday and are looking for a direction. Minor gains or losses overall, with just the Chinese Hang Seng closing down by more than 1.5% on Monday. 
• The CME Fed rate expectation for the meeting on November 7 shows a 92.3% probability of a 25 basis points (bps) rate cut, while the remaining 7.7% is pricing in no rate cut. Chances for a 50 bps rate cut have been fully priced out. 
• The US 10-year benchmark rate is trading at 4.09% after having flirted with a break below 4% on Wednesday. 

US Dollar Index Technical Analysis: The beginning of something big

The US Dollar Index (DXY) holds strong near last week’s peak. Expectations of a gradual approach to interest rate cuts by the Fed would support a stronger US Dollar. More upside could take place should former President Donald Trump take a further lead in the polls or gain a swing state majority, or should geopolitical tensions in the Middle East swirl further out of control. 

A firm resistance ahead is 103.80, which aligns with the 200-day SMA. Above that, there is a small gap before hitting the pivotal level at 103.99 (the June 4 low) and the 104.00 big figure. Should geopolitic