• EUR/USD -0.33%, USD/JPY 0.25%, GBP/USD -0.39%, AUD/USD -0.59%

• S&P E-minis 0.01%, DAX -0.19%, Nikkei 225 -0.31%, FTSE -0.37%

• Dollar's September close sets it up to soar in October nL2N3B80O5

• There are still a lot of longs weighing EUR/USD nL2N3B80BH

• USD/JPY buoyant despite noises from Japan authorities nL2N3B80KC

• GBP/USD ebbs and flows as fourth quarter gets underway nL2N3B80M6

• AUD/USD sags before another expected RBA rate hold nL2N3B80NK

• Options expiries nL2N3B80A3. U.S. Open nL3N3B81IS

• Cable drops to 1.2161 following early London rise to 1.2220 (intra-day high)

• 1.2161 is lowest level since Thursday (1.2120 was low that day)

• USD supported by expectation US interest rates to remain higher for longer

• UK recession risk is helping weigh on the pound: UK final mfg PMI 44.3

• No tax cuts yet, UK finance minister Hunt tells Conservatives nL2N3B80JL

• IMM net GBP long more than halved in week through BoE rate hold last month

The USD/JPY rise, which has already spanned 127.22-149.83 this year, may far exceed current expectations which envisage a drop to 132.00 in the next 12 months and 155 as the maximum extent of the current rally.

The expectations of the 51 economists polled by Reuters on September 6th chime with the forecasts of Japanese companies who see USD/JPY averaging 135.75 and EUR/JPY 144.62 in the current financial year.

It will likely require a huge FX intervention to push USD/JPY to the levels expected.
But judged by what happened after a similar foray last year, USD/JPY may not stay low for long, and should Japanese firms seize the chance to hedge, it will weigh on yen while the authorities support it.
If they don't hedge they may find themselves even further out of touch with reality in the future.

While BOJ maintains its super-easy policy, the yen is likely to drop further and having hit a record low on trade-weighted basis in August, it is harder for firms to hedge for yen's journey into the unknown.

In contrast it's much easier to hedge USD/JPY which is trading at familiar levels and is still far from the 183.34 target required to correct its long-term slide.

There has been a ten-fold increase in the forward swap underpinning USD/JPY during the U.S. tightening cycle, while stocks have recouped most of the losses that cycle inspired.
Should a bull run follow its expected end, the yen could come under greater pressure.

For more click on FXBUZ

• 1-month GBP/USD FX option expiry now Nov 2 - includes Nov 1 Fed, Nov 2 BoE

• More chance of related realised volatility lifts 1-month implied volatility

• 1-month GBP/USD implied volatility now 8.1 - high since early August

• Peaked 8.0 from l-t low 7.0 last week before edging back to 7.6 Friday

• However, past 1-month realised volatility 5.1 suggests implied is expensive

• Repeat FX performance and longs wouldn't break-even at current implied level

For more click on FXBUZ

• By Sep 26 traders were still betting $13 billion on a rise

• IMM traders' largest bet is little changed from 13.6 bln on Sep 19

• Between Sep 19 and Sep 26 EUR/USD dropped 1.0676-1.0562 EBS

• Pair flirted with 2023 low at 1.0482 on Sep 27 reaching 1.0488

• Following recovery reached 1.0617 - Oct 2 range 1.0558-72

• Losses or loss of profits may encourage further unwind of longs

• Next targets for a deeper correction are 1.0461 and 1.0280

• Price action now moving against our 0.8689 short play as sterling struggles

• Daily chart looking constructive

• Thurs hammer candle into bullish engulfing line Frid but no trend to reverse

• Momentum readings remain positive and RSI is rising again

• Cross is below Friday's 0.8679 high but a run back to the 200DMA the risk

• The long-term average remains pivotal, currently at 0.8709

• Oct. 25 0.8593-97 cloud twist a potential bearish lifeline

  For more click on FXBUZ

• Tempted to square our 1.2137 long play but will run it to the stop

• Bearish signal given Friday: Long upper shadow and a Doji candle

• Daily RSI remains over sold and momentum readings negative

• Sterling recovery may have seen the best at 1.2271

• Failure to drive an advantage home above the 10DMA adds to the bearish risk

• The 10DMA now seen as a pivotal resistance point at 1.2237

• Major support 1.2111, Sept. 27 low

  For more click on FXBUZ

• AUD/USD retreats to 0.6413 from Mon peak 0.6445

• Slips under 21 DMA support 0.6418 with room to fall

• May pause at Bollinger downtrend channel at 0.6388

• Rebound in US yields revives USD-buying interest

• Broad USD strength sweeps through Asia led by USD/JPY

• Likely RBA hold on Tues adds to sombre AUD views nL3N3B70BA

• For more click on FXBUZ

• USD/SGD inches up to 1.3680 from open 1.3662; STI +0.3%

• At threshold of entering Bollinger uptrend channel

• Mon close above 1.3682 will engage bullish chart signal

• From there, last week's 10-mth 1.3740 will be at risk

• USD/JPY reaching new 11-mth high inspires USD/AXJ bulls

• UST yields rebound from Fri dip; 10y last 4.621%

• For more click on FXBUZ

• AUD/USD subdued, last 0.6436 from Fri close 0.6435

• Long-tailed doji candlestick on Fri is omninous sign

• Suggests topside heavy with opportunistic sellers

• Intraday resistance at 0.6445 will attract some offers

• That demarcates entrance of Bollinger uptrend channel

• China PMIs mixed, muting optimism for AUD bulls nL2N3B70IY

• For more click on FXBUZ

• AUD/USD hasn't traded early Asia after closing up 0.11% at 0.6435 Friday

• On Saturday U.S. Congress reached a stop-gap deal to avert a shutdown nL2N3B6033

• China official manufacturing PMI released Saturday beat expectations nAZN1BRKD0

• Both of the results may be viewed as supportive for risk and the AUD

• AUD/USD indicative rate unchanged around 0.6430/35

• AUD/USD hit 0.6501 Friday before USD and US yields recovered late in the day

• Support is at the 10-day MA at 0.6421 and 21-day MA at 0.6417

• Key resistance is at the double-top at 0.6522

• For more click on FXBUZ

Repeat with no changes

• Net USD G10 long grew slightly to $5.1bn in Sep 20-26 period, $IDX +1.01%

• EUR$ -1.01% in period specs -3,582 contracts now +98,399

• $JPY +0.81%, specs -7,893 contracts now -109,512; USD longs eye 150

• GBP$ -1.92% in period, specs -18,014 contract, long cut to 15,669

• Specs wary of diminishing BoE hike outlook, falling UK growth

• CAD, AUD buck the trend specs +15k CAD, +10k oz as commods rise, oil abv $90

• BTC -3.82% in period specs +197 contracts on dip, now +1,794; central banks near end of hike cycle supports BTC

• Uptrend reaffirmed by Friday's sharp rebound from daily tenkan support

• Wednesday's 149.71 trend high and 150 hurdles are back in view

• Close above 150 would target 2023's channel top, Monday at 150.84

• Broader target is 2022's 32-yr peak at 151.94 on EBS

• Uptrend intact unless 30-DMA and kijun, 147.31//07 last, are closed below

For more click on FXBUZ

• AUD/USD opened NY near 0.6495, neared 0.6480 then rallied to 0.6501

• Rally aided by US PCE data which initially sunk yields US2YT=RR, US$

• US$ sales abated quickly however & yields couldn't add to post data losses

• Equities ESv1 turned down, commodity HGv1 gains eroded, USD/CNH rallied

• AUD/USD gains faded, pair dipped below 0.6430, was near flat late in the day

• Daily gravestone doji, falling monthly RSI are concern for AUD/USD shorts

• China Sept NBS, Caixin mfg & non-mfg PMIs are key risks over the weekend

• For more click on FXBUZ

Synopsis: MUFG, one of the world's leading financial groups, weighs in on the recent mild correction observed in the US Dollar (USD). While the short-term might bring an extension of this weakness, the bank holds a more conservative view on the possibility of a lasting reversal.

Key Highlights:

Short-Term Weakness in the USD: MUFG notes that the US Dollar's recent modest downturn could stretch further in the imminent future. However, they express reservations about this being a sign of a long-term shift.

Technical Movements and External Influences: The bank believes the current movement of the USD seems primarily technical. Moreover, it hints at the influence of month-end flows as a potential factor driving the currency's price actions.

Steadfast Yields Keep the Dollar Buoyed: Despite the observed weakness, the yields remain in favor of the USD. The prevailing narrative of "higher for longer" when it comes to the dollar is rooted in this supportive yield environment.

Data Dependence: MUFG emphasizes that a shift in the "higher for longer" perspective will likely be contingent on the US economic data. Any significant weakness observed in the data could act as a catalyst for questioning the current stance on the dollar.

Closing Thoughts: While the USD is showing signs of a short-term correction, MUFG remains circumspect about labeling this as a harbinger for a long-term downturn. With supportive yields and an awaiting data-driven narrative, the bank advises market participants to be vigilant and data-responsive in the coming days.

• AUD/USD rallies to a 7-session high of 0.6501 Friday, sellers emerged

• Pair slid back towards 0.6450 and traded up +0.39% into Europe's close

• AUD/USD bears have been defending the 0.6510/340 zone since early August

• Series of daily highs, 55-DMA and daily cloud base sit within that zone

• Technicals suggest AUD/USD bears may have to be concerns however

• Daily RSI is rising, pair above 10- & 21-DMAs, monthly bull hammer in place

• Break above the resistance is likely to trigger stop loss, profit stop buys

• Daily cloud top, 0.6610/30 and the 200-DMA come into focus if it breaks

• For more click on FXBUZ

Synopsis: Credit Agricole presents an analysis focusing on the trajectory of the EUR/CHF currency pair for the remainder of the year, emphasizing potential shifts influenced by central bank decisions and other economic determinants.

Key Highlights:

CHF and GBP's Shared Plight: Both CHF and GBP found themselves adjusting due to unexpected pauses from their respective central banks. This adjustment has, in turn, influenced the broader currency dynamics.

EUR/CHF's Resilient Stance: Despite the challenges, EUR/CHF remains stable, hovering just below the 0.97 mark. Broad EUR weakness at September's end seems to have lent support to this stability.

Anticipated Range Bound Movement: Credit Agricole forecasts a possible consolidation in a 0.95/0.98 range for the EUR/CHF pair. This prediction is contingent on peripheral risks in the Eurozone, especially if the 10Y BTP-Bund yield spread approaches the 200bp mark.

FX Option Market's Comfort Zone: The current scenario seems acceptable to the FX option market as 3M EUR/CHF risk reversals have begun an upward trajectory.

Domestic News and Its Limited Impact on CHF: While domestic events usually sway currency direction, recent occurrences have seemingly had little impact on the CHF's direction. However, all eyes will be on the upcoming September CPI data, which might have implications for SNB's policy trajectory.

Strategic Insights:

For Traders: Monitoring the EUR/CHF pair's movement, especially in light of Eurozone peripheral risks and upcoming data releases, will be key.

For Investors: The broader implications of a stable EUR/CHF amidst central bank decisions and other regional dynamics might offer potential investment insights.

For Analysts: A close observation of the 10Y BTP-Bund yield spread and its influence on the EUR/CHF could provide crucial pointers on the Eurozone's financial health.

Closing Thoughts: Credit Agricole's perspective brings attention to the delicate balance and potential stability of the EUR/CHF pair, underpinned by broader regional economic dynamics. As the year progresses, market watchers should remain vigilant to sudden shifts that could redefine the currency's path.

• CA GDP 0.0% vs 0.1%, BoC hike bets unwind slightly

• Odds of a BoC Oct hike at 27% vs 31% pre-GDP release 0#BOCWATCH

• That said, a plethora of data from now and Oct meeting will set expectations

• USD/CAD rebounds from intra-day lows towards 1.3450

• However, bounce in risk tone, softer USD likely to keep pressure on USD/CAD

• Pair also looks to have broken a bear flag, paving way for a deeper pullback

• Key support situated at 1.3388 (Jul peak/Sep low) and 1.3401 (100DMA)

For more click on FXBUZ

Trade Recommendation:

• View: ANZ is bearish on the CHF/JPY in the long term.
• Entry Point: They suggest entering the trade at 160.
• Target: The bank sets a target of 155.

Rationale:

1. BoJ Policy Normalisation:

   • ANZ anticipates that when the Bank of Japan (BoJ) begins its policy normalization process, it will result in a strengthened Japanese yen (JPY).
   • Shorting CHF/JPY, according to ANZ, could be a cost-effective method to leverage the expected appreciation of the JPY.

2. Historical Performance:

   • The CHF/JPY pair has been trading at historic highs for several months. This might provide traders an opportunity for potential downward movement.

3. SNB's Tightening Cycle:

   • The Swiss National Bank (SNB) is believed to be nearing the conclusion of its current monetary tightening cycle.
   • This could imply that the Swiss franc (CHF) might lose some of its strength against other major currencies, including the JPY.

4. Intervention by the SNB:

   • While the SNB is known for its active intervention in the FX markets, ANZ believes that any weakness in the CHF/JPY pair is unlikely to trigger a central bank intervention.
   • This is because the SNB's primary concern has been imported inflation from major economies like the US and the euro area (EA).

5. Outlook on CHF:

   • ANZ expects the CHF to soften over the course of the year.
   • This perspective is bolstered if the Swiss Consumer Price Index (CPI) remains within the SNB's target range.

In summary, ANZ sees an opportunity to capitalize on potential JPY strength and CHF softness by shorting the CHF/JPY pair with a target of 155.

Canada's GDP Performance:

• Monthly Data: The recent GDP data indicates that Canada's economic performance in Q3 was lackluster, following a subdued Q2.
• July Activity: The economy remained stagnant in July, matching the preliminary estimate but falling slightly short of the broader market expectation.
• Sectoral Rebounds: Areas that had been negatively impacted by early summer forest fires, namely mining, oil & gas, and the accommodation & food service sectors, showed signs of recovery.
• Setbacks: These recoveries were counterbalanced by downturns in transportation and manufacturing, which were likely influenced by the BC port strike.
• Domestic Demand: The data indicated a softening in domestic demand, with retail playing a minor but negative role in the July GDP.
• August Preview: The preliminary estimate for August, showcasing a mere 0.1% growth, was somewhat softer than anticipated by CIBC. With this, Q3 GDP is forecasted to be slightly under 0.5%, assuming there is some uplift in September.

Implications for the Bank of Canada:

• GDP as a Parameter: While the GDP figures were somewhat disappointing, CIBC emphasizes that recent fluctuations were significantly influenced by supply disruptions (like wildfires and the BC port strike) rather than inherent changes in domestic demand.
• Future Considerations for BoC: CIBC believes that for the Bank of Canada (BoC), the upcoming employment and CPI data will hold more weight than the GDP numbers as the central bank prepares for its October rate decision. In essence, the bank may prioritize these indicators when gauging the health of the economy and determining its monetary policy stance.

• Sterling rally now testing levels just above the 10DMA

• Average has tracked the market lower through September, currently at 1.2263

• A close above the 10DMA could trigger a bigger squeeze

• We are long from 1.2137 for 1.2440 and have now locked in small points

• Session lows at 1.2197 main support heading into month-end

• Note, the daily RSI is now back above the 30 line from a sub-19 low

  For more click on FXBUZ

The dollar might be relaxing its grip on the market heading into month-end and sterling finding its feet, but the bigger technical picture suggests the pound will continue to struggle.

A combination of a softer dollar and U.S. Treasury yields Friday plus an upward revision to UK growth numbers has helped with sterling's recovery from a 1.2111 27-week low versus the dollar.

Sterling looks to be entering a short-term technical adjustment having fallen from 1.3144, July high.
Profit taking from levels around a 76.4% Fibonacci level, 1.2121 off the 1.1805-1.3144 March-July climb set the recovery this week.

However, September has not been kind to the pound and this week's 1.18% rebound must be taken in the context of a near 4.0% decline on the month.

The GBP/USD bear run, in place since July 13, targets another Fibonacci level.
The 38.2% retracement of the 1.0327-1.3144 September 2022 to July 2023 climb comes in at 1.2068.
Another potential bear trigger is provided by the 1.1805 low from March.

If sterling is to dig itself out of this hole a break above this month's 1.2711 high is needed.

For more click on FXBUZ

• FX volatility traders typically hold opposing cash and option positions

• Constant adjustment of cash removes currency exposure/captures volatility

• Cash hedging can draw FX toward strike pre expiry - massive 1.0600 today

• 3.7-billion euros due to expire and related hedging therefore likely extreme

• EUR/USD has recovered from sub 1.0500 Wed-Thurs and peaks 1.0611 Friday

• Beware these big FX option strike expiries next week nL1N3B50EF

For more click on FXBUZ

• AUD/USD ascends to 0.6485 as equity gains lift risk-sensitive AUD

• Asian shares had their best day in weeks; European stocks rise at open

• 0.6485 is highest level since Sept 20 (0.6332 was Wednesday's 10-month low)

• Offers tipped above large 0.6500 option expiry level, including at 0.6510

• 0.6510 was Sept 20 high - before USD strengthened on Fed's hawkish hold

• RBA rate decision next week; 30 of 32 economists polled by Reuters tip hold