'Higher for Longer' or Safe-Haven Flight

A quiet start to the week on the data front, with only US Empire Manufacturing index due for release. The Fed's Harker (voter, dove) is scheduled to speak on economic outlook in the afternoon.

Strong Data Prints Could Unsettle the Delicate Balance at BoE

At the September meeting the BoE kept its bank rate unchanged at 5.25%. It was a very close call, reminiscent of past and more turbulent times at the BoE. Governor Bailey kept the door open to further tightening steps if there were to be evidence of more persistent inflationary pressures. However, the market is aware of BoE’s sclerotic stance in terms of delivering further rate hikes, and it is thus almost fully convinced that the tightening cycle has been completed.

NZD/USD Rises on Strong Services PMI

The New Zealand dollar has started the week with strong gains. In the European session, NZD/USD is trading at 0.5919, up 0.55%. It was a miserable week for the News Zealand dollar, which fell 1.74%, its worst weekly performance since August.

Bitcoin Locked in a Vice

From above, Bitcoin was subjected to a sell-off on the rise to its 200-week average and 200-day average but received new buyers on a dip to its 50-day average last week. Now, all eyes are on the ability to develop gains on rallies above $28K. Bitcoin seems to be sandwiched between two important moving averages. Our eyes are now on its momentum near those curves, and we are closely watching the behaviour near $28K.

Sunset Market Commentary

Dovetailing with risk appetite increasing at the start of the week, the US dollar is losing a few ticks against most peers. DXY drops from 106.648 to 106.4. EUR/USD rises from 1.0507 at the open to 1.054, around today’s highest. The greenback even loses marginally against the yen. USD/JPY is filling offers at 149.43. In the G10 zone, the Swedish krone is outperforming.

Dollar to Seek Direction from US Retail Sales as Yield Rally Stalls

The US economy has been chugging along quite nicely in 2023 despite hitting several bumps on the road and Fed policy becoming more restrictive than what many investors had anticipated at the start of the year. The Atlanta Fed’s GDPNow forecast model is estimating third quarter growth of 5.1% - that’s well above the recent average of just above 2.0%.

British Pound Eyes UK Employment Release

The British pound has started the week in positive territory. In the European session, GBP/USD is trading at 1.2166, up 0.17%. The pound had a rough week, falling by 0.74% after a hotter-than-expected US inflation report saw the US dollar climb sharply.

BTC/USD: Bitcoin Volatile on False SEC Approval of ETF

Bitcoin’s surge above $30,000 quickly disappeared after Blackrock refuted earlier reports that the SEC approved their spot Bitcoin ETF.  Cointelegraph earlier tweeted a Bitcoin ETF was approved and has since issued an apology and announced an internal investigation.  Blackrock was quick to correct the misinformation on CNBC.

USD/CHF: Dollar Softens Despite Surge in Treasury Yields

Price action on the USD/CHF daily chart is breaking below two key support levels, the uptrend line that started in early August and below the 200-day SMA.  King dollar might struggle for safe-haven flows against the franc.  If Treasury market liquidity concerns remain the primary driver for the bond market, the franc could rally towards the 0.8600 level.  Major upside resistance remains at the 0.9200 level.

Canada: Business and Consumer Sentiment Measures Weaken in Q3

According to the Bank of Canada Business Outlook Survey (BOS) Canadian business sentiment continued deteriorating in the third quarter of 2023. The BOS indicator, a statistical summary of survey results, was -3.51 in 2023 Q3, down from -2.15 in 2023 Q2. This is the indicator's lowest level in over a decade, except for a brief period early in the COVID 19 pandemic.