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Markets are still digesting the repercussions of the Chancellor's “mini-budget”. In the latest move, the BOE increased the amount of authorized buybacks through TECRF facility. That's the intervention launched to shore up the pound in the wake of the announcement of financial reforms. Despite a rebound in the later part of September, cable has resumed its longer-term downward trend against the dollar. However, that has been aided in large part by the unexpected drop in the US unemployment rate, which increased the bets that the Fed would raise rates by 75bps at its next meeting. Now, the main concern surrounding the budget appears to be the uncertainty. In that situation, the market often assumes the worst. As presented, the budget appears to increase spending (which is pro-inflationary), while reducing taxes (which questions the financial stability of the government). The combined response is to expect the BOE to hike rates more aggressively to fend off the expected increase in inflation. Bringing things back to reality Depending on how the “mini-budget” is financed, however, it could allay many of those concerns. The problem is that the key “detail” won't be available until the end of November, and the BOE will have to… Read More »UK employment and GDP outlook

Historically, the final quarter has always been considered to be one of the most lucrative periods of the year for commodity traders – And once again, that trend, is certainly living up to expectations! It's no secret that the global markets have entered an exciting new phase in monetary policy as central bankers across the world ramped up their fight against rapidly surging inflation. After being criticized for being slow to recognize inflation, the Federal Reserve and its central-banking peers have embarked on their most aggressive series of rate hikes since the 1980s. As a result, aggressive moves specifically from the Fed in recent months have dramatically strengthened the dollar – raising concerns among leading economists that the U.S currency will be the next asset bubble to burst. According to Morgan Stanley – “such U.S dollar strength has historically always ended in some kind of financial or economic crisis” and that's the exact direction we are heading in again. In recent weeks, a long list of Wall Street banks and international organization from the United Nations, World Bank and IMF have warned that an overly aggressive Fed tightening policy, combined with a surging U.S dollar – “risks breaking the financial… Read More »Commodity traders eye record profits in the final quarter of 2022 – What’s next? [Video]

Selling has continued in European and US markets today, although at a less frenetic pace than we saw last week, says Chris Beauchamp, chief market analyst at online trading platform IG. Subdued move prevails across markets “The impact of Friday’s payroll report and its implications for Fed policy and the economic outlook continue to loom large over markets. While Friday’s knee-jerk move was perhaps an overreaction in the near-term, the overall outlook remains highly unfavourable to equities. Even the prospect of earnings season provides little comfort, since Q3 numbers are likely to be uninspiring while Q4 guidance will be cautious at best.” Stronger dollar cushions European markets “European stocks did better this morning, thanks perhaps in large part to the weaker pound and euro. But the fresh outrages in Kyiv are another reminder that European markets face an even tougher winter than those in the US, despite the massive support being provided by governments. The bounce is already fizzling out, with more pain for European stocks ahead this quarter.”

In the red are now the relations between the world's largest energy poles, after reducing the daily oil production by 2 million barrels as OPEC decided, adding a new ‘’headache’’ to Europe's energy security. That decision surprised all the analysts who expected a reduction of 1 million barrels. Simultaneously, with the prices of natural gas being very expensive due to Russia’s pipelines, they took advantage to sell their liquified natural gas. OPEC decided in its first one-on-one meeting since 2020 to cut production by up to 2 million barrels per day from November. Oil prices have fallen to around $90 a barrel from $120 in early June, amid growing fears of the prospect of a global economic recession. However, still not knowing how long will it last and with what intensity, predictions are useless for now. On the other side of the Atlantic, the US opposes such a move, as OPEC keeps oil prices high, resulting in inflationary pressures on consumers and production costs. More specifically, President Biden is disappointed by OPEC's short-sighted decision to reduce production quotas while the global economy deals with the continuing negative effects of Putin's invasion of Ukraine. At a time when maintaining global energy,… Read More »OPEC: The oil decision showed the rift in the US – Saudi Arabia relations

EUR/USD – 0.9735 Euro's selloff from 0.9999 (Tue) to as low as 0.9727 Fri after robust US jobs report suggests correction from Sep's 2-decade trough at 0.9537 has possibly ended and as 0.9790 has capped recovery, bearishness remains and a daily close below 0.9713 (61.8% r) would pressure price to 0.9684, then later 0.9636/40. On the upside, only a daily close above 0.9790 would risk stronger retracement towards 0.9816, break, 0.9835 Data to be released later: Australia AIG services services index, Japan market holiday. EU Sentix index. U.S. market holiday, Canada market holiday on Monday.

An electrifying week is coming up, featuring another crucial US inflation report and minutes of the latest Fed meeting. Both will be key pieces of the puzzle for the dollar and risk assets, as traders grapple with whether the Fed will pause its tightening cycle anytime soon. Even in case of a softer inflation print though, this type of speculation seems premature. 

The USDJPY pair was attacking the critical resistance zone between 145 and 146, where the Bank of Japan intervened several days ago. As of writing, the USD traded somewhat higher on the day, boosted by today's US labor market data. US jobs market remains solid The headline non-farm payrolls came in at 262,000, which was below the unrevised August reading of 315,000 and just over the consensus forecast of 255,000. Notably, the September print was the lowest since April 2021, albeit not terrible. The revision to the change in total nonfarm payroll employment for July increased it by 11,000, from +526,000 to +537,000, and the change for August stayed at +315,000. Average hourly wages increased by 5.0% from a year ago and by 0.3% from August, exceeding estimates by a narrow margin. The former number was also unchanged from the 0.3% increase in August, while the latter dropped from a 5.2% Y/Y increase one month ago. The unemployment rate surprisingly decreased from 3.7% to 3.5%, significantly below the predicted unchanged reading. This was due to a 250,000 decrease in the number of jobless people, who fell from slightly over 6 million to 5.753 million. Cautious trading It looks like the… Read More »USD/JPY trying to break 145 after solid jobs data

Summary Nonfarm payrolls nearly matched consensus expectations with a 263K gain in September. Job gains were largest in some of the hardest-hit pandemic sectors, such as leisure and hospitality and healthcare. The unemployment rate returned to a 50-year low of 3.5% through a combination of solid job growth and a roughly flat labor force. Wage growth moderated slightly but remains well above rates that are consistent with the Fed's 2% inflation target. Taken together, today's employment report suggests the labor market remained exceptionally tight headed into the final quarter of 2022. There are signs in the data that labor supply and demand are directionally moving toward balance, but gradual improvement should not be mistaken for a completed journey. We continue to look for the FOMC to hike its policy rate by 75 bps at its November meeting, and we await the September CPI report on Thursday for a fuller picture of how the Fed's rate path is likely to proceed through year-end and into 2023. Download The Full Economic Indicator

S&P500 on the four-hour chart is trading muted on Friday, ahead of the widely expected US non-farm payrolls report, which is due later in the session. After falling into the lower half of the Bollinger bands, the index is hanging on the 50-EMA support level, which is in confluence with the last bottom at 3721.6. The recent rally has proved to be short-lived as the bullish bias is losing steam with the price retreating from the 3806.8 resistance region. Though, the next direction of the price depends on the 3721.6 crucial level. Since Bollinger bands exhibit a fading bullish bias, and the bands have been narrowing regarding price consolidation, an emerging M pattern may rule out the market. Thursday’s top, which is totally within the bands is considered a relatively lower top compared to Tuesday’s top, which closed out of the bands. Hence, 3721.6 is the M-pattern neckline, and penetration of this level will confirm the pattern, accelerating bearish sentiment. If that happens, the immediate target for sellers can be estimated at around 3698.4. A sustained move below this hurdle can take the pair down to 3668.9, 161.8% of the last upswing. Further declines will put 3636.4 and 3583.7 in… Read More »S&P 500 rally is out of steam ahead of NFP [Video]

Let me not mince words. I’m disgusted by the fact that the Republican party nominated Herschel Walker for a seat in the US senate – and that he actually has a chance of winning. I’m disgusted, but I understand it. It’s simply a cynical tactic. Walker’s limitations are so apparent that even members of his own party have publicly acknowledged his shortcomings. They’ll support him anyway and whitewash his deficiencies, however, in an effort to shift control of the Senate to Republican hands. His supporters in Georgia are willing to entrust their representation to an incompetent senator who hardly presents as a moral exemplar solely because they expect him to toe the line and vote with the Republican leadership. Concerns about competency and character simply take a back seat. Actually, that’s an overstatement. Concerns about competency and character are nowhere to be found. Of all the people that Republicans could have chosen in the state of Georgia, what does it say about Republicans that they picked Herschel Walker? It seems reasonable to view putting Walker up for this post as being indicative of the quality of decisions that we can expect from this party; and, unfortunately, this nomination is not… Read More »Prioritizing democracy: Throw the bums out