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By Swissquote Analysts
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Don’t get too excited by weakening EZ inflation!

The first set of inflation data from the Eurozone countries was mixed. Later this morning, we will find out the overall Eurozone inflation number for September. With a little bit of chance, the actual data will meet the soft market expectations, and strengthen the hand of the European Central Bank (ECB) doves. Yet this month’s figures should be taken with a pinch of salt.

The EURUSD tipped a toe below the 1.05 mark than rebounded on the back of a global retreat in the US dollar rally. The dollar retreated on the back of a soft set of economic data. Except from the light jobless claims report, the data showed that corporate profits didn’t improve as much as expected, real consumer spending slowed and the US GDP was revised marginally higher from 2% to 2.1%. The soft looking data led to some profit taking in the greenback. The dollar index retreated after a four-day rally that pushed it to the highest levels since November.

The US PCE, the Federal Reserve’s (Fed) favourite gauge of inflation is due before the week ends, and the US government shuts down. Core PCE may have slowed in August but the headline figure will likely reflect the rising gasoline prices, which could push the Fed doves out of the race.
On the US political scene, there was not much progress regarding the negotiations to avoid a government shutdown. The US government will more likely be shut from next week and strikes in Detroit will extend into another week,

In Japan, inflation came in slower than expected in September. If the US dollar rally wasn’t cooling, we would’ve seen the USDJPY go straight above the 150 level.

Watch the full episode to find out more!

Don’t get too excited by weakening EZ inflation! | MarketTalk: What’s up today? | Swissquote
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Swissquote (in English)
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EURUSD tests major support before EZ inflation updates!

The week started on a cautious note as stocks in Asia mostly sold off following a rough week in the US, where the Federal Reserve’s (Fed) hawkish pause triggered a fresh wave of worries that the rates would stay higher for longer. The yields pushed higher as the S&P500 recorded the worst performance over the week since the banking crisis in March.

The UAW strikes will broaden to all GM and Stellantis parts plants in the US, which means that 5600 more workers will join the movement (Ford will likely be spared, for now, as some good progress is made on negotiations with the UAW) and the US will shut down by the end of the week if politicians fail to pass a dozen of bills. The latest US GDP update will fall in this chaotic environment, but the expectation is a positive revision !
In the currency markets, the US dollar extends gains. The dollar index entered the bullish consolidation zone after the Fed decision, the EURUSD tested an important Fibonacci support last week, and the USJDPY pushes timidly higher, fearing a direct FX intervention to turn the market upside down.

Inflation numbers will be on the menu in many locations this week. For Europe, any softness in inflation should give further support to the euro bears, while higher than expected numbers, which I believe could be the surprise of this week could revive the European Central Bank (ECB) hawks, but will hardly prevent the euro from seeking into a deeper depression.

Watch the full episode to find out more!

EURUSD tests major support before EZ inflation updates! | MarketTalk: What’s up today? | Swissquote
By
Swissquote (in English)