Daily Market Outlook, October 4, 2022

Daily Market Outlook, October 4, 2022 Overnight Headlines UN Calls On Fed, Other Central Banks To Halt Interest-Rate Increases Fed's Barkin: Permanent Shifts In Inflation Could Mean More Volatile Policy Fed's Williams: Fed Is Cooling Inflation But Underlying Pressures Still Strong BoE's Mann: Concerned About Upward Drift In Inflation Expectations UK Chancellor To Bring Forward Debt-Cutting Plan After Tax U-Turn Some Of Truss’s Top Team Say Her UK Project May Already Be Over Climbdown On 45pc Tax Doesn’t Change ‘Negative’ Outlook For UK, Warns S&P US Seeks To Further Restrict Cutting-Edge Chip Exports To China Consumer Prices In Japan's Capital Rise At Fastest Pace Since 2014 RBA Surprises Market With Quarter-Point Hike, Currency Tumbles N.Korea Fires Missile Over Japan, Sparking Warning Messages Crypto Could Threaten Financial System, Federal Risk Panel Warns Biden Administration Urges Congress To Speed Up Crypto Rules Aussie Bond Yields Challenge Gilts For The Biggest Drop Oil Forges Higher As Traders Expect OPEC+ To Deliver Supply Cut OPEC+ Scraps Technical Meeting Ahead Of Key Meeting Of Ministers Australia Stocks Jump After Smaller Rate Hike; Asia Markets Rise Boeing Does Not Expect FAA Approval For Max 10 Before Summer 2023The Day Ahead Asian equity markets are mostly up sharply this morning. That follows a big rise in US stocks yesterday and somewhat smaller gains in Europe. Some reports have said that the moves were supported by weak US economic data boosting expectations that interest rates may not have much further to climb. The Australian central bank hiked interest rates by 25 basis points at its latest policy update below expectations for another 50bp increase. Meanwhile, media reports suggest that the UK government may bring forward the date for the release of its medium-term fiscal plan currently scheduled for 23rd November. There is no UK economic data of note today. The Conservative Party Conference continues but the next big event is PM Truss’s speech tomorrow. In the meantime, topics other than monetary policy may be discussed. In the Eurozone, producer price data for August will provide an update on pipeline inflationary pressures. The latest consumer price data for the single currency area showed a further rise in inflation as energy and food prices, and indeed prices more generally, continued to increase rapidly. Today’s update is expected to show that cost pressures remain intense. US factory orders are expected to have grown modestly in August. Already released data for durable goods orders showed a small fall due to a decline in the volatile transport sector. However, other orders rose and it is predicted that will also be the case for non-durable orders. European Central Bank President Lagarde is scheduled to speak at an event for students, and so seems unlikely to reveal anything new about the ECB’s plans for monetary policy. There are no scheduled speeches from Bank of England policymakers, but several US Federal Reserve officials are set to speak and markets will watch for clues on how much further interest rates will be raised at the upcoming November meeting. Early tomorrow, New Zealand’s central bank is expected to hike interest rates. Most forecasters are expecting a fifth successive 50bp rise taking the official cash rate to 3.5%. Looking further ahead, the consensus expectation amongst economists is that rates will peak at around 4.0-4.5% next year, while markets are priced for rates to reach 5% by May.FX Options Expiring 10am New York Cut EUR/USD: 0.9645-55 (2.1BLN), 0.9700 (609M), 0.9750 (676M) 0.9800-05 (679M), 0.9900 (388M) USD/JPY: 142.00 (445M), 143.00 (200M), 144.50 (417M) 144.70-75 (347M), 145.00 (567M) EUR/CHF: 0.9600 (210M) GBP/USD: 1.1300 (546M). EUR/GBP: 0.8800 (487M) 0.9000 (550M) USD/CAD: 1.3400 (480M), 1.3575-85 (395M)Technical & Trade ViewsEURUSD Bias: Bearish below 1.00 Edges higher in risk – on Asian session EUR/USD opened +0.23% at 0.9823 after lower US yields weighed on USD In a buoyant Asian session, EUR/USD traded in a 0.9806/46 range Heading into the afternoon it is trading around 0.9840 Asia was in a buoyant mood with Nikkei up over 2% and E-minis +0.45% Support is at 0.9758 and break renews downward pressure Resistance is 1.00 a break would suggest bottom in place 20 Day VWAP bullish, 5 Day bullishGBPUSD Bias: Bearish below 1.1250 GBP/USD up to test BoE hike day top pre – UK fiscal plan date Cable breaks 1.1365 before Kwarteng reveals new date for his fiscal plan 1.1365 was Sept 22 high (just before BoE's 50 bps hike) UK fiscal plan expected later this month vs originally scheduled Nov 23 date New date news follows Monday's UK tax U-turn, which lifted GBP Gilt market resilient despite 'major repricing' - DMO head 1.15 next upside hurdle 20 Day VWAP is bullish, 5 Day bullishUSDJPY Bias: Bullish above 140 Bid, but softer UST yields, intervention fears cap +0.15% towards top of 144.41-144.91 range - choppy consolidation extends Consumer prices in Tokyo +2.8%y/y - fastest pace since 2014 A week of lower UST yields and intervention fears are capping USD/JPY BoJ intervention - pivotal 141.97 support Monday's 145.40 high first resistance then September pre intervention 145.90 This week's 144.16 low then 143.10 are initial supports Broad 143.00-146.00 range viable this week unless there is major news 20 Day VWAP is bullish, 5 Day bullishAUDUSD Bias: Bearish below .6750 AUD/USD down 0.65% as RBA's less than expected 25 bps hike surprises traders Recovers quickly after falling to 0.6451 from day high of 0.6543 C.bank balancing risks to growth while fighting inflation taken as positive Cites deteriorating outlook for global economy as reason for smaller hike Response of AU households to sharply higher borrowing costs also a factor AUD rallies likely to be limited as Fed remains focused on inflation fight Break of 0.6540 strong resistance required to signal s/term low in place More resistance at 0.6570-75; support 0.6450, 0.6420-25, 0.6390-0.6400 20 Day VWAP is bearish, 5 Day bullishBTCUSD Bias: Bearish below 25.3K BTC testing offers towards 20k Crypto Could Threaten Financial System, Federal Risk Panel Warns Biden Administration Urges Congress To Speed Up Crypto Rules Fed: Even 'Safe' Stablecoins Might Pose Financial Stability Risk - CoinDesk UK Shuts Down Temporary Crypto Company Licensing Program - CoinDesk FTX's Head Of OTC And Institutional Sales Has Quietly Left The Firm First resistance sited at 21k support now see at 18k 20 Day VWAP is bullish, 5 Day bullish

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