• Main drivers: Mild negative bias to sentiment; RBA monetary policy; Eurozone final Manufacturing PMIs & New Zealand unemployment later.
  • Mild negative bias to sentiment: USD has been gradually regaining strength versus major currencies (though is mixed versus EUR). Further highs on Wall Street but lost momentum in Asia and European indices are mixed to lower. Commodities are mixed again.
  • RBA meeting: The Reserve Bank of Australia kept rates flat (at +0.10%, as expected) and removed the yield curve control which was buying the 2024 Government Bond to target +0.10% yield (as expected). However, RBA Governor Lowe suggested that it is “likely to take some time” for inflation to sustainably return to its target. This reduces the rate tightening expectations [AUD negative]
  • Bank of Japan minutes: the September meeting showed the economy is to improve as the pandemic subsides (no surprise there), whilst pent up demand is yet to materialise. [JPY outperforming]
  • France/UK fishing dispute: talks continue, no retaliatory measures yet. [risk neutral, for now]
  • Central bank speakers: No Fed speakers – FOMC in the “Blackout Period”.
  • Economic Data: 
  • Eurozone final Manufacturing PMI at 0900GMT expected to be unrevised from the flash reading of 58.5
  • New Zealand unemployment at 2145GMT expected to improve slightly and tick lower to 3.9% in Q3 (from 4.0% in Q2)

Markets Outlook

  • Broad outlook: USD strengthening starting to take hold again, amidst a hint of risk aversion creeping back in this morning.
  • Forex: USD mixed versus euro, but regaining strength elsewhere in the major pairs. 
  • EUR/USD is still very choppy since the ECB meeting. Swinging higher, lower and higher again, yet to settle properly. Essentially ranging near to medium term between 1.1525/1.1685. We still prefer to sell rallies for a break to the downside below 1.1525. 
  • GBP/USD another negative candle yesterday and growing downside momentum. Resistance growing between 1.3690/1.3710 and we look to sell intraday rallies for pressure towards 1.3570/1.3610.

  • AUD/USD negative reaction to the RBA is putting big pressure on key support at 0.7450/0.7475. Momentum (RSI) is leading the market lower. A close under 0.7450 would complete a top and open 0.7380.  
  • Commodities: mixed outlook on precious metals, oil bulls are defending support well.
  • Gold trading above $1780 lends a slight positive bias to the near to medium-term outlook, but resistance at $1800/$1810 continues to be a persistent barrier. We remain neutral.
  • Silver support at $23.75/$24.00 is holding well, but the bulls are struggling to get a hold on the market now. Looking increasingly neutral. Below $23.75 opens $23.00/$23.18.
  • Brent Crude oil a good response in the past few sessions from the bulls, and the market is looking to edge higher once more. Turning into a trading range of $82.40/$86.65.

Indices: further highs on Wall Street but may be time to take a pause, near term.

  • S&P 500 futures showing signs of near term consolidation today. The breakout at 4548 is now a basis of support. We look to buy into near term weakness.  
  • DAX looking to break clear of the 15,800 resistance area again today. Looking encouraging for further upside. A decisive close above 15,800 opens the all-time highs again around 16,000. 
  • FTSE 100 although the market has dropped back today, this looks to be a chance to buy, with good support now 7180/7246. Another higher low around here with the buying pressure returning would continue the medium-term bullish breakout targeting 7700.