Early repayment charges: should you abandon your fixed-rate mortgage for a new deal now?

Increasing numbers of homeowners are paying an early repayment charge to leave their fixed-rate mortgage deal early, and lock in a new deal now. Should you do the same?

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Early repayment charges: should you abandon your fixed-rate mortgage for a new deal now?

Increasing numbers of homeowners are paying an early repayment charge to leave their fixed-rate mortgage deal early, and lock in a new deal now. Should you do the same?

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Two reasons to hold dollar longs and retain bearish view on stocks

Volatility across asset classes is hitting new highs this year, credit spreads are rising, and the market is trying to calm down after the threat of a financial crisis that has been brewing in the UK pension fund industry has tipped. As a result, demand for defensive assets in FX remains high and is unlikely to turn into a steady decline soon. Among such assets, the key is cash dollar, as well as Japanese yen in cross pairs. The market is waiting for data on inflation, as well as for Putin's address to the nation.Volatility in the foreign exchange market has reached its highest level this year and may rise even higher. There are two factors that contribute to this. The first is the policy of central banks, which are trying to prevent high inflation bygaining a foothold in the minds of economic agents and therefore urgently raise interest rates. The Fed is leading this race. Whether the Fed will be able to maintain its leadership will depend on incoming data, and the August Core PCE which is due today will help to gauge the likelihood of even more aggressive policy tightening. The Fed prefers to measure inflation using this index, so it is of great importance. Core PCE is expected to increase from 4.6% to 4.7% in August, with a monthly change of 0.5%. The Fed predicts a slowdown in inflation to 4.5% at the end of the year and at the same time intends to bring the range of interest rate to 4.25-4.5%. It is clear that in the event of a positive surprise, there will be a higher risk that year-end inflation won’t meet expectations of the Fed, and therefore the regulator may be forced to signal that there will be two 75 bp increases in November and December. In short, a surprise on the upside in the report could trigger a dollar rally today.A strong dollar is also due to higher real interest rates in the US. If at the beginning of August, the real interest rate (yield on 10-year inflation-protected bonds) was 0%, now it has risen to 1.4%:The real interest rate is calculated as the nominal rate minus inflation expectations, and for its increase it is necessary that inflation expectations decrease, and nominal rate rises, and this is precisely what is happening now. Typically, such a process is accompanied by a bearish trend in risky assets (as an alternative to bonds) and strong dollar (due to investment demand from abroad). One should not expect a reversal of this trend soon, surely not until the Fed gives the appropriate signal.The second volatility factor are geopolitical tensions. President Putin will make an address to the nation today, in which he will probably announce that four regions of Ukraine have become part of the Russian Federation and will also comment on the sabotage on two Nord Stream pipelines. The market will most likely interpret the speech as a signal of escalation in the confrontation with the West and will price in retaliatory measures.Inflation in Germany rose to double digits (10%), while core inflation in the Eurozone accelerated to 4.8% against the forecast of 4.7%. Accelerating inflation in the EU above the forecast hurts the Euro, as the ECB is constrained in maneuvering as any rate hike will hurt the EU economy. After release of the report, EURUSD resistance formed at 0.99 (the upper limit of the bearish channel), downward movement is likely to resume after the speech of the President of the Russian Federation, as market participants will tend to factor in further escalation, which will have negative consequences for inflation.

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Market Spotlight: EURJPY Longs Triggered

EURJPY Breaking OutThe recent EURJPY long idea has triggered on a break of the 140.82 level, following the reversal off the 137.74 level and bullish trend line. The retail market has turned more aggressively short the pair, supporting the view that we have further to run to the topside here. Price is fast approaching initial target at 143.80 where traders should monitor price action given the resistance we’ve seen here previously. Look to stay along above 140.82 targeting 149.83 in the longer-term. MACD is close to switching positive here, suggesting further bullishness to come.Keep An Eye OnThe drop in USD and GBP this week has been highly beneficial for EUR. Additionally, EUR is benefiting more hawkish ECB expectations. With eurozone inflation still at record levels, many players are now projecting more aggressive action from the ECB over the remainder of the year. The BOJ, meanwhile, remains committed to maintaining negative rates. Traders should, however, be wary of any signs suggesting further BOJ intervention given the wild moves we saw the week before last.

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FOMO Fridays: EUR On The Rebound

EUR Turns Higher Amidst Market TurmoilIt’s becoming a redundant sentence, I know, but what a week. FX volatility is back up at levels not seen since the outbreak of COVID and this has made for plenty of opportunity. We’ve seen many wild swings this week with the boomerang action in GBP clearly the winner in terms of shock factor. However, chatting with traders ahead of the weekend, it seems the move that has captured traders’ attention in a more meaningful way is the rally in EUR. The single currency has made broad based gains this week and is starting to look like a fuller move higher might be on the cards in the near-term. Looking at EURUSD in particular, we’ve seen a more than 3% move higher this week, bringing price back up firmly off the year’s lows. So, let’s take a look at what caused the move and, as ever, if you caught it? Well done! If you missed it? There’s always next week.What Caused The Move?GBP Volatility Favours EURPart of the move higher in EUR this week has been the weakness we’ve seen in its major trading partners. Both USD and GBP have been sharply lower, allowing EUR plenty of room to recover. The UK government’s mini-budget has seemingly gone down like a lead balloon, sending GBP sinking to its lowest levels since the 80s. This seismic shift in market pricing has seen funds diverted into EUR this week as traders look to avoid the UK meltdown many are now forecasting in the coming months.Hawkish ECB ForecastsHowever, the story has not just been a by-product of action elsewhere. EUR is also benefiting from a more hawkish ECB outlook. Goldman Sachs upgraded their ECB forecasts this week, now pegging tow further .75% hikes over the coming months as the ECB battles to tame soaring inflation. The change in outlook is being digested by traders as markets adjust to the sharp shift in EU rates this year which has seen the ECB reversing the negative rates put in place in response to the GFC.Technical ViewsEURUSDThe rally off the bear channel lows has seen EURUSD reversing sharply higher. Price has broken above tow key levels and is now fast approaching a retest of the broken .9885 level. This is a major level for EURUSD, with the bear channel top just above. A break here will be firmly bullish, putting the longer run focus on a move up to the 1.0364 level thereafter.

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Mini-Budget: will Kwasi Kwarteng’s gamble on growth work?

The government has launched the biggest dash for growth in 50 years, relaunching an approach known as supply-side economics. What is the plan – and will it work?

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Daily Market Outlook, September 30, 2022

Daily Market Outlook, September 30, 2022 Overnight Headlines Fed Officials Reinforce Rate Hike Calls, Say Markets Got Message Oil Set For First Quarterly Drop Since 2020 As Macro Mood Sours Europe Gas Falls As Traders Weigh Fallout Of Pipeline Eruptions Gold Edges Up On Softer Dollar, To Fall For Sixth Straight Month Aluminium Extends Gains, Record Spike On Russia Supply Fears Pres Biden: US Will Never Recognise Russian Claims On Ukraine Senate Pass Bill To Stop Government Shutdown, Sent To House Biden Administration Sets Sanctions Targeting Iran's Oil Exports PBoC Makes Biggest Weekly Net Cash Injection Since Jan 2020 China’s Economy Struggles On Covid-19 Curbs, Property Woes BoJ Boosts Amounts At Regular Bond Buy, Yields Stay Elevated Japan To Confirm Yen Intervention Size, Eyes On War-Chest Size Japan PM Kishida Orders Specific Stimulus Steps By End-October ECB Eye Jumbo Hike To Fight Inflation Even Amid Debtors Suffer Truss Holds Emergency Talks With OBR Failing To Calm Markets UK Job Vacancies Decrease To Post-Pandemic Levels, REC SaysThe Day Ahead Equity markets remained under broad pressures in the Asia-Pacific region, falling for a seventh straight week, following another negative end to trading on Wall Street. Investors continued to assess prospects of further policy tightening by the Fed and other major central banks across the world. In UK news, there are reports that PM Truss and Chancellor Kwarteng will meet with the head of the independent Office for Budget Responsibility (OBR) which had not been asked to produce a forecast to accompany last week’s mini-budget. Revised GDP figures released earlier this morning showed the UK economy grew by 0.2%q/q in Q2 compared with the prior estimate of a 0.1%q/q contraction. It implies that the economy is probably not currently in a technical recession defined as two consecutive quarters of negative growth. Lloyds Bank Business Barometer survey released overnight showed business confidence remaining steady at 16% in September following three months of declines. The survey also showed some renewed upward pressure on output prices and wages. As responses were taken in the first half of the month, they will not have accounted for the government’s Growth Plan announcements which aim to increase the economy’s trend rate of growth recent, nor the recent volatility in financial markets. UK money supply and bank lending data for August will be released later today but may look dated given recent developments. In particular, the numbers on mortgage activity will not reflect the impact of last week’s move on stamp duty, the most recent fluctuations in interest rate expectations or this week’s announcements by some lenders about changes to the availability of products. Consequently, it may have little impact on markets. Inflation data updates for the Eurozone and the US will be closely watched. In the Eurozone, upside risks to CPI inflation after yesterday’s German data, which could see the headline rate rising near to 10% in September. That would maintain pressure on the ECB to hike rates further in the coming meetings even as economic activity is slowing. In the US, the PCE deflator is the Fed’s preferred inflation gauge. Echoing the already released CPI figures, we look for the headline PCE deflator to rise by 0.2%m/m in August, bringing the year-on-year rate down to 6.1% from 6.3%. However, look for the annual core rate, which excludes food and energy, moving up to 4.9% from 4.6%. The fall in the headline rate is likely to be partly driven by lower gasoline prices. That should support real personal spending during the month.FX Options Expiring 10am New York Cut EUR/USD: 0.9690-00 (1.3BLN), 0.9750 (650M) 0.9795-00 (1.65BLN), 0.9850 (644M), 0.9900 (1.1BLN) 0.9930-35 (403M), 0.9950 (256M), 1.0020 (418M) USD/JPY: 143.00 (509M), 144.00 (675M), 144.95-00 (1.13BLN) 146.00 (361M). EUR/JPY: 141.00 (300M) USD/CHF: 0.9780 (214M). EUR/CHF: 0.9500 (306M) 0.9600 (931M), 0.9650 (450M), 0.9700 (361M) GBP/USD: 1.1050 (518M), 1.1200 (521M), 1.1350 (210M) EUR/GBP: 0.8800 (530M), 0.8850 (303M), 0.8875 (411M) AUD/USD: 0.6500 (310M), 0.6575 (325M). USD/CAD: 1.3500 (515M) 1.3550 (270M), 1.3700 (270M), 1.3725 (250M), 1.3850 (250M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.00 Choppy month end, though strikes contained Off 0.2%, towards the base of a 0.9795-0.9844 range, dragged around by GBP Choppy trading amid light liquidity at quarter end, after volatile September European inflation data today key event risk CPI flash poll 9.7%, core +4.7% Close above 0.9849, 38.2% Aug-Sept fall would be bullish for next week 0.9683 NY low and 0.9844 Asian high are initial support and resistance 0.9800 1.556 BLN and 98.45/50 718 MLM are Friday's close strikes 20 Day VWAP bearish, 5 Day bullishGBPUSD Bias: Bearish below 1.10 Volatile sterling cries out for credible policy A choppy session to end an extremely volatile month for sterling in Asia Trades near the base of a 1.1071-1.1222 range with solid volumes on D3 Bid on optimism into today's Truss-OBR meeting, which faded Markets need a credible budget statement next week not Nov 23rd 1.0764 low Thursday and today's 1.1222 high initial support resistance 20 Day VWAP is bearish, 5 Day bullishUSDJPY Bias: Bullish above 140 Positive data – bid but intervention fears cap +0.2% near top of a 144.33-144.77 range, capped by 145+ intervention fears Modest risk off at quarter end, Nikkei -1.8% - down 7.6% in September Strong Japan factory, retail sales... and jobs ... Japan to announce size of yen-buying intervention today Psychological 145.00 first resistance, then pre intervention 145.90 high Wednesday's 143.91 NY low, then 143.10 are initial supports 20 Day VWAP is bullish, 5 Day bullishAUDUSD Bias: Bearish below .6750 Consolidates, RBI hike looms next week AUD/USD trades in a narrow 0.6518-0.6479 range ahead of a Sydney holiday Mon Fed tough talk, risk aversion continue to cap rallies China, Japan FX threats, BOE bond buys limit downside... Higher iron ore prices support; Dalian iron sees best month in six Focus turns to Tuesday's RBA rate decision, 50 bps hike expected... support 0.6435-45, resistance 0.6530-40 20 Day VWAP is bearish, 5 Day bullishBTCUSD Bias: Bearish below 25.3K BTC rotates around 19.5k Circle Announces Acquisition of Elements to Accelerate Crypto Payments UK watchdog dismisses criticisms over crypto authorisations Encouraging words for crypto from Stanley Druckenmiller BTC is still down ~58.5% so far this year First resistance sited at 21k support now see at 18k 20 Day VWAP is bullish, 5 Day bullish

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Investment Bank Outlook 30-09-2022

BNY MellonBrazilian Elections: Expect The UnexpectedThe first round of Brazil's presidential election takes place this Sunday, Oct. 2. Contrary to what is priced, we believe the likelihood of incumbent President Jair Bolsonaro winning the second round against ex-president Luis Inacio Lula da Silva on Oct. 30 is close to 50-50. Our three working scenarios for a second-round vote: Bolsonaro wins with just over 50%; Lula wins with less than 55%; and Lula wins with more than 55%.In Brazil, a president is elected if a candidate wins more than 50% of the valid votes outright in the first or second round. If a candidate fails to reach 50% in the first round, a second round takes place within four weeks between the two leading candidates in the first round. The most recent poll published by aggregator XP/Locomotiva has Lula at 49%, Bolsonaro at 38%, Ciro Gomes at 6%, Simone Tebet at 5%, and others at 1%.For context, each of the presidential result scenarios proposed above has materialized in the past. Back in 1994 and 1998, President Fernando Henrique Cardoso (FHC) won in a first round twice, with 54% and 53% outright. Since then, however, no candidate has managed to win in a first round. Nevertheless, Lula won in the second round in both 2002 and 2006 with more than 60% support. Dilma Rousseff comfortably won in 2010 with 56% of the vote in the second round of 2010, but just barely in 2014, with 51.6%.In the 2018 elections, while it was clear that Bolsonaro would win in a second round, he only received 55% of the vote. That was a wide margin, but still resulted in a fragmented congress that has proved quite challenging for the president and his cabinet to navigate.In terms of market reaction, we think a Bolsonaro win will likely drive the BRL stronger, back below 5.00 per dollar, and begin to have more easing priced into the curve through 2023. The curve is priced for 300bp of easing over 2023, with -100bp priced for H1 that year.A Lula win will likely also induce the market to price easing, but that will likely differ between the two scenarios. A 'weak win' will likely have Lula opt for a pragmatic cabinet earlier, potentially bringing ex-Finance Minister and ex-central bank (BCB) President Henrique Meirelles into the newly formed government. We believe this would, in turn, reinforce the commitment to the spending ceiling introduced by President Michel Temer, which was strongly supported by Meirelles two weeks ago. While the BRL may not rally as much on a Bolsonaro win, CDI futures could price even more aggressive easing than were Lula to win.A strong win – 55%+ margin – for Lula will likely drive the BRL weaker, while also have additional rate cuts priced for next year. Market turmoil could escalate, however, were the president to announce intent to eliminate the spending ceiling, as frequently mentioned in public speeches over the past few months. Lula’s campaign economist, Guilherme Mello, discussed this yesterday, though didn't give details on a replacement mechanism.

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Market Update – September 30 – Quarter End

• USDIndex – has dropped back to 112.00, as bonds and stocks remained very jittery into quarter-end, month end and week end. -The US Q2 chain price indexes accelerated to 9.0% for the headline, and 4.7% for the core. Credibility issues also are keeping buyers sidelined as the central banks are seen having waited too long to address rising price pressures, with worries now that they are overdoing rate hikes and will push the globe into recession.
• Yields: The German 10-year rate is down -3.2 bp in early trade, the US rate -4.1 bp.
• PM Liz Truss – she will stick to her plan to reignite economic growth, breaking her silence after nearly a week of financial market chaos.
• German Chancellor Olaf Scholz – set out $196 billion “defensive shield”, including a gas price brake and a cut in sales tax for the fuel, to protect companies and households from the impact of soaring energy prices. That came after the 10.9% German Inflation figure for September.
• 
• Stocks  were headed for their worst month! Nikkei still closed with a loss of -1.8%, the ASX was down -1.2% by end of trade while CSI 300 and Hang Seng are down -0.3% and up 0.1% respectively. However, markets seem to be finding a footing and European and US futures are mostly managing slight gains.
• Japan’s factories ramped up output in August and China’s factory activity returned to growth this month, data showed.
• GBP has lifted above 1.10
• EUR – is at 0.98,  at
• JPY traded at 144.57.
• USOil steady at $81
• Gold – rebounded to $1670.
• BTC – steady at 19410
• VIX index has been on the rise and hit 33.46 earlier, just shy the 34.75 May high, though has yet to really test the 40 area last seen in late 2020.

Biggest FX Mover @ (06:30 GMT) USA100 back to 11333. Intraday fast MAs aligning higher, MACD histogram & signal line are turning higher but still in negative area, RSI at 54.76, H1 ATR 58.36, Daily ATR 354.98.

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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3 top value stocks to buy now

Professional investor Adam Rackley of Cape Wrath Capital highlights three overlooked value stocks to buy.

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Why everyone is over-reacting to the mini-Budget

Most analyses of the chancellor’s mini-Budget speech have failed to grasp its purpose and significance, says Max King

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AUDNZD overbought for the first time since 2008

Australia’s monthly consumer price measure on Thursday (29/09) showed the annual inflation rate eased slightly in August from July thanks to a sharp drop in petrol prices, which may hint cost-of-living pressures may be nearing their peak.

In its first monthly release, Australia’s CPI rose 6.8% y/y in June, accelerated to 7.0% y/y in July and slowed to 6.8% y/y in August. The monthly CPI excluding fruit, vegetables and fuel rose 5.5% y/y in June, increased to 6.1% y/y in July, then 6.2% y/y in August. However, the monthly readings can differ considerably from the quarter CPI figures. The monthly CPI only has about two-thirds of the price observations of the quarterly series and is more volatile, thus somewhat limiting its usefulness. After all, it has not been seasonally adjusted and does not include the core inflation measure favoured by the RBA.

https://www.abs.gov.au/media-centre/media-statements/monthly-cpi-indicator-rose-68-year-august

This data comes ahead of next week’s RBA Policy Board meeting, where markets are expecting a 50bp rate hike to a 9-year high of 2.85%.

Meanwhile, ANZ New Zealand Business Confidence rose from -47.8 to -36.7 in September. Own Activity Outlook rose from -4.0 to -1.8. Investment intentions rose from -2.0 to 1.8. Work intentions rose from 3.4 to 5.9. Price intentions rose from 68.0 to 70.1. Cost expectations fell from 90.9 to 89.8. Inflation expectations decreased from 6.13% to 5.98%.

ANZ said that demand has not rolled over as feared as the Central Bank has raised interest rates. But to the extent that the RBNZ can keep going until they see the drop in demand they need to tame inflation, it will likely be a temporary reprieve, if not a double-edged sword for companies that have considerable debt.

Technical Review

Meanwhile in the FX market, AUDNZD has rallied since December 2021 and reached an 8-year high below the 1.1500 range. RSI (70.62) entered the overbought area for the first time since July 2008. However, poor market sentiment and fear over China’s economic outlook will be a test for AUDNZD. The PBOC has recently intervened several times in the market and is likely to do so again to defend the Yuan amid fears of an economic slowdown, caused by the lockdown.

AUDNZD, H2

AUDNZD,H2 – Intraday bias looks neutral for now, and a move to the upside could test the recent peak at 1.1488 or the multi-year peak of 1.1528 (2015). However, 1.1500 will make the bulls rethink their positions. In today’s Asian session trading, it was seen that the bears attempted to surpass the minor support of 1.1369, but this attempt has not been maximised.

Moving to the downside, it is likely to test the 1.1315 support before moving further to break the ascending trendline and resistance which is the support at 1.1255. The oscillation is now on the downside after the divergence created by the pair’s long liquidation attempt. Broadly speaking, it is likely that the pair will enter a consolidation phase before deciding on the next trend.

Click here to access our Economic Calendar

Ady Phangestu

Market Analyst – HF Educational Office – Indonesia

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Bank of England spends £65bn to “restore orderly market conditions”

The Bank of England has said it will spend £65bn buying bonds to stabilise the financial markets after the government’s mini-Budget. Saloni Sardana explains what’s happening.

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Investment Bank Outlook 29-09-2022

BNY MellonBOE: Avoiding UK Mortgage MayhemThe Bank of England went to great lengths Wednesday to stress that its intervention in Gilt markets is purely a financial-stability-related operation. The time-limited and targeted nature of the purchases is clearly different from the operational parameters of quantitative easing or yield curve control. Coupled with the fact that it was the Financial Policy Committee (FPC) which initiated the process that led to the purchase programme, the BoE will likely attempt to reassure markets that this is not a reversal of its willingness to tighten policy. For now, markets are unlikely to see things that way – a reversal of quantitative tightening and short-term expansion of the BoE's balance sheet may weigh on sterling. We think there is every chance that the Gilt purchase programme will be extended if fixed income volatility remains high. Market participants have long since abandoned efforts to push back against largescale asset purchases in government bond markets. The divergence in UK financial conditions against those in the US in particular means that the collapse in the relationship between front-end rate spreads and GBPUSD appears set to continue.Media reports Wednesday suggested that the Bank of England acted due to concerns that the recent selloff in Gilts would leave many liability-driven investment (LDI) managers facing margin calls and lead to more forced sales of UK government paper; we expect the FPC to address the reasoning behind its decision in due course. We concur with the view that further volatility in the Gilt market would have led to sustained dysfunction in sterling fixed income markets, leading to material damage to the real economy.Sterling weakness is one tangible manifestation of the uncertainty, but we believe the FPC and MPC would have been equally concerned about the state of the mortgage market. By Tuesday morning, the number of mortgage products available had shrunk by a third from the previous Friday before the budget was announced; originators were simply unable to adequately price their products. At the pace products were being withdrawn, the UK real estate market was staring at a sudden stop that would have devastating consequences for the economy.As of Tuesday afternoon, products were still being withdrawn so this risk has not gone away. In the UK, an agreed mortgage offer is normally valid for between three to six months. However, with the prospect of very aggressive BoE rate hikes well within that time frame hanging over markets, providers simply had no visibility over their pricing or valuation accuracy and decided to pause offerings altogether.We doubt that the BoE’s actions Wednesday will be enough to calm the market. We also expect market pressure to force the Treasury to bring forward the full fiscal plan for the budget and associated independent forecasts by the Office for Budget Responsibility (OBR). Once clarity is established and the BoE's interest-rate curve has adequately repriced, mortgage products should be brought back online. Until then, the BoE will need to engage in quantitative operations to limit interest-rate volatility. We would also not rule out specific funding measures to support the mortgage market.

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Daily Market Outlook, September 29, 2022

Daily Market Outlook, September 29, 2022 Overnight Headlines Fed's Evans: Fed Must Press On Despite Global Market Volatility Biden Tells Econ Team To Stay In Touch With Allies On Markets US Treasury Alarmed At UK Economic Chaos Unleashed By PM BoE Response Highlights ‘Impossible Trinity’ Of Liquidity Issues Pressure Builds On Kwarteng As UK Tories Slam Economic Plans China's Covid Worries To Take Shine Off Golden Week Holidays PBoC Speculation Warning Sparks First Yuan Gain In Nine Days Citadel's Founder Griffin Warns Economy Has Powerful Tailwind World Bank Sees Risk Of Stagflation, Likely Recession In Europe EU Plans Russia Import Bans, Tech Curbs Over Putin Land Grab Pressure Builds On Kwarteng As UK Tories Slam Economic Plans Sterling Slips Back Alongside Euro On Persistent UK Fiscal Angst Turkey’s Erdogan Aims For Interest Rate In Single Digits This Year Amazon Raises Hourly Wages At Cost Of Almost $1 Billion A Year Gold Drops After BoE Move Spurs Biggest Jump In Over Six MonthsThe Day Ahead Asian equity markets are mostly up this morning following rises in Europe and the US yesterday. That may be a sign that the announcement by the Bank of England that it is delaying the start of active sales of gilts and instead would buy gilts in an attempt to calm UK markets had an initial wider impact. Indeed, some market participants have speculated that central banks may now feel the need to slow the pace of monetary policy tightening because of concerns about the impact on markets. However, there was little sign of that in comments by central bank officials yesterday as both US Federal Reserve and European Central Bank officials pointed to the likelihood of further interest rate hikes. Today’s UK money supply and bank lending data for August may look dated given recent developments. In particular the numbers on mortgage activity will not reflect the impact of last week’s move on stamp duty, the most recent fluctuations in interest rate expectations or this week’s announcements by some lenders about changes to the availability of products. Consequently, it may have little impact on markets. German September CPI data may provide some clues on tomorrow’s outturn for the Eurozone as a whole. Annual headline inflation is expected to have risen sharply from its August rate. Meanwhile, September business confidence readings for the Eurozone are forecast to have weakened in line with recent evidence from business surveys. Early tomorrow the September Lloyds Business Barometer will provide an update on UK business confidence. The headline reading has declined in recent months as companies have become more nervous about both the general economic situation and their own prospects. Meanwhile there have been some signs of wage and price pressures easing. The data was collected before last week’s moves on fiscal and monetary policy but should capture the initial impact of the announcement on the cap on energy prices. There are a lot of scheduled speeches from central bank policymakers today including some from Bank of England officials. BoE Deputy Governor Ramsden is supposed to be talking about ‘real time’ data and so may not touch on recent economic developments, but external Monetary Policy Committee member Tenreyro will discuss inflation developments.FX Options Expiring 10am New York Cut EUR/USD: 0.9700 (201M), 0.9720-25 (1.4BN), 0.9750 (1.45BN), 0.9780 (275M), 0.9810 (435M) USD/JPY: 144.25-28 (310M), 144.90-00 (1.07BN), 146.00 (301M) USD/CHF: 0.9700 (365M), 0.9900 (1.1BN) EUR/CHF: 0.9380 (649M) EUR/GBP: 0.8825 (679M) AUD/USD: 0.6610 (1.02BN), 0.6640-50 (496M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.00 EUR/USD – Bullish outside day, as yield spreads tightened -0.15% after closing up 1.5%, supported by the lower USD, as risk recovered BoE calmed markets, pledging to restore order by buying gilts ECB policymakers are becoming hawkish - 75pt Oct hike viable Yield spreads supported EUR - bund 10yr -10bp 2.155%, 10yr UST -23bp 3.737% 20 day VWAP bands fall - bearish setup, as over sold signals unwind Early EZ 0.9535 low and NY 0.9751 high are initial support, resistance 0.9720/25 795mln are the only close strikes for Thursday 20 Day VWAP bearish, 5 Day bullishGBPUSD Bias: Bearish below 1.10 Soft after a bullish outside day, as BoE buys time Off 0.5% early after closing up 1.4%, as BoE bought bonds BoE acted and markets have recovered, but the moves will only buy time Credible UK government policy needed to reverse the sterling downtrend PM Truss is facing growing pressure from Conservative MPs to sack Kwarteng August UK car output climbed, soaring costs to fuel inflation Bullish outside day unwinds oversold signals seen earlier this week 1.0706 lower 20 day VWAP band and 1.10 initial support, resistance 20 Day VWAP is bearish, 5 Day bullishUSDJPY Bias: Bullish above 140 Bid after Wednesday's fall as UST yields open higher +0.2% early after closing down 0.5% with the U.S. dollar broadly lower Yield spreads narrowed as UST yields slumped, 10yr -23bp - opens +3bp 3.737% Foreign investors net sellers of Japanese shares last week... Positive Asian markets - Nikkei +0.7%, AsiaxJP +0.7%, E-mini S&P flat BoJ intervention - now pivotal 141.04 support Psychological 145.00 first resistance, then pre intervention 145.90 high NY 143.91 low, then 143.10 are initial supports 20 Day VWAP is bullish, 5 Day bullishAUDUSD Bias: Bearish below .6750 Pares gains as bearish sentiment remains entrenched AUD/USD down 0.6% in Asia as risk recovery runs out of steam Bearish sentiment remains entrenched as Fed hawkish talk continues Sellers rush to take advantage of 1.3% rally from 29-month low of 0.63635 BOE steps to stem risk rout, China verbal warnings taken in stride UST yields drift higher after sharp pullback, GBP drops 0.9%, undermine AUD Australia monthly CPI measure slows slightly to 6.8% y/y in Aug Asia range 0.6522-0.6471; support 0.640, 0.6445-50, resistance 0.6540-50 20 Day VWAP is bearish, 5 Day bearishBTCUSD Bias: Bearish below 25.3K BTC continues to rotate around 19k Bank of England bond intervention... helps sink global yields US rate drop leads to broad based USD selling, risk rally Encouraging words for crypto from Stanley Druckenmiller Daily bull hammer forms BTC is still down ~58.5% so far this year First resistance sited at 21k support now see at 18k 20 Day VWAP is bullish, 5 Day bullish

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Market Update – September 29 – Sterling & Stocks drift as BoE boost fades

• USDIndex – tumbled at 112.43 after the BoE’s actions ( worst session in 2.5 years). Today it found some ground edging towards 113.35, buoyed by renewed pressure on the pound.
• Yields: UBoE’s announcement that it will buy up to GBP 5 bln a day for 13 days in a bid to stabilise markets bruised by the government’s mini-budget may have helped Gilts and wider bond markets to recover somewhat yesterday, but while Australia and New Zealand bonds rallied in catch up trade, yields are already rising again in Europe and the US. Record surge in Gilts where the 30-year rate plunged an historic 105 bps to 3.913%, unwinding the better than 130 bp selloff to a 5.135% high. The 10-year Gilt crashed 50 bps, the most since 1992, to 3.999%.

While intervention supported Gilts, Treasuries rallied on haven demand amid global investor jitters, bargain hunting, a solid 7-year auction, and a month-end bid. 

• GBP remains volatile as BoE presses panic button. Sterling rallied on the BoE’s initial announcement of bond purchases, but Cable has since settled at 1.08 area as the rapid switch from scheduled asset sales to “temporary” bond purchases has not really helped to instill confidence in the currency. 
• EUR – returned to 0.9665.
• JPY traded at 144.70.
• Stocks:  The 1.96% bounce to 3718 in the US500 snapped a six-day string of losses, the worst since February 2020, as the index climbed off of Tuesday’s 3647, a new 2022 low. Strength was broadbased with energy climbing over 4%. The US100 jumped 2.05% to 11,051, and the US30 rose 1.88% to 29,683.
• USOil up to $81. Goldman Sachs cut its 2023 oil price forecast, citing expectations of weaker demand and a stronger USD. China’s travel during the upcoming week-long national holiday is set to hit the lowest level in years as Beijing’s persistent zero-COVID rules prompt people to stay at home and economic woes dampen spending. Citi economists have lowered their China GDP forecast from 5% year-on-year growth to 4.6% for the fourth quarter of 2022.
• Gold – after some buying retreats to $1647.
• BTC – at 19375.
• Today: German Inflation, ECB’s Panetta, de Guindos, Elderson and Lane speech, US GDP and Jobless claims.

Biggest FX Mover @ (06:30 GMT) NZDUSD (-1.05%) back to 0.5655. Intraday fast MAs aligning lower, MACD histogram & signal line are turnign to 0, RSI at 2342, H1 ATR 0.00173, Daily ATR 0.00953.

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Bitcoin And S&P 500 Are on The Rise

Bitcoin keeps testing the supporting level of 19000 without breaking it. Bitcoin is still likely to pull away from the support and target the level of 22000 next.Having formed the new minimum, gold is trying to recover. So far, this asset is likely to approach the level of 1735, which is located next to the downtrend and broken downtrend denoted by the blue line on the monthly chart. Gold might potentially pull from the crossing point of these trendlines and drop.American stock index S&P 500 has pulled away from the supporting level of 3639.00. The asset was trying to close the trading day by engulfing and thus signifying the potential growth. However, should the asset head north, it might have to face the broken local uptrend denoted by points 1 and 2 on the chart below.

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How the mini-Budget tax cuts will affect you

Chancellor Kwasi Kwarteng's mini-Budget was full of tax cuts that will change your take-home pay

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3 funds to invest in Japanese value stocks

Japanese stocks have fallen out of favour with investors, but they are looking ripe for recovery, says Max King.

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Live Analysis | 28th September 2022

Haven demand is helping boost Treasuries amid worries over a financial crisis in the UK, exacerbated by the BoE’s decision to purchase longer dated Gilts. The further dive in equities is adding to the flow into Treasuries. The market was also looking oversold.

The front end of the curve is outperforming in a classic move with the 2-year yield down 16 bps at 4.125%. Yesterday’s richening broke a record string of 13 straight sessions of higher rates. The 7-year is down 9.5 bps to 3.995%. The 10-year has richened 6.5 bps to 3.880% after testing 3.99% Tuesday. It has not closed with a 4-handle since December 2007. The bond is down 2 bps to 3.806%. The traditional haven, gold, is also firmer, up 0.38% to $1635.

Meanwhile, Wall Street has bounced from earlier losses and is mixed. The US30 future is up 0.47%, with the S&P 0.27% higher, while the US100 is down -0.11%. The USDIndex has been all over the board, though inside a relatively narrow range. Currently it is at 114.259, heading back toward the 114.08 low, having slide from the intraday peak of 114.778. Along with the tumult in the UK, the buck benefited from news out of the White House that suggested there would be no currency agreement to cap the ascent of the greenback.

 

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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GBP Stabilises Following Sharp Losses As IMF Criticises UK Tax-Cuts

GBP Finds Equilibrium - For Now Following the heavy volatility we saw in GBP on Friday and Monday, price action has since stabilised. In GBPUSD in particular, price plunged almost 5% on Monday before reversing around 70% of those losses. The market has since been underpinned by support at the 1.0646 level though looks vulnerable to further losses. In terms of deciphering the bounce off the lows, the move looks be mainly linked to large players simply looking to buy GBP at record lows. There have been reports of many sizeable players looking to secure GBP purchases given how far below its 5-year average it has fallen, and therefore not particularly indicative of the view that the currency is likely to recover near-term.Adverse Market Reaction To Mini-BudgetThe driver behind the fall itself was the market reaction to the mini-budget announced by the UK government on Friday. Chancellor Kwasi Kwarteng announced the removal of the highest 45% tax bracket in the UK, a reduction in stamp duty and a 1% reduction in income tax. Additionally, Kwarteng announced that the planned 1.25% increase in National Insurance tax will be scrapped.Looking at corporates then, Kwarteng removed the cap on bankers’ bonuses, put in place after the GFC, and has scrapped next year’s planned increase in corporation tax from 19% to 25%. In all, the new tax cuts would, according to the budget, be funded by fresh borrowing of £45 billion by the UK government.With GBP seeing its third worst day behind the COVID outbreak and Brexit referendum results, the market’s verdict on the “pro-growth” measures are quite clear. Critics have called the moves a disaster for the UK economy stating that the measures will simply add to the inflationary spiral currently gripping the UK, forcing the BOE to tighten more aggressively.BOE In Focus Indeed, with GBP sinking to record lows against USD, speculation of an emergency BOE rate-hike was rife on Monday. However, the BOE issued a statement saying that while it was monitoring the situation and did indeed have tools, and the willingness to use them, at its disposal, it would wait until the next scheduled BOE meeting in November to take action.IMF Criticises UK Tax-CutsThe IMF this week joined those criticising the UK government. The fund labelled the tax cuts excessive and urged a review of the measures, specifically those aimed at helping the highest earners in the UK. The IMF warned that the untargeted tax cuts would likely lead to greater inequality in the UK and would undermine monetary policy.In response to the situation, new PM Truss announced that the government would issue a statement on November 23rd adding further details to the budget and setting out a full fiscal plan. In the meantime, the new chancellor is undertaking meetings with investment banks aimed at gathering information ahead of that date.Technical ViewsGBPUSDThe market is trading almost a thousand pips below where it was last week. The break below the 1.1474 level is a major bearish development and while below there, the focus is on a further push lower. However, while the prior 1985 lows at 1.0539 hold, we are likely to see a period of range-bound activity while the market awaits fresh drivers.

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Hundreds of mortgage products withdrawn as interest rates surge

Hundreds of mortgage products have been withdrawn after sterling crashed to the lowest levels in decades against the dollar and the Bank of England said it wouldn’t hesitate to step in and raise interest rates further.

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Investment Bank Outlook 28-09-2022

BNY MellonReserve Import Cover Shows VulnerabilityAlthough August macro data for APAC countries in general showed continued deterioration, one relative bright spot was tentative signs of stabilization in economic conditions in China. Aside from declining credit growth (aggregate financing eased 0.2ppt to 10.5%), China's activity data otherwise was encouraging. Examples of recovery signs came from fixed asset investment (5.8% y/y, +0.1ppt), industrial production (3.6% y/y ytd, +0.1ppt), and infrastructure investment (8.3% y/y ytd, +0.9ppt). And the year-to-date growth rate in retail sales was back in positive territory. The biggest drag on China's economy, however, remains the property sector. Property investment declined further, to -7.4% (-1.0ppt), and average home prices across 70 cities dropped for a twelfth consecutive month (-2.1% y/y in August).Given ongoing efforts to ensure the implementation of policy measures already announced, we believe that China's underlying economic fundamentals should be able to withstand the complicated global environment – slowing growth momentum, aggressive tightening of monetary policies, substantial volatility in asset markets, etc.Slowing external conditions, reflected particularly in falling exports growth, along with domestic growth recoveries and high commodity prices (elevated import growth) have continued to exert severe stress on APAC trade balances. As discussed previously (here), the exports shock is an increasing concern. India's exports in August grew 1.6% y/y while imports surged 37.3% y/y. Likewise, South Korea: exports up 6.6% y/y while imports jumped 28.2% y/y. The Philippines' exports in July fell 4.2% y/y against imports rising 21.5% y/y. The repricing of global assets since the Federal Reserve's policy meeting last week has been significant. Alongside the market recalibrating a higher Fed terminal rate, the 2y US Treasury yield has spiked over 20bp since the meeting (up 75bp on the month) to around 4.30%. Aggressive tightening of Fed policy raises risks of a growth slowdown, which, in turn, exerts downside pressure on equity and bond prices. EM and APAC FX have additionally suffered on concerns around capital outflows. The chart and table below show APAC asset price changes since the beginning of the month, as well as FX volatilities in the region.FX volatility plays a key role in the stability of financial markets across APAC. A weak currency would not only raise the prospect of inflationary pressure in the medium term but also, and crucially, run the spillover risk of triggering capital outflows from other assets.

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EURGBP pivots around the key 0.9000 level

Bank of England Chief Economist Huw Pill stated that the BOE is ready to make a strong policy response at its November 3 policy meeting, in a bid to calm the battered UK bond market and Sterling. The comments helped prop up Sterling and saw it recover from record lows against the Dollar and Euro, which were hit during Monday’s massive sell-off.

As investors demand higher compensation for holding on to UK government debt, the recent decline in the value of the Pound has been accompanied by an increase in UK bond yields. The yield on the 10-year gilt on Tuesday hit an almost 14-year high of 4.537%. This demand comes in response to last Friday’s tax cut announcement from Chancellor Kwasi Kwarteng.

There are growing fears that the world economy will enter a recession, amid tax cuts and guarantees that billions of pounds of energy prices will be paid for by issuing more debt.

The BOE is committed to bringing inflation back to 2.0% and will raise interest rates to slow the economy down. In light of rising inflation expectations, the market is now pricing in a 200bp hike over the rest of 2022.

Meanwhile, the EURGBP exchange rate remains vulnerable amidst a deteriorating global backdrop largely a result of rising US interest rates. Rising interest rates have increased the cost of money globally, reducing borrowing and economic activity. Falling stock markets and commodity prices are evidence of this slowdown, as is the soaring US Dollar. This unhelpful backdrop is likely to keep UK assets under pressure and Sterling will struggle longer.

EURGBP’s intraday bias remains neutral at the moment. The latest rally to 0.90 area turn the 0.8720 resistance into support. A move above 0.9250 will target the 0.9500 long term resistance. However, a break of the 0.8270 support will cloud the near-term outlook. For now, trading within the range is likely to remain in force and the 0.9000 round figure mark will be the middle price traders are watching.

Click here to access our Economic Calendar

Ady Phangestu

Market Analyst – HF Educational Office – Indonesia

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Weekly Market Update: 27 September 2022

U.S Dollar heads into the new week renewing 20-year highs.

Dollar

The Dollar begins the week on the front foot, refreshing its 20-year highs as risk aversion intensifies in the global markets. Key drivers thus far have been comments from various FED members, which indicate their proclivity towards maintaining their hawkish stance to keep fighting record high inflation. Other key elements adding to the risk aversion is the increasing realisation from other central banks around the world, that they might need to take some action to defend their respective currencies from a rampant Dollar.

Technical Analysis (H4)

In terms of market structure, price action printed out a bullish continuation pattern in the form of a bull flag around the 109.00 range and subsequently printed out an impulsive wave. Current price action is locked in a range between the 113.06–114.30 area, where a significant break above will see bulls continue to drive price, or a break below will give sellers an opportunity to test the 111.00 area.

Euro

The Euro kicks off the week under significant pressure as it attempts to pull back from fresh 20-year lows. The renewed buying interest can be attributed to the latest hawkish comments coming from ECB officials as well as Christine Lagarde saying, “we expect to raise interest rates further over the next several meetings”. Additionally, the prospect of easing the energy crisis in the bloc with a delay on the proposed price caps of Russian oil imports has relieved some of the pressure on the currency as hopes of a stable energy plan take centre stage. Going forward key drivers will continue to be the divergence between the FED and ECB as well as geopolitical effervescence and macroeconomic data.

Technical Analysis (H4)

In terms of market structure, price action printed out a bearish continuation pattern in the form of a bear flag around the 1.00 range and subsequently printed out an impulsive wave to the downside. Current price action is locked in a range between the 0.970–0.955 area, where a significant break above will see bulls challenge the 0.948 area, or a break below will give sellers an opportunity to drive price even further down.

Pound

Sterling begins the week rebounding from record lows amid fears of a “mismanagement of the UK economy” under the newly formed Tory government. The fears are centred around proposed tax cuts as well as a new energy bill which could potentially increase the rate of inflation and general debt incurred by the government. With that being said, there are speculations of an emergency rate hike by the BoE to alleviate some of the pressure on the currency, and investors have priced in roughly 175 basis points of hikes by November.

Technical Analysis (H4)

In terms of market structure, price has been in a downtrend, printing bearish continuation patterns to the downside with lower-lows and lower-highs. Current price action is locked in a range between the 1.093–1.033 area, where a break below will see sellers continue to drive price potentially towards parity, conversely a break above will put buyers in line to challenge the 1.134 area.

Gold

Gold heads into the new week bouncing from a 29-month low as investors eye the pullback from the Dollar. The yellow metal remains bearish as investors await comments from FED chairman Jerome Powell as well as data in the form of Consumer confidence for the month of September for further fundamental impetus.

Technical Analysis (H4)

In terms of market structure, price action has confirmed the formation of the bear flag that formed around the $1 672 range by yielding an impulsive wave to the downside. Henceforth, buyers could retest the lows of the broken pattern around the $1 660 area or bears could continue the path of least resistance and keep moving price southbound

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Daily Market Outlook, September 28, 2022

Daily Market Outlook, September 28, 2022 Overnight Headlines Moody's Warns UK Unfunded Tax Cuts Are 'Credit Negative' IMF Tells UK To Re-Evaluate Tax Cut As Global Criticism Mounts UK Price Inflation In Shops Hits Record High As Pound Tumbles Treasury 10-Year Yields Rise Above 4% In First Time Since 2010 Poll: Fed To Take Rates Even Higher With Further Pain Ahead Fed’s Kashkari Says Rate-Hike Pace Appropriate To Cool Prices White House’s Deese Doesn’t See Another Plaza Accord Ahead White House Mulling Potential Yellen Departure After Midterms Senate Advances US Funding After Manchin Drops Energy Bid BoJ Board Agreed On Need For Vigilance On Sharp Yen Moves Putin Raises Gas Pressure As Moves To Annex Ukraine Regions EU Warns Against Attacks On 'Active Infrastructure' After Leaks Apple Ditches iPhone Production Increase After Demand Falters China's Offshore Yuan Hits Record Low Against Strengthening Dollar Oil Tumbles As Dollar Hits Record In Fresh Blow To Commodities US Futures Fall After S&P 500 Hits New Low For The YearThe Day Ahead Asian equity markets came under renewed pressure and the US dollar strengthened against other major currencies. Treasury yields climbed further after hawkish Fed comments and some strong US data including a rise in consumer confidence. The White House also reportedly played down prospects of a 1985 Plaza-type agreement to weaken the dollar. Regarding the UK, the IMF said fiscal policy should not “work at cross purposes to monetary policy”. Data from the British Retail Consortium showed another record rise in shop prices in September. In the absence of significant economic data releases, especially in Europe and the UK, the focus will remain on several central bank speakers today. In the UK, yesterday saw comments from BoE MPC member and Chief Economist Huw Pill who said there will be a “significant monetary policy response” to recent developments. Fellow rate-setters Deputy Governor Jon Cunliffe and new external MPC member Swati Dhingra are due to speak today. The BoE’s Cunliffe will speak on payment systems rather than the economic or monetary policy outlook. This evening, Dhingra will chair a panel with Chicago Fed President Charles Evans on inflation and monetary policy. Dhingra dissented at her first policy vote last week in favour of a smaller 25bp hike, rather than the majority 50bp, putting her at the most dovish end of the spectrum. There are also several scheduled ECB and US Fed speakers today as well, as the two central banks prepare to increase interest rates further in response to high inflation. Ahead of this Friday’s Eurozone flash CPI inflation figures, which are expected to show a rise to a record high, ECB President Lagarde will participate in a ‘keynote fireside chat’ this morning. Fed Chair Powell will also give welcome remarks at an event today. US advance trade data and pending home sales will draw some attention in the afternoon session. The goods deficit is forecast to narrow slightly, while pending home sales are expected to fall as rising interest rates dampen housing activity.FX Options Expiring 10am New York Cut EUR/USD: 0.9650 (302M), 0.9725-30 (444M) USD/JPY: 143.40-50 ( (431M), 143.94-00 (263M), 145.00 (554M) EUR/JPY: 138.00 (401M). USD/CHF: 0.9890-00 (830M) AUD/USD: 0.6285 (200M, 0.6495-05 (594M) USD/CAD: 1.3760-65 (1.28BLN)Technical & Trade ViewsEURUSD Bias: Bearish below 1.00 Under pressure as USD buying picks up steam in Asia EUR/USD down 0.45% as USD bid across the board - led by GBP/USD Equities pressured as negative feedback loop between USD and equities bites US 10-year yield testing yesterday's 3.9930% high and underpinning USD E-minis down 0.45% while AXJ equity index down over 1.5% EUR/USD below Tuesday's 0.9570 low with support at Monday's 0.9528 low Bids are tipped ahead of 0.9500 with talk of stops below 20 Day VWAP bearish, 5 Day bearishGBPUSD Bias: Bearish below 1.10 Heavy, scepticism on UK pro growth policies resurfaces Off 0.5% as sterling sellers return, with EUR/GBP up 0.2% White House's Deese - UK economic plans need 'fiscal prudence' Moody's warns UK unfunded tax cuts are 'credit negative' Headlines underline markets scepticism with UK's pro growth mini budget Tuesday's 1.0650 low and early Asian 1.0737 top initial support, resistance 20 Day VWAP is bearish, 5 Day bearishUSDJPY Bias: Bullish above 140 Yen shows broad strength, as risk appetite sours Risk off in Asia, in response to surging yields on Tuesday in EZ and U.S. Nikkei -1.85%, AsiaxJP stocks -1.4% and E-mini S&P futures -0.55% Yen shows broad strength, as Japanese investors repatriate USD/JPY -0.1%, EUR/JPY -0.5%, GBP/JPY -0.75% and AUD/JPY -0.8% Pivotal 141.03 now major support Psychological 145.00 first resistance, then pre intervention 145.90 high London 144.06 low, then 143.10 initial supports 20 Day VWAP is bullish, 5 Day bullishAUDUSD Bias: Bearish below .6750 New low as USD firms – muted reaction to better Aus data AUD/USD eased to 0.6411 before Aus retail sales better than expected It is the lowest traded since May 2020 - as yesterday's low was 0.6413 Muted reaction to the better retail sales as USD broadly firmer in Asia AUD/USD looks vulnerable after clearly breaking important fib at 0.6463 There isn't much in the way of support until weekly lows at 0.6235/50 20 Day VWAP is bearish, 5 Day bearishBTCUSD Bias: Bearish below 25.3K BTC gave up a +5% gain to close negative and sub 19k on the day BTC is still down ~58.5% so far this year CFTC - BTC specs +451 contracts, long rises to 577 contracts; BTC -6.23% in period Crypto Exchange FTX President Brett Harrison Stepping Down Crypto billionaire Bankman – Fried eyeing bid for Celsius assets - BBG First resistance sited at 21k support now see at 18k 20 Day VWAP is bullish, 5 Day bullish

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Market Update – September 28 – Renewed selling

• USDIndex – breaks range and tops at 114.63. Economic data on confidence, durables, home sales, and the Richmond Fed index were stronger than expected, while home prices declined and broke a long string of gains.
• Yields:  A tweet from DoubleLine Capital’s Gundlach that he was buying Treasuries provided some support along with dip-buying and safe haven demand. The 10-year Treasury yield ended over 5 bps higher, testing 3.99% after having dropped over 10 bps to a low of 3.797%.
• GBP in a renewed selling, UK bonds sold off sharply yesterday a third day of turbulent trading, Yields on US bonds higher and US stocks to the lowest level since 2020.  10-year gilt on Tuesday rose 26% to hit a 14-year high of 4.5% after the Bank of England’s chief economist Huw Pill said the loosening of fiscal policy announced last week would “require a significant monetary response”.
• Kwarteng met the heads of companies including Aviva, Legal & General, Royal London, BlackRock, Schroders and Fidelity, to reassure them that his economic strategy would work after days of turmoil in financial markets. Later spoke to Conservative MPs to calm fears that the government had lost control of the economic situation.

• IMF criticise Britain’s new economic strategy, saying the proposals are likely to increase inequality. Moody’s warned that unfunded tax cuts were credit negative.

• EUR – fresh low at 0.9540.
• JPY traded at 144.70.
• Stocks: closed mixed with the US100 managing a 0.25% gain, while the US30 declined -0.42%, with the US500 sliding -0.2% to 3647.
• USOil steady at $77 .The energy crisis in Europe intensified as European authorities investigated what Germany, Denmark and Sweden said were attacks which had caused major leaks into the Baltic Sea from two Russian gas pipelines.
• Gold – drifted to $1619.97.
• BTC – slide back to $18K area, as stocks fell deeper into a bear market. Ether was also down by less than 1%. – “crypto winter”  ?

Biggest FX Mover @ (06:30 GMT) AUDJPY (-0.77%) extemds outside daily BB. Intraday fast MAs aligning lower, MACD histogram & signal line are negative, RSI at 23, H1 ATR 0.218, Daily ATR 1.166.

Click here to access our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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The best student bank accounts

As we approach the start of an academic year, Ruth Jackson-Kirby rounds up what you should look for when choosing a student bank account and outlines some of the best deals.

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Technical update – Sterling Grosses

Sterling has seen sharp falls in most pairs, some with runs of over 1000 pips from their highs and some with 800 pips today alone. This is in the wake of the mini-budget reported on Friday, which is casting doubt on the UK’s economic future and causing investors to question the decisions of its new government and the BoE.

Today, the country’s largest mortgage lenders have suspended and withdrawn new mortgage deals thanks to rising costs for lenders due to the new tax cut announced last week by the new finance minister, Kwasi Kwarteng, which in turn pushed bond yields higher.

This is in addition to several disappointing economic data which you can read in this previously published article.

EURGBP – $0.8944

The EURGBP price has soared from the lows of 0.8686; after being range bound for several days in a bullish channel, it rose more than 500 pips and the price made a high of 0.9254, testing the Sep 2020 highs. The price has trimmed gains testing the 61.8% Fibo level at 0.8906 but closing just below the psychological level of 0.9000 which will act as a buy or sell signal.

The next highs are the March 2020 highs at 0.9496 followed by the October 2016 highs. Supports are at the 20-period SMA (H4) at 0.8850 along with the broken channel guideline, followed by the 88.6-78.6 range at 0.8753-0.8809 along with the 50-period SMA (H4) at 0.8785. Lows at 0.8689. 200-period SMA (H4) is at 0.8602. RSI at 55.76 after reaching 89.23.

GBPUSD – $1.0773

The GBPUSD price has accelerated its fall from the highs of 1.1737, dropping over 1400 pips and breaking the modern day lows of February 1985 at 1.0520, and trading at levels not seen since the Bretton Woods monetary system was abandoned in February 1972, making new all time lows at 1.0333.

Resistance is at the 38.2% Fibo level at 1.0869, followed by a range from the 20-period H4 SMA which crossed the 1.10 level to the 50% Fib. at 1.1035 and then the 61.8% Fibo along with the psychological level at 1.1201 and the 50-period SMA at 1.1239. Regarding supports, there is only the current historical low which is likely to be broken and the psychological levels up to parity at 1.00 which is the key level in focus. RSI at 39.87 after being oversold.

GBPAUD – $1.6610

The GBPAUD price fell sharply lower after ranging from 1.7100-1.6895, retracing more than 1000 pips lower and making lows at 1.5915, prices not seen since March 2017.

Current resistances are at the 61.8% Fibo level at 1.6650, the 20-period SMA at 1.6746, followed by the 88.6% Fibo level at 1.6968 near the base of the range and the psychological level of 1.7000. Support levels after the current range of 1.5915-1.6000 are at 2016 lows at 1.5361, 2013 lows at 1.4379, 1985 lows at 1.3606 and historical lows are at 1.2781 from 1976. RSI at 44.40 flat after recovering oversold.

GBPCAD – $1.4742

The GBPCAD price made new all time lows at 1.4075 after falling more than 1200 pips from multi-day range highs at 1.5297, breaking past all time lows at 1.4559 of February 1985. The price has recovered the historical lows of 1985 and has resistance at the 61.8% Fibo at 1.4831. The 20-period SMA is at 1.4905, the base of the range at the 78.6% Fibo is at 1.5000-1.5036.

GBPJPY – $155.574

The GBPJPY price accelerated its fall from 167.15 highs to 148.92 lows, a price not seen since July 2021. The price has recovered from the 150.00-155.00 level and remains below the 38.2% Fibo at 155.88. Resistance is at the 20-period SMA at 157.36, the 50% Fibo at 158.03, and the psychological level of 160.00. Support is at 148.92-150.00 area. RSI flat at 41.91 after recovering oversold.

GBPNZD – $1.8960

The GBPNZD price was in a bullish channel since early September where it made a high at 1.9380 but failed to hold the level and fell sharply over 1200 pips to a low at 1.8158 (2018 lows), but trimmed losses at the close of today’s session.  Resistances are at the psychological level of 1.9000 which can be used as a watershed between buys and sells, followed by the 20-, 100- and 200-period SMA.

GBPCHF – $1.0667

The GBPCHF price accelerated its downtrend for the year and fell over 900 pips breaking last year’s lows at 1.1118 and making new lows at 1.0179, prices not seen since November 1976.

Resistance is at the 61.8% Fibo and 20-period SMA at 1.0777, followed by the 50-period SMA and 78.6 Fib. at 1.09110-1.093397 and the psychological 1.1000 level. The break of the latter leaves no support apart from today’s new low and the 1.0500 level.

Click here to access our Economic Calendar

Aldo Zapien

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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The IndeX Files 27-09-2022

Equities Attempting Recovery Following Heavy Monday LossesGlobal equities benchmarks have seen a mixed start to the week with most indices finding their feet today after heavy selling across Monday’s trading. The ongoing rise in USD on the back of last week’s FOMC meeting has had a heavy downward impact on equities prices. With the Fed acknowledging that elevated inflation is here to stay for longer than first thought, the market has done away with any near-term idea of a Fed-pivot. Instead, hawkish expectations have become entrenched with many players now suggesting .75% hikes will be the new .25% hikes as the Fed battles inflation.With a slew of central banks having hiked rates in recent weeks, global bond yields have been on the rise, adding further pressure to equities markets. Recessionary fears have taken centre stage in recent weeks. Price action in GBP over the last two trading days highlights the level of nerves in the market currently. While equities prices are stabilising a little today, amidst a softer start for the US Dollar, downside risks remain key. Powell speaks later today and his comments have the potential to turn equities lower again if the Fed chair is seen adding further details to his concern over the inflation outlook. The latest US consumer confidence report due today is also likely to add to bearish sentiment for equities traders while traders will also be watching the latest durable goods numberTechnical ViewsDAXThe breakdown below the 12462.59 level, marking new lows for the year, is a significant development for the market. While below this level, and with MACD and RSI bearish, the focus is on a further push lower towards the 11590.13 level next. Back above, and 13067.45 is the first resistance for bulls.S&P 500The breakdown below the 3910.00 level in the S&P has seen the index plunging back towards the yearly lows around 3647.00. While bulls can defend this level, there is potential for a rebound. However, price action remains a heavy and a break down towards new lows and next support at 3534.75 is the big risk.FTSEThe sell of fin the FTSE has seen the market hurtling down towards the 6994.2 level. Price briefly pierced below the level before trading back above and, while this support holds, a rebound to 7213.9 is viable. Should we break lower, however, in line with bearish MACD and RSI, the 6827.3 level and bear channel lows, is the next support area to watch.NIKKEIThe sell-off in the Nikkei has seen the market breaking through the 27422.9 level and trading down o test the rising trend line from year to date lows and the 26246 level support. While this level is holding for now, bearish MACD and RSI suggest risks of a further move towards 25500.5 next.

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