Ekonomske vesti sa finansijskih tržišta od 11 октобар 2024

At next week's ECB meeting on 17 October we expect the ECB to deliver yet another rate cut of 25bp, bringing the deposit rate to 3.25%. Weaker-than-anticipated growth indicators, as well as a decline in inflation, support the case for another rate cut from the ECB, Danske Bank’s analysts note.

ECB to stick to the 'meeting by meeting' and 'data dependent' approach

“Since the US labour market report last week, markets have significantly repriced expectations for policy easing across central banks, not least the ECB. Markets are now discounting an additional 47bp of rate cuts this year, consistent with a rate cut next week and again in December, and 97bp of rate cuts next year, consistent with our baseline of quarterly rate cuts of 25bp each.”

“We expect very limited forward guidance at the upcoming meeting, meaning the ECB should stick to the 'meeting by meeting' and 'data dependent' approach that it has been following in the past few quarters.”

“Ahead of the December meeting, where it will give new staff projections, including the 2027 projection, we are set to see very important data points from the euro area (2x PMIs, 2x inflation, wage data, labour data)”.

• Silver oscillates in a range on the last trading day of the week. 
• A mixed technical setup warrants caution for aggressive traders.
• Acceptance above $32.00 will set the stage for additional gains.

Silver (XAG/USD) struggles to capitalize on its modest intraday uptick and trades around the $31.15 region during the first half of the European session on Friday, nearly unchanged for the day.

Looking at the broader picture, this week's bounce from the vicinity of the $30.00 psychological mark and a subsequent strength back above the $31.00 mark favors bullish traders. That said, the recent repeated failures to capitalize on momentum beyond the $32.00 mark constitute the formation of a bearish multiple-tops pattern. This, along with mixed oscillators on the daily chart, warrants caution before positioning for any meaningful appreciating move for the XAG/USD. 

From current levels, the $31.55 region is likely to act as an immediate hurdle ahead of the $31.75-$31.80 area and the $32.00 mark. This is followed by resistance near the 32.25 supply zone, which if cleared decisively has the potential to lift the XAG/USD back towards the multi-year peak, just ahead of the $33.00 round figure touched last Friday. Some follow-through buying should pave the way for a move towards the December 2012 swing high, around the $33.85 region. 

On the flip side, weakness below the $31.00 round figure now seems to find some support near the $30.70-$30.65 region ahead of the $30.35-$30.25 area and the $30.00 mark. The next relevant support is pegged near the $29.80-$29.70 confluence – comprising the 100-day Simple Moving Average (SMA) and the 50-day SMA. This should act as a key pivotal point, which if broken will set the stage for an extension of the recent decline from the highest level since December 2012. 

The XAG/USD might then accelerate the downfall towards the $29.00 mark before eventually dropping to test the $28.60-$28.50 zone. The descending trend could extend further towards the $28.10-$28.00 region en route to the September monthly swing low, around the $27.70 area.

Silver daily chart

• The Mexican Peso recovers after the release of fairly benign Banxico minutes improved the outlook. 
• President Sheinbaum sends an envoy to meet the “kings” of US finance: Dimon and Fink.  
• USD/MXN peaks and pulls back after its mini-rally runs out of steam. 

The Mexican Peso (MXN) edges higher in its most-traded pairs on Friday, carrying momentum over from its recovery on the previous day, when it found a floor and rose following the release of the Bank of Mexico (Banxico) meeting minutes. 

In their discussions, Banxico officials painted an overall benign picture of the Mexican economy, with inflation “improving”, a “stable” labor market, and high demand for exports but also a loss of “dynamism” and “productive activity” in the domestic economy.  

The Peso may be garnering further support as political risks ease following meetings with the CEOs of US finance giants JP Morgan Chase and Blackrock, and pivot back to the US elections.

Mexican Peso rises after release of Banxico Minutes 

The Mexican Peso appreciated following the release of the Banxico September meeting Minutes on Thursday, at which the bank decided by a majority vote to lower the target for the Overnight Interbank Interest Rate by 25 basis points (bps) to 10.50%. There was one dissenter, Jonathan Ernest Heath Constable. Below are ten key takeaways from the Minutes: 

• Most noted the inflation outlook in Mexico has been improving. 
   
• Forecasts for headline and core were adjusted slightly downward for some quarters in the near term.
   
• In the last reading, food commodity inflation was 3.95%, while non-food was 1.69%, in both cases clearly below their respective historical averages.
   
• All agreed services inflation continues to show persistence.
   
• The balance of risks with respect to the expected trajectory of inflation over the forecast horizon remains skewed to the upside.
   
• All members indicated that the labor market remains solid.
   
• The yield curve of government securities showed downward movements, especially in the short maturities.
   
• Most noted a contraction in consumption of imported goods, whilst the value of manufacturing exports – both automotive and non-automotive – recorded some reactivation during July.
   
• All agreed that domestic productive activity is going through a period of weakness, and most agreed that there has been a visible loss of dynamism since the last quarter of 2023.
   
• The information available for the beginning of the third quarter shows some rebound regarding domestic demand. 

Sheinbaum administration courts US investors 

Despite investor concerns regarding the political outlook for Mexico after the Morena-led coalition victory in June, there appear to be signs the new Sheinbaum administration is attempting to build bridges with some of the big players in global finance. 

On Thursday, the Mexican Secretary of Finance, Rogelio Ramírez de la O, separately met with the CEO of Blackrock, Larry Fink,  and JP Morgan Chase’s CEO, Jamie Dimon, reports El Financiero. Although no details of the meetings have been made public, the move could be interpreted as part of a charm offensive by the Mexican government to win back the confidence of investors. 

“Before the election turmoil, Dimon said last November that he saw a “huge” opportunity in Mexico, amid a boom in factories moving to the country to be closer to the United States, as part of a business trend known as nearshoring,” said El Financiero. 

Perhaps of greater concern to investors now is the outcome of the US presidential election in November. JP Morgan strategists downgraded their bullish stance on the Mexican Peso on Thursday due to the risks of a “highly unpredictable” US presidential election result.

Technical Analysis: USD/MXN retreats after peaking

USD/MXN bottomed out at the base of its long-term rising channel and recovered on October 4. However, its nascent uptrend has reversed after peaking at 19.62 on Thursday. Prices are now pulling back down towards the base of the channel and the 50-day Simple Moving Average (SMA) again.

USD/MXN Daily Chart 

That said, USD/MXN’s new short-term uptrend is still probably intact, and prices could still recover and continue rising within the ascending channel. In addition, the medium and longer-term trends remain bullish, and given the technical analysis principle that “the trend is your friend,” this favors an eventual continuation higher when the longer bullish cycles kick in.

A break above the 19.62 high would see USD/MXN resume its uptrend and continue up to the next target at 19.83 (October 1 high). 

A break below 19.31 (October 9 low), however, would be a bearish sign indicating the possibility the short-term uptrend had ended and either a sideways or more bearish trend was evolving instead.

Here is what you need to know on Friday, October 11:

Following Thursday's volatile action, markets seems to have stabilized to begin the last trading day of the week. The US economic calendar will feature Producer Price Index (PPI) data for September and the University of Michigan's Consumer Sentiment Survey for October. In the early American session, Statistics Canada will publish the labor market data for September.

Inflation in the US, as measured by the change in the Consumer Price Index (CPI), declined to 2.4% on a yearly basis in September from 2.5% in August, the US Bureau of Labor Statistics (BLS) reported on Thursday. Other details of the report showed that the core CPI, which excludes volatile food and energy prices, rose 3.3% on a yearly basis, coming in above the August reading and the market forecast of 3.2%. The monthly core CPI was up 0.3% in September. The US Dollar (USD) failed to benefit from these readings as the weekly Initial Jobless Claims came in at 258,000 in the week ending October 5, up sharply from 225,000 in the previous week. After reaching its highest level in nearly a month at around 103.20 on Thursday, the USD Index closed the day flat and went into a consolidation phase below 103.00 early Friday. 

The data published by the UK's Office for National Statistics showed on Friday that the Gross Domestic Product expanded by 0.2% on a monthly basis in August, matching the market estimate. In the same period, Industrial Production and Manufacturing Production increased by 0.5% and 1.1%, respectively. Although GBP/USD edged slightly higher on the upbeat data, it remains well below 1.3100 in the European session.

EUR/USD closed flat on Thursday as the USD lost its strength in the second half of the day. The pair struggles to gather recovery momentum and trades in a narrow channel slightly below 1.0950 in the European morning. Germany's Destatis reaffirmed on Friday that the annual CPI rose 1.6% on a yearly basis in September, matching the initial estimate.

USD/CAD extended its uptrend on Thursday and closed the seventh consecutive day in positive territory. Ahead of the Canadian jobs data, the pair trades marginally higher on the day near 1.3750.

USD/JPY closed in the red on Thursday after reversing from the multi-month high it set above 149.60. The pair stays relatively quiet and moves up and down in a tight band below 149.00.

Gold gathered recovery momentum and snapped a six-day losing streak on Thursday. XAU/USD continues to edge higher toward $2,650 on Friday.

• The Pound Sterling slightly recovers against its major peers after the UK ONS reported robust factory data and expected GDP growth in August.
• Traders expect the BoE to cut interest rates in at least one of its two policy meetings remaining this year.
• Investors await the US PPI data for fresh cues on the Fed’s interest rate outlook.

The Pound Sterling (GBP) moves lower against its major peers in Friday’s London session after the release of the UK data. The initial reaction from the British currency was positive, however, it failed to capitalize on the same despite the data came in better than expected, and the Gross Domestic Product (GDP) grew expectedly in August.

The Office for National Statistics (ONS) reported that the economy grew by 0.2%, as expected, after remaining flat in July. Month-on-month Manufacturing and Industrial Production rose at a robust pace of 1.1% and 0.5%, respectively, while economists expected them to grow by 0.2%.

Annually, Manufacturing and Industrial Production contracted by 0.3% and 1.6%, respectively. However, the pace at which both economic data declined was slower than in July.

Upbeat monthly factory data and an expected GDP growth have improved the UK economic outlook. This would allow the Bank of England (BoE) policymakers to follow a shallow policy-easing cycle. Financial market participants expect the BoE to cut interest rates only once in the remaining two policy meetings this year.

Going forward, the next trigger for the Pound Sterling will be the UK Employment data for the three months ending August and the Consumer Price Index (CPI) report for September, which will be published on Tuesday and Wednesday, respectively. The economic data will significantly influence market expectations for BoE’s likely interest rate action in November.

Daily digest market movers: Pound Sterling remains weak against US Dollar ahead of US PPI

• The Pound Sterling edges lower against the US Dollar (USD) on Friday. The GBP/USD pair trades slightly above the monthly low of 1.3010, but the outlook is cautious as the Greenback remains firm. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, holds onto gains near 103.00.
•  The US Dollar clings to gains as hotter-than-expected United States (US) Consumer Price Index (CPI) data for September kept the scope of the Federal Reserve (Fed) to reduce interest rates by 50 basis points (bps) again in the November meeting off the table.
• Thursday’s CPI report showed that the annual core inflation – which excludes volatile food and energy prices – accelerated to 3.3%. The headline inflation rose by 2.4%, faster than estimates of 2.3% but slower than the August print of 2.5%.
• However, traders are confident that the Fed will cut interest rates next month but at a gradual pace of 25 bps, according to the CME FedWatch tool. Also, a majority of Fed policymakers see more rate cuts as appropriate.
• On Thursday, New York Fed Bank President John Williams said at an event at Binghamton University, "Based on my current forecast for the economy, I expect that it will be appropriate to continue the process of moving the stance of monetary policy to a more neutral setting over time."
• On the economic data front, investors will focus on the US Producer Price Index (PPI) data for September, which will be published at 12:30 GMT. The annual headline PPI is estimated to have decelerated to 1.6% from 1.7% in August. On the contrary, the core PPI – which strips off volatile food and energy prices – is expected to have accelerated at a faster pace to 2.7% from 2.4% in August.

Technical Analysis: Pound Sterling stays below 20- and 50-day EMAs

The Pound Sterling remains under pressure near the monthly low of 1.3010 against the US Dollar. The outlook of the GBP/USD pair is vulnerable as it has stabilized below the upward-sloping trendline plotted from the 28 December 2023 high of 1.2827.

The near-term trend of the Cable has become bearish as it trades below the 20- and 50-day Exponential Moving Averages (EMAs), which trade around 1.3167 and 1.3106, respectively.

The 14-day Relative Strength Index (RSI) declines to near 40.00. More downside would appear if the momentum oscillator falls below the above-mentioned level.

Looking up, the round-level resistance of 1.3100 and the 20-day EMA near 1.3170 will be a major barricade for Pound Sterling bulls. On the downside, the Pound Sterling would find support near the psychological figure of 1.3000.

• EUR/GBP gains traction to near 0.8380 in Friday’s early Asian session, up 0.11% on the day. 
• The German HICP inflation remained steady at 1.8% YoY in September, as expected. 
• The UK GDP expanded 0.2% MoM in August, matched estimates. 

The EUR/GBP cross trades on a stronger note around 0.8380 on Friday during the early European trading hours. The Euro (EUR) remains firm after the release of German inflation data and UK growth numbers. Traders will shift their attention to the UK employment data next week. 

Data released by Destatis on Friday showed that the German Harmonized Index of Consumer Prices (HICP) rose 1.8% YoY in September, compared to the previous reading and the expectations of 1.8%. The German inflation data continues to support the Euro, while investors were digesting the ECB's cautious tone on economic growth. 

The meeting account published on Thursday showed that the ECB remains confident that inflation is on track to hit the 2% target. The ECB policymakers see the cut rates by 25 basis points (bps) in September as appropriate due to disinflation and a fragile recovery. 

The ECB signaled that any further policy easing would be gradual and data-dependent. The ECB is anticipated to cut the deposit rate to 3.5% next week. More than 90% of economists polled by Reuters expect a reduction next week, with a similar majority betting on a follow-up move in December.

On the UK’s front, the Office for National Statistics (ONS) showed on Friday that the UK economy grew by 0.2% over the month in August. The reading matched the market consensus of 0.2% growth in the reported period.

Meanwhile, further delay on rate cuts by the Bank of England (BoE) might cap the downside for the Pound Sterling (GBP) in the near term. The BoE chief economist Huw Pill warned against cutting the base rate “too far or too fast” last week. Investors expect the UK central bank to cut the rate by a total of 0.5% to 4.5% in two of its last three meetings before the end of the year.

• UK GDP expands 0.2% MoM in August, matches estimates
• GBP/USD battles 1.3050 after the UK data.

The UK economy expanded by 0.2% over the month in August, having stagnated for the second consecutive month in July, the latest data published by the Office for National Statistics (ONS) showed on Friday. The reading matched the market consensus of 0.2% growth in the reported period.

Meanwhile, the Index of services (August) arrived at 0.1% 3M/3M vs. July’s 0.6% print and 0.3% expected.

Other data from the UK showed that the monthly Industrial Production and Manufacturing Production rose 0.5% and 1.1%, respectively, in August. Both readings bettered market expectations.

Separately, the UK Goods Trade Balance came in at GBP-15.06 billion MoM in August vs. GBP-19.30 billion expected and GBP-18.871 billion previous.

Market reaction to the UK data

The UK economic data have little to no impact on the Pound Sterling. At the press time, GBP/USD is trading 0.07% lower on the day, keeping its range near 1.3050.

FX option expiries for Oct 11 NY cut at 10:00 Eastern Time, via DTCC, can be found below.

EUR/USD: EUR amounts

• 1.0880 833m
• 1.0900 1.4b
• 1.0930 1.6b
• 1.0950 1.5b
• 1.0960 912m
• 1.1000 3.2b
• 1.1045 1.4b
• 1.1050 1.2b
• 1.1100 1.1b

USD/JPY: USD amounts                     

• 148.00 1b
• 149.00 405m
• 150.00 595m
• 150.10 645m

AUD/USD: AUD amounts

• 0.6670 594m
• 0.6765 753m
• 0.6800 1.2b
• 0.6830 742m

USD/CAD: USD amounts       

• 1.3600 1.3b
• 1.3700 1.5b
• 1.3705 711m

• EUR/USD trades with mild losses near 1.0935 in Friday’s early European session. 
• A warmer US inflation reading supports Fed hawks' call for gradual interest rate cuts.
• The ECB is expected to deliver a cut to the 3.5% deposit rate next week.

The EUR/USD pair remains on the defensive around 1.0935 during the early European session on Friday. The hotter-than-expected US inflation reading on Thursday has provided some support to the Greenback and caps the upside for the pair. 

The warmer US Consumer Price Index (CPI) reading coupled with the stronger-than-expected September jobs report strengthens the chance that any future rate cuts by the US Federal Reserve (Fed) should be gradual. The CME FedWatch Tool showed investors boost the odds that the Fed will trim its policy rate by 25 basis points (bps) in November to 83.3% following the CPI release.

Market players will take more cues from the US Producer Price Index (PPI) for September, along with the preliminary reading of the Michigan Consumer Sentiment Index for October, which is due on Friday. The headline PPI is expected to show an increase of 1.6% YoY in September, while the core PPI is estimated to see a rise of 2.7% YoY in the same reported period. Nonetheless, if the report shows a softer outcome, this could undermine the US Dollar (USD) against the shared currency. 

The European Central Bank (ECB) policymakers support a rate cut amid the economic slowdown, which might exert some selling pressure on the Euro (EUR). The ECB is anticipated to lower rates twice this year and a cut to the 3.5% deposit rate next week. More than 90% of economists polled by Reuters expect a reduction next week, with a similar majority betting on a follow-up move in December.

The Harmonized Index of Consumer Prices (HICP) inflation data from Germany is due later on Friday, which is expected to hold steady at 1.8% YoY in September. 

Gold prices rose in India on Friday, according to data compiled by FXStreet.

The price for Gold stood at 7,143.14 Indian Rupees (INR) per gram, up compared with the INR 7,101.15 it cost on Thursday.

The price for Gold increased to INR 83,318.09 per tola from INR 82,826.47 per tola a day earlier.

FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.

(An automation tool was used in creating this post.)

• GBP/USD draws support from subdued USD demand, though bulls remain on the sidelines.
• Expectations for more aggressive BoE policy easing undermine the GBP and cap the major.
• Traders now look to the UK data dump for short-term impetus ahead of the US PPI report.

The GBP/USD pair struggles to capitalize on the previous day's modest bounce from the 1.3020 area or a one-month low and oscillates in a narrow band during the Asian session on Friday. Spot prices currently hover around mid-1.3000s, unchanged for the day, and seem vulnerable to prolonging the recent retracement slide from the highest level since March 2022 touched last month.

The US Initial Jobless Claims data released on Thursday pointed to signs of weakness in the US labor market and suggested that the Federal Reserve (Fed) will continue cutting interest rates. This keeps the US Dollar (USD) on the defensive below its highest level since mid-August and lends some support to the GBP/USD pair. That said, investors now seem to have fully priced out the possibility of a more aggressive policy easing by the Fed. The expectations were reaffirmed by the September FOMC meeting minutes and the stronger-than-expected US consumer inflation figures.

Apart from this, persistent geopolitical risks stemming from the ongoing conflicts in the Middle East act as a tailwind for the safe-haven Greenback and cap the upside for the GBP/USD pair. In the latest development, Israel's army said that it has killed the top commander of the Palestinian militant group Islamic Jihad in the Nur Shams refugee camp in the occupied West Bank. This, along with the market conviction that the Bank of England (BoE) might be heading towards speeding up its rate-cutting cycle, might continue to undermine the British Pound and keep a lid on the currency pair. 

Market participants now look forward to the UK macro data dump, including the monthly GDP print, for some impetus. The focus, however, will remain on the US Producer Price Index (PPI), due later during the North American session. Apart from this, the US economic docket features the release of the Preliminary Michigan Consumer Sentiment Index and Inflation Expectations. This, along with speeches by influential FOMC members, will drive the USD demand and allow traders to grab short-term opportunities around the GBP/USD pair on the last day of the week.

• Gold price attracts some follow-through buyers for the second successive day on Friday.
• Fed rate cut bets keep the USD on the defensive and lend support to the precious metal.
• Diminishing odds for a more aggressive Fed easing might cap gains ahead of the US PPI.

Gold price (XAU/USD) builds on the previous day's mixed US macro data-inspired recovery from the $2,600 neighborhood or a nearly three-week low and gains positive traction for the second straight day on Friday. US data published on Thursday showed that the annual rise in the headline US Consumer Price Index (CPI) was the lowest since February 2021 and a surge in the weekly jobless claims. This, in turn, suggested that the Federal Reserve (Fed) will continue cutting interest rates, which keeps the US Dollar (USD) bulls on the defensive below the highest level since mid-August and benefits the non-yielding yellow metal.

Meanwhile, the markets now seem to have fully priced out the possibility of a more aggressive easing by the Fed and another oversized interest rate cut in November. The expectations were reaffirmed by the September FOMC meeting minutes, which, in turn, acts as a tailwind for the Greenback and might cap the Gold price. This, along with hopes that China will announce more fiscal stimulus measures on Saturday to boost growth in the world’s second-largest economy, might keep a lid on the safe-haven precious metal. This, in turn, warrants some caution for aggressive bullish traders ahead of the release of the US Producer Price Index (PPI).

Daily Digest Market Movers: Gold price is underpinned by bets for more interest rate cuts by Fed, subdued USD demand

• The US Labor Department reported on Thursday that the headline Consumer Price Index rose 2.4% in the 12 months through September, while the core gauge, which excludes food and energy prices, climbed 3.3%. 
• The stronger US consumer inflation data fueled speculations about a slower pace of rate cuts by the Federal Reserve and lifted the US Dollar to a nearly two-month top, though the initial reaction faded rather quickly. 
• The number of Americans seeking unemployment benefits increased by 33,000, to a seasonally adjusted 258,000 in the week ended October 5 vs. 230,000 expected and pointed to signs of weakness in the US labor market. 
• Given that the Fed has shifted its focus on obtaining maximum sustainable employment, the mixed data suggests that the US central bank will continue cutting interest rates and continue to benefit the non-yielding Gold price. 
• Meanwhile, the yield on the benchmark 10-year US government bond manages to hold above the 4% threshold, which acts as a tailwind for the Greenback and might keep a lid on any further gains for the XAU/USD. 
• China's finance ministry will hold a briefing on Saturday and release more details of fiscal stimulus measures, underpinning the risk sentiment and contributing to capping any meaningful upside for the commodity.
• Traders now look forward to the release of the US Producer Price Index (PPI) report, which will drive the USD demand and produce short-term opportunities around the precious metal heading into the weekend.

Technical Outlook: Gold price seems poised to appreciate further and aim to challenge all-time high near 2,685-2,685 area

From a technical perspective, the overnight goodish rebound from the vicinity of the $2,600 mark and the subsequent move back above the $2,630 static support breakpoint-turned-resistance favors bullish traders. Moreover, oscillators on the daily chart hold in positive territory and suggest that the path of least resistance for the Gold price is to the upside. Hence, some follow-through strength towards the $2,657-2,658 horizontal barrier, en route to the $2,670-$2,672 supply zone, looks like a distinct possibility. The momentum could eventually lift the XAU/USD to an all-time high, around the $2,685-2,686 region touched in September. This is closely followed by the $2,700 mark, which if cleared will set the stage for an extension of a well-established multi-month-old uptrend.

On the flip side, the Asian session low, around the $2,630-2,628 region, now seems to protect the immediate downside, below which the Gold price could challenge the $2,600 pivotal support. A convincing break below the latter will be seen as a fresh trigger for bearish traders and pace the way for deeper losses. The XAU/USD might then extend the corrective decline towards the next relevant support near the $2,560 zone en route to the $2,535-2,530 region before eventually dropping to the $2,500 psychological mark.

• The Indian Rupee edges lower in Friday’s Asian session. 
• Indian foreign outflows, rising crude oil prices weigh on the INR; likely RBI’s intervention might cap its downside. 
• The US PPI and preliminary reading of the Michigan Consumer Sentiment Index data will be the highlights on Friday. 

The Indian Rupee (INR) weakens on Friday amid the firmer US Dollar (USD). Furthermore, sustained Indian foreign fund outflows and elevated crude oil prices continue to undermine the local currency. The hotter-than-expected US inflation data and hawkish comments by Federal Reserve (Fed) officials lift the Greenback and also contribute to the INR’s downside. 

Nonetheless, the possible foreign exchange intervention from the Reserve Bank of India (RBI) helps limit the INR’s losses. Looking ahead, market players will shift their attention to the US Producer Price Index (PPI) for September, along with the preliminary reading of the Michigan Consumer Sentiment Index for October. On the Indian docket, the Industrial Production and Manufacturing Output will be released on Friday. 

Daily Digest Market Movers: Indian Rupee remains sensitive to multiple headwinds 

• FTSE Russell said on Tuesday that Indian sovereign bonds will be added to its Emerging Markets Government Bond Index (EMGBI), following a similar move by JP Morgan and Bloomberg Index Services.
• The US Consumer Price Index (CPI) for September rose by 2.4% YoY, compared to 2.5% in August, exceeding estimates of 2.3%. Core CPI climbed by 3.3% YoY in September, surpassing forecasts and August's 3.2%.
• New York Fed President John C. Williams said on Thursday that the monetary policy will continue to shift towards a more neutral stance in the coming months, aligning with ongoing progress toward price stability.  
• Chicago Fed President Austan Goolsbee noted on Thursday that he was not overly concerned with a higher-than-expected September inflation report and stuck by his view that the Fed has moved past its singular focus on price pressures.
• Atlanta Fed President Raphael Bostic stated that the Fed could stand pat at an upcoming policy meeting if the data warrants. "I am totally comfortable with skipping a meeting if the data suggests that's appropriate," said Bostic. 

Technical Analysis: USD/INR maintains the bullish trend in the longer term

The Indian Rupee trades on a softer note on the day. The constructive outlook of the USD/INR pair remains in play as the pair holds above the descending trend line and the key 100-day Exponential Moving Average (EMA) on the daily timeframe. The upward momentum is supported by the 14-day Relative Strength Index (RSI), which stands above the midline near 59.15, supporting the buyers in the near term. 

The 84.00 psychological level acts as a key resistance level for USD/INR. A decisive break above this level could lead the way to the all-time high of 84.15, en route to 84.50. 

On the downside, the initial support level emerges near the resistance-turned-support level at 83.90. The next contention level is located around the 100-day EMA at 83.68. The additional downside filter to watch is 83.00, representing the round mark and the low of May 24. 

• WTI consolidates the overnight gains and oscillates in a narrow band on Friday.
• Geopolitical tensions and supply distortion concerns offer support to Oil prices. 
• The recent USD bullish run keeps a lid on any further gains for the commodity.

West Texas Intermediate (WTI) US crude Oil prices struggle to capitalize on the previous day's strong move up and oscillate in a narrow band, around the $75.00/barrel mark during the Asian session on Friday.

The markets remained concerned about a potential Israeli attack on Iranian oil infrastructure, which keeps the geopolitical risk premium in play and acts as a tailwind for the black liquid. In fact, Israeli Defence Minister Yoav Gallant promised earlier this week that any strike against Iran would be "lethal, precise and surprising". Apart from this, worries about supply disruptions caused by Hurricane Milton in the United States (US), along with the upbeat demand outlook, further lend support to Crude Oil prices. 

Investors turned optimistic that China's massive stimulus measures will ignite a lasting recovery in the world's second-largest economy and lift fuel demand in the world's largest oil importer. Moreover, the markets seem confident that further interest rate cuts by the Federal Reserve (Fed) will boost economic activity and demand for oil. That said, stronger-than-expected US inflation data sparked some doubts over how much rates will fall in the coming months, which, in turn, caps the upside for Crude Oil prices. 

Apart from this, the recent US Dollar (USD) rally to its highest level since mid-August, bolstered by diminishing odds for a more aggressive Fed policy easing, acts as a headwind for the commodity. Nevertheless, Crude Oil prices remain on track to register gains for the second straight week. That said, a sharp pullback from the vicinity of the $78.00 mark, or a nearly two-month high touched on Tuesday, warrants caution before positioning for an extension of the recovery from the year-to-day (YTD) low touched in September.

• The Japanese Yen fails to build on the overnight strength amid the BoJ rate hike uncertainty.
• A positive risk tone also undermines the JPY, though subdued USD demand helps limit losses.
• The fundamental backdrop suggests that the path of least hurdle for the JPY is to the downside.

The Japanese Yen (JPY) struggles to attract any meaningful buyers during the Asian session on Friday, with the USD/JPY pair holding just below its highest level since early August touched the previous day. A drop in Japan's real wages for the first time in three months, a decline in household spending and signs that price pressures from raw material costs were subsiding raised doubts about the Bank of Japan's (BoJ) rate hike plans. This continues to undermine the JPY ahead of Japan's snap election on October 27 and turns out to be a key factor acting as a tailwind for the currency pair. 

Meanwhile, the initial market reaction to the hotter-than-expected US consumer inflation figures released on Thursday turned out to be short-lived amid indications of labor market weakness. Given that the Federal Reserve (Fed) has shifted its focus on obtaining maximum sustainable employment, a surge in the US jobless claims suggested that the US central bank will continue cutting interest rates. This keeps the US Dollar (USD) bulls on the defensive, below a nearly two-month top set the previous day, and caps the USD/JPY pair as traders await the release of the US Producer Price Index (PPI). 

Daily Digest Market Movers: Japanese Yen draws support from subdued USD price action, not out of the woods yet

• Expectations that the Bank of Japan will be in no rush to lift borrowing costs fail to assist the Japanese Yen to capitalize on its modest recovery against the US Dollar, from over a two-month low touched on Thursday.
• Furthermore, political uncertainty ahead of a snap election on October 27 in Japan, along with a generally positive risk tone, could undermine demand for the JPY and continue to act as a tailwind for the USD/JPY pair. 
• The US Dollar shot to its highest level since mid-August after the US Labor Department reported that the core Consumer Price Index, which excludes food and energy prices, rose 3.3% on a yearly basis in September. 
• Meanwhile, the headline CPI climbed 2.4% in the 12 months through September vs. 2.3% expected. This, however, was lower than the 2.5% in August and also the smallest year-on-year rise since February 2021.
• Furthermore, the number of Americans seeking unemployment benefits surged 33,000, to a seasonally adjusted 258,000 for the week ended October 5 and pointed to initial signs of weakness in the US labor market. 
• Investors now seem convinced that the Federal Reserve will continue cutting interest rates, which keeps the USD bulls on the defensive ahead of the release of the US Producer Price Index (PPI), due later this Friday.

Technical Outlook: USD/JPY seems poised to resume its recent uptrend and aim to reclaim the 150.00 psychological mark

From a technical perspective, last week's move beyond the 50-day Simple Moving Average (SMA) for the first time since mid-July and acceptance above the 38.2% Fibonacci retracement level of the July-September downfall favors bulls. Moreover, oscillators on the daily chart have been gaining positive traction and are far from being in the overbought territory, suggesting that the path of least resistance for the USD/JPY pair is to the upside. Hence, any subsequent fall is more likely to attract fresh buyers and should remain limited near the 148.00 mark. 

The latter should act as a key pivotal point, which if broken might prompt some technical selling and drag the USD/JPY pair to the 147.35 intermediate support en route to the 147.00 mark and the 146.50 area. On the flip side, the 149.00 round figure now seems to act as an immediate hurdle ahead of the overnight swing high, around the 149.55-149.60 region, above which bulls might aim to reclaim the 150.00 psychological mark. The momentum could extend further towards the 50% Fibo. level, around the 150.75-150.80 region.

• The Australian Dollar trades in positive territory for the second consecutive day in Friday’s Asian session. 
• Reduced bets of deeper Fed rate cuts support the USD and weigh on the pair. 
• Investors brace for the US PPI data, which is due on Friday. 

The Australian Dollar (AUD) gains ground on Friday. Nonetheless, the lower odds of aggressive interest rate cuts from the US Federal Reserve (Fed) after the hotter-than-expected inflation data might lift the US Dollar (USD) and cap the upside for the pair. 

In the absence of top-tier economic data releases from the Australia on Friday, the USD price dynamic will be the main driver for the AUD/USD. Investors will monitor the release of US Producer Price Index (PPI), which is due on Friday. The headline PPI is expected to show an increase of 1.6% YoY in September, while the core PPI is estimated to see a rise of 2.7% YoY during the same period. If the reports shows softer than expected outcome, this could weigh on the USD and acts as a tailwind for AUD/USD. Additionally, the preliminary of the Michigan Consumer Sentiment Index will be released later in the day.

Daily Digest Market Movers: Australian Dollar extends its recovery ahead of another US inflation data

• RBA Minutes from the September meeting showed board members overlooked the warning that there would be no rate cuts in the near future. The Australian central bank wants to keep its options open, watching whether the economy starts to pick up in the second half of the year. 
• The US Consumer Price Index (CPI) rose 2.4% YoY in September, compared to 2.5% in August, above the consensus of 2.3%, the US Department of Labor Statistics showed Thursday. The core CPI, excluding food and energy, climbed 3.3% YoY in September, above forecast and the previous reading of 3.2%. 
• The US Initial Jobless Claims for the week ending October 4 rose to 258K, up from the previous week's 225K. The figure was above the initial consensus of 230K. 
• New York Fed President John Williams said on Thursday that he expects more rate cuts lie ahead as inflation pressures continue to moderate and the economy remains solid.
• Chicago Fed President Austan Goolsbee noted he sees a series of rate reductions over the next year to year and a half, noting that inflation is now near the Fed's 2% target and the economy is about at full employment.
• Atlanta Fed President Raphael Bostic is open to the idea of skipping a rate cut in November if economic data still hasn't aligned with the Fed's target figures in time. 

Technical Analysis: Australian Dollar maintains a positive stance in the longer term

The Australian Dollar trades stronger on the day. According to the daily chart, the AUD/USD pair keeps the bullish vibe as the price is well-supported above the lower limit of the ascending trend channel and the key 100-day Exponential Moving Average (EMA). However, the further downside cannot be ruled out as the 14-day Relative Strength Index (RSI) is located below the midline near 44.70. 

The first upside barrier emerges near the high of September 6 at 0.6767. Extended gains could pave the way to 0.6823, the high of August 29. Any follow-through buying above the mentioned level could see a rally to 0.6942, the high of September 30.

On the flip side, the key support level is seen at 0.6700, representing the lower limit of the trend channel, the 100-day EMA, and the psychological level. A breach of this level could expose 0.6622, the low of September 11. 

The People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead on Friday at 7.0731, as compared to the previous day's fix of 7.0742 and 7.0737 Reuters estimates.

• NZD/USD edges higher to near 0.6095 in Friday’s early Asian session.
• The US CPI inflation was higher than forecast in September, while jobless claims posted an unexpected rise. 
• The dovish stance of the RBNZ might cap the pair’s upside. 

The NZD/USD pair holds positive ground around 0.6095 during the early Asian session on Friday. However, the upside of the pair might be limited as firmer US September inflation lowers the odds of aggressive US Federal Reserve (Fed) cuts, which lift the Greenback. Investors await the Producer Price Index (PPI) and the preliminary Michigan Consumer Sentiment Index data, which are due later on Friday. 

The US inflation surprised on the upside in September, with the Consumer Price Index (CPI) rising 2.4% YoY in September, compared to 2.5% in the previous month. Meanwhile, the core CPI, Ex-food & energy price growth, jumped 3.3% YoY in September versus 3.2% prior, hotter than the 3.2% expected. The higher-than-expected inflation report might boost the Greenback and cap the upside for NZD/USD. 

The small upward surprise in September price growth is unlikely to prevent the Fed from additional interest rate cuts this year, but the odds of a 50 basis points (bps) reduction fell significantly after September's strong US Nonfarm Payrolls report last week. The markets are now pricing in nearly 83.3% possibility of 25 basis points (bps) Fed rate cuts in November, according to the CME FedWatch Tool.

New York Fed President John Williams said on Thursday that he expects more rate cuts lie ahead as inflation pressures continue to moderate and the economy remains solid. Meanwhile, Chicago Fed President Austan Goolsbee noted he sees a series of rate reductions over the next year to year and a half, noting that inflation is now near the Fed's 2% target, the economy is about at full employment, and the Fed's goal is to freeze those conditions in place.

However, Atlanta Fed President Raphael Bostic is open to the idea of skipping a rate cut in November if economic data still hasn't aligned with the Fed's target figures in time.

On the Kiwi front, the dovish stance of the Reserve Bank of New Zealand (RBNZ) might cap the pair’s upside in the near term. The markets bet on more aggressive easing in November. Swaps imply there are a further 45 bps of easing to come at the RBNZ's November meeting. However, the positive development surrounding the Chinese economy could lift the China-proxy New Zealand Dollar (NZD) as China is a major trading partner to New Zealand.