Overall Market Sentiment: Cautious risk-on. Equities and high-beta FX lean firmer as markets price an October cut and Powell hints QT could end soon, while the BLS blackout keeps nerves taut until CPI drops on Oct 24.
Currency Outlooks
🔻 USD: Futures price an almost certain 25 bp cut on Oct 29 and decent odds of another by December. With CPI delayed to Oct 24 and Core PCE due Oct 31, the front end stays capped. August core PCE was +0.2% m/m, 2.9% y/y. The curve has re-steepened with 2s ~3.5% and 10s ~4.0–4.1% – about +50–60 bp on 2s10s – which usually fades dollar rallies when growth is wobbly. Key levels: EURUSD 1.1550 support, 1.1680 resistance. Nuance: a hot CPI would reprice the very front-end and squeeze the dollar.
🔺 EUR: France risk premium is easing at the margin – OAT-Bund ~79–80 bp – while the ECB stays patient. Sept flash HICP 2.2% and core ~2.3% keep year-end ECB easing limited, so EUR mostly trades the USD path unless French spreads re-widen. Levels: 1.1550 holds near term; a close above 1.1680 opens 1.1760. Watch EURCHF around 0.93 as a France-risk barometer.
⚖️ GBP: Sterling consolidates after softer wage data and a tick-up in unemployment; markets see ~40% chance of a December BoE cut. Direction remains USD-led. Levels: support 1.3250; resistance 1.3370–1.3400.
⚖️ CAD: The BoC cut to 2.50% in September; the Oct 29 decision is seen as a close call, with odds higher for another move by year-end. Oil in the high-50s to low-60s keeps CAD rallies contained. Bias is to sell USDCAD strength if WTI stabilizes.
🔻 CHF: SNB policy rate is 0%, with recent tweaks to sight-deposit remuneration; inflation is ~0.2–0.3% y/y. Safe-haven demand is milder as Fed easing looms and France calms, keeping EURCHF near ~0.93 and USDCHF heavy near ~0.80.
🔻 JPY: USDJPY sits just above 151 with intervention risk rising as 150–154 comes into view. The BoJ’s rate is about 0.5%, and policy normalization remains gradual, so the USD leg still hinges on U.S. front-end moves. Fade spikes toward 154 with tight risk; first support near 150.0.
⚖️ AUD: RBA held at 3.60%; swaps keep November as a live but coin-flip meeting. Australia’s Oct 16 AEDT labour force print will steer that pricing. AUD holds a constructive bias above 0.6450, with tests of 0.6600 if risk stays firm.
🔻 NZD: The RBNZ cut 50 bp to 2.50% last week and kept the door open to more easing. Q3 CPI lands Oct 20; softer prints would cap rebounds. NZDUSD bias is lower while below 0.6070.
Conclusion
🪙 Gold: Bid on softer USD and lower real yields, with fresh records above $4,100–$4,200 this week.
🛢 Oil: Downtrend persists with WTI ~$58–59 and Brent ~$62–63 on surplus fears; a sustained rebound is needed to lift energy-beta FX.
📈 Stocks: Relief bid continues as Powell hints QT end is in view and two cuts are priced; follow-through depends on Oct 24 CPI.
Week-ahead triggers: • Oct 16 AEDT Australia labour force. • Oct 20 NZ CPI. • Oct 24 US CPI. • Oct 29 Fed and BoC. Softer prints favor risk and weigh on USD; upside inflation flips that script.
