Apple and Amazon’s upcoming Q3 2024 earnings reports are in the spotlight.  Market participants are concerned about rising AI capital expenditures impacting profit margins. Can Amazon rebound from a disappointing Q2? Apple iPhone 16 sales in focus after strong debut in China. Most Read: Bitcoin (BTC/USD) Takes a Pause, $75k Still On as OTC Inflows Decline Earnings Season Brings AI Capital Spending into Focus Earnings season continues today with two more ‘magnificent 7’ earnings releases in the form of Apple AAPL. and Amazon AMZN. expected after market close. Market participants will be keeping a close eye on the releases following Meta and Microsoft yesterday revealed increases in capital expenditure related to AI. Wall Street however remains concerned that such expenditure could hurt profit margins, something they may have to accept in the short to medium-term as the AI race heats up.  Meta and Microsoft both topped revenue and profit expectations however the rising capital expenditure spooked market participants. This left both Meta and Microsoft down around 4% after the earnings release. Microsoft’s capital expenditure rose 5.3% to $20 billion in the first fiscal quarter while predicting an increase in spending on AI in Q2. This means that Microsoft now spends more money in one quarter than it used to spend in a whole year before 2020. For Meta, their spending in one quarter matches what they used to spend in a year up until 2017. One can understand the concern by Wall Street despite the potential payoff from AI capital expenditure.  Let us take a look at what to expect and keep an eye on when Amazon and Apple report later today. Amazon Q3 2024: Amazon to Shake off Poor Q2 Earnings Amazon is getting ready to announce its Q3 2024 earnings, and experts expect a revenue increase of 9.9% over last year, reaching $157.4 billion. This good news comes after a tough Q2 when Amazon’s stock dropped. Investors want to see if the company can recover and get closer to its previous high stock prices. The main focus will be on how well Amazon’s online shopping and cloud services are doing, as these have been big moneymakers in the past. Market participants will also be interested in how Amazon is managing costs and adjusting to economic changes, especially around AI. Revenue Historic Results Source: LSEG (click to enlarge) EPS Historic Results Source: LSEG (click to enlarge) Apple Q3 2024: Is AI driving iPhone Demand? Apple is getting ready to share its Q3 2024 earnings, which is their first report since releasing the iPhone 16. Analysts expect revenue to reach $94.58 billion, up over 5% from last year. A big topic of interest will be how well the iPhone 16 is doing, especially after its strong start in China, where it sold 20% more than older models. With Apple’s stock up 20% this year, people are watching to see if the company can keep this success going. Market participants will be looking closely at sales numbers for both the older iPhone 15 and the new iPhone 16, as well as the impact of other products like Macs and services. The market is eager to see how Apple plans to continue growing and stay ahead in the tech world. Revenue Historic Results Source: LSEG (click to enlarge) EPS Historic Results Source: LSEG (click to enlarge) Key Takeaways and Thoughts Earnings season has thrown a few surprises thus far, not least of which has been the revenue and profit beat by the majority of the magnificent 7 thus far. However, the performance of the stocks and their impact on major Wall Street Indexes paint a different picture. This leaves us with the question, what are markets focused on? As we discussed in the opening section of the article, capital expenditure on AI is proven to be a sticky point. This seems to be the main area of focus as market participants appear concerned that this will have a big impact on margins moving forward.  Apple and Amazon are expected to be no different, with markets likely to pay more attention to the capital expenditure than revenue and profit. This is not to say that markets would ignore a significant miss or beat of expectations but rather that should the profit and revenue prints come in around expectations, then focus will likely shift to capex and in particular AI capex and investments. Lots to consider as AI continues to grow its confluence both on companies direction and earnings potential. Follow Zain on Twitter/X for Additional Market News and Insights @zvawda

The Australian dollar has broken a three-day skid and is in positive territory on Wednesday. In the North American session, AUD/USD is trading at 0.6577, up 0.26%. Australian inflation falls below 3% Australia’s inflation rate fell below 2.8% y/y in the third quarter, down sharply from 3.8% in the second quarter. This was the lowest level since Q1 2021 and was below the market estimate of 2.9%. Most important, inflation is back below the Reserve Bank of Australia’s target band of 2% to 3%. The drop in inflation was driven by lower prices for electricity and fuel. The impressive decline in headline CPI was tempered by other inflation indicators. The trimmed mean measure, a key indicator of core inflation, eased to 3.5% from 4.0%, is still well above the target range. As well, services inflation crept up to 4.6% from 4.5%. The inflation data has not changed market expectations for rate cuts at the Reserve Bank of Australia’s Nov. 5 meeting. The markets have priced in a rate cut at just 10%, with an initial cut not unlikely until April or May 2025. The labor market remains robust, with low unemployment and sticky wage inflation, despite high interest rates and weak economic conditions. The RBA will remain an outlier among central banks until it joins the club and starts lowering rates. However, sticky services inflation and a tight labor market support the case for holding interest rates, which means the RBA will stay on the sidelines again at next week’s meeting. AUD/USD Technical AUD/USD is testing resistance at 0.6567. Above, there is resistance at 0.6589 There is support at 0.6539 and 0.6517

Bitcoin price breaks above $70k for the first time since July, driven by decreased OTC desk inflows. US spot ETFs see a surge in inflows, potentially linked to the upcoming US election and perceived pro-crypto stance of Donald Trump. Despite the pullback, bullish pressure remains, with the possibility of Bitcoin reaching new highs if inflows continue. Most Read: US Earnings: Reddit, Alphabet Beat Estimates, Nasdaq 100 Retreats with Meta Up Next Bitcoin prices have finally broken above the$70k handle this week, the first time the worlds largest cryptocurrency is trading above the $70k handle since July. Over the last 7 days BTC/USD rose 8% in 7 days before taking a breather today and trading down 1% at the time of writing. OTC Inflows Decline Help Bitcoin Rally A notable aspect of the recent rise in bitcoin is that OTC desks, where two parties can trade directly and privately, now have 416,000 BTC (worth $30 billion). This is much higher than the average of less than 200,000 BTC they held during the first quarter, based on CryptoQuant data. OTC desks are mainly used by big companies or wealthy people who don’t want their trades to show up on public crypto exchange records. This lets them buy or sell large amounts without changing the market price. More trades going to OTC desks is one reason why bitcoin’s price has stayed mostly flat for the last seven months. With an abundance of bitcoin on OTC desks, the U.S. spot-listed exchange-traded funds (ETFs) could make purchases without affecting the spot price. Source: Coindesk The amount of bitcoin going into OTC desks each day has dropped to the lowest this year. According to CryptoQuant, in October, OTC desks handled about 90,000 bitcoin daily, which is 52% less than in the first three quarters of the year. This could in part be responsible for the break of the $70k handle.  ETF Flows Surge ETF flows returned to the offensive recently and continue to surge as the US election draws nearer. Markets have already declared Donald Trump as the pro crypto candidate which could also explain the recent price surge. Betting markets have Trump in a sizable lead, while the most recent Reuters/Ipsos poll paints a much closer race with Kamala Harris holding a slender lead.  Since October 11, spot bitcoin ETFs have taken in nearly $4 billion, with just one day seeing money leave, based on Farside Investors’ data. On Monday, US spot Exchange Traded Funds (ETFs) received $427.60 million, continuing a streak of four days where more money came in. Yesterday saw even more money flow into ETFs, with total inflows of $827 million. The drop in price today could just be a blip, with another positive day of inflows, market participants would hope that fresh high may be incoming. Source: Coinglass Technical Analysis BTC/USD Bitcoin (BTC/USD) is currently experiencing a brief pullback hovering on and around a key area at 72000. As the daily candle stands now, a close inside yesterday’s daily candle seems likely which would result in an inside bar bearish candlestick pattern.  This is obviously no guarantee of further downside as it appears that there is still a lot of bullish pressure. However a retest of the trendline break or the 70000 handle cannot be ruled out. The confluence area between the 70000 and 68334 could be key for the bullish run to continue and may be worth keeping an eye open.  Immediate resistance rests at 73777 which is the current ATH with 75000 the next area of interest. Conversely, support rests at 70000, 68334 before the 65876 handle becomes the area of focus.  Bitcoin (BTC/USD) Daily Chart, October 30, 2024 Source: TradingView.com (click to enlarge) Support 70000 68334 65876  Resistance 73777 75000 80000  Follow Zain on Twitter/X for Additional Market News and Insights @zvawda

Alphabet and Reddit exceed Q3 earnings expectations, driven by strong ad sales and cloud revenue. Microsoft’s Q1 FY2025 earnings will be a key indicator of broader AI demand, with Azure and AI services in the spotlight. Could Meta and Microsoft facilitate fresh highs on the Nasdaq 100? Nasdaq 100 remains range-bound ahead of Meta and Microsoft earnings releases.  Most Read: Gold (XAU/USD) Price Reclaims $2750/oz Amid Record $3 Billion Inflows into Gold Funds US Earnings are now in full swing with Alphabet GOOGL.O, the first of the five “Magnificent Seven” megacap stocks due to report results this week, having leapt 6.3% in premarket trading.  Alphabet beat expectations with both revenue and Q3 profit thanks in large part to its cloud business and Youtube Ad sales. Ad sales have proven to be the surprise of earnings season so far with Reddit RDDT.N also reporting positives regarding Ad sales. Reddit jumped 21% after reporting a quarterly profit for the first time since going public.  Alphabet also surprised by increasing its operating margin which rose from 28% to 32% despite continued capital spending on AI development. This is a big deal for markets as one of the concerns heading ito earnings season was whether the ‘magnificent 7’ would be able to justify their lofty valuations. Many analysts had feared that earnings would disappoint as there have been signs of an economic slowdown outside the US.   Source: LSEG Meta and Microsoft Earnings Preview Microsoft MSFT and Meta report after market close today and both shares are trading slightly highly early in the US session. Markets will no doubt be paying attention to Ad Sales and Cloud revenue from Meta and Microsoft respectively as well as the general revenue  and profit numbers.  To break it down more, When it comes to Meta which reported second-quarter ad impressions and the average price per ad, each up 10% year-over-year. Markets will be keen to gauge if this could continue. Following the surprise by Alphabet in regard to its operating margin, markets will be keeping a close watch on Metas AI spending and operating margin as well. Microsoft is set to announce its earnings for the first quarter of fiscal year 2025, which ended on September 30, 2024. Investors are eager to see the demand for Microsoft’s AI services as the company invests heavily in AI infrastructure. Wall Street expects Microsoft to report $64.51 billion in revenue, a 14% increase from last year, with earnings of $3.08 per share. Key areas to watch include the impact of AI on Azure’s revenue growth, which saw a 9% contribution from AI technologies last year. Additionally, the performance of Microsoft 365 Copilot, which uses AI to improve productivity, remains undisclosed and highly anticipated. Capital expenditures, which hit a record $19 billion last quarter mainly for AI and cloud infrastructure, are expected to rise further. Microsoft’s results are seen as a key indicator of broader AI demand in the industry Source: LSEG Technical Analysis  Nasdaq 100 The Nasdaq 100 has for the first time closed above the key 20484 resistance level. This is key as the tech index has failed to breach this level since the initial test on the 14 October. The all-time highs around 20789 are not that far off, however we are seeing an initial pullback following the US open.   The Nasdaq is likely to remain below the all-time highs ahead of Meta and Microsoft earnings later in the day. The question is, could positive data from the two push Nasdaq to fresh all-time highs.  The Nasdaq 100 is also trading in an ascending channel which usually precedes a breakout to the downside. This doesn’t bode well for the bulls but time will tell if this materializes. Immediate resistance rests at the previous highs around 20789 before the 21000 handle comes into focus. Conversely, a move lower from here may find support at 20136 before the 20000 handle becomes the source of focus. Nasdaq 100 Daily Chart, October 29, 2024 Source: TradingView (click to enlarge)  Support 20136 20000 19757 Resistance 20790 (all-time highs) 21000 21250 Follow Zain on Twitter/X for Additional Market News and Insights @zvawda

UK Autumn Budget anticipation mounts as markets remain calm, unlike during the ‘Trussonomics’ era. GBP/USD faces a critical juncture at the 1.3000 level, with potential for both upside and downside breaks. GBP/JPY nears the 200.00 handle, a daily close above could trigger a run towards July highs. READ MORE: This article follows my previous GBP Price Action Ideas Piece on October 16. The GBP has steadily gained ground against the majority of G7 counterparts with the exception of the US Dollar and Euro. The British Pound has held steady against the Euro and the USD as markets await more clarity on the rate cycles of the three central banks. Over the last few weeks there appears to be a growing divergence in the expectations for the Federal Reserve and its counterparts at the Bank of England and the European Central Bank. Markets are starting to price in the possibility of more aggressive rate cuts from the latter two with the Fed seeing a reduction in rate cut expectations.  The change for the US Dollar has come from ongoing data releases which paint a positive picture for the US economy. The British Pound on the other hand has seen a significant drop in its latest services inflation print which came in well below the 5.5% the BoE projected for the end of 2024. This has ramped up rate cut expectations for the BoE and has weighed slightly on the Pound. Now all attention turns to the UK budget due tomorrow. UK Autumn Budget Attention now turns to the highly anticipated Autumn Budget in the UK which is also the first under the recently elected Labor Government. There are a host of questions regarding the UK budget with memory still fresh for many regarding the disaster of the ‘Trussonomics mini budget’ in 2022. However, there are some important differences this time around and it seems markets are calm ahead of the event. There does not appear to be any political risk premium this time around with ING research pointing to a short-term EUR/GBP fair value at 0.834. Remember that in previous instances of political/gilt-related turmoil in the UK, the EUR/GBP risk premium was around 3-5%. Secondly, CFTC figures from October 22 point to speculators holding a long bias on the British Pound. Traders held the largest net-long positions in GBP among G10 currencies, making up 32% of open interest, and these positions have resisted the shift back to the dollar seen in other major currencies. The key issues to pay attention to in the budget tomorrow include tax changes, fiscal rule changes and growth objectives and targets. The Labour manifesto emphasized in particular the importance of striking a “balance between prioritizing investment and the urgent need to rebuild our public finances”. This strikes a particular chord after Rachel Reeves stated last week that the Labor Government would look to redefine public debt in the budget. This has sparked some interest and it will be interesting to see how the Chancellor aims to do this. This change, according to Reeves, aims to allow for increased borrowing to fund infrastructure and investment projects, potentially unlocking up to £50 billion. Reeves emphasized that this borrowing would be for long-term investments rather than day-to-day spending, aiming to boost economic growth and job creation. Public Sector Balance Sheet (% of GDP) Source: IFG Tax on the wealthy is another sticking point of tomorrow’s budget. Looking back historically however, this would not be the first time the incoming Government has delivered tax hikes. In every fiscal event following an election since 1992, the chancellor has increased taxes.  All in all it promises to be an interesting one, although many would hope not as interesting as the now infamous Trussonomics budget of 2022. Technical Analysis GBP/USD From a technical standpoint, GBP/USD is at a very important level with the 1.3000 psychological level in play. A daily candle close below this level could open up further downside for the pair.  A daily candle close above the 1.3000 level has proved elusive for the better part of a week. This leaves cable vulnerable to further downside with a potential run toward the 1.2800 area growing ever more appealing. Following my previous piece on GBP pairs where I had hoped for further gains above 1.3000, the technicals are beginning to point to the possibility of a break to the downside. .  There are two scenarios that could develop in the day/days ahead. The first one being a break and daily candle close above the 1.3000 handle which could open up further upside. The second scenario, is a push lower and a break of the ascending trendline, this would open up a run toward support at 1.28060 (200-day MA).  Support 1.2950 (100-day MA) 1.2900 1.2806 (200-day MA) Resistance 1.3040 1.3100 1.3143 GBP/USD Daily Chart, October 29, 2024 Source: TradingView.com (click to enlarge) GBP/JPY GBP/JPY has been inching its way higher since bottoming out on August 5. There was another push down to the mid 180s on September 16 before the move higher began once more. GBP/JPY broke above the 200-day MA as mentioned in my October 16 article before making a run toward the 200.00 handle. A high today of 199.690 leaves GBP/JPY at a critical junction heading into tomorrow’s budget.   On a daily chart, a daily candle close above the 200.00 handle tomorrow could open up GBP/JPY for a run toward its July highs at 207.57. There may be some resistance around the 203.00 handle which could lead to a pullback as the RSI is currently just shy of overbought territory. Weakness in the British Pound tomorrow could bring the GBP/JPY toward the 200-day MA resting at the 195.00 handle. There is also another area of support resting at 193.84 before the 190.00 handle comes into focus. GBP/JPY Daily Chart, October 29, 2024 Source: TradingView.com (click to enlarge) Support 195.16 (200-day MA) 193.84 190.00 Resistance 200.00  203.00 207.57 EUR/GBP EUR/GBP remains near the YTD low around the 0.8300 handle. The pair is struggling to gain acceptance above the confluence level of 0.8345 which is a confluence area.  Immediate resistance rests at 0.8342 with the 50 day MA resting at 0.8385 likely to provide some resistance as well. The region between 0.8400-0.8487 plays host to the 100 and 200-day MAs as well as the most recent swing high. Conversely, should the GBP strengthen in light of the UK budget tomorrow then the YTD lows around 0.8295 will likely be broken before the 2022 lows around 0.8200 comes into focus. EUR/GBP Daily Chart, October 29, 2024 Source: TradingView.com (click to enlarge) Support 0.8300 0.8250 0.8200 Resistance 0.8345 0.8400 0.8447 Follow Zain on Twitter/X for Additional Market News and Insights @zvawda

The Japanese yen is lower on Monday. In the European session, USD/JPY is trading at 152.63, up 0.22% at the time of writing. The yen weakened as far as 153.88 but has pared most of the losses. Yen slumps after Ichida loses parliamentary majority The new trading week has barely begun but the markets are busy digesting the drama out of Tokyo. The snap parliamentary election over the weekend was a disaster for new Prime Minister Shigeru Ishiba, as his Liberal Democratic Party (LPD) coalition won just 215 seats, short of the 233 majority. Ishiba has been in power for only a month and the snap election backfired as the LDP lost its parliamentary majority for the first time since 2009. It’s unclear if Ishiba will be able to cobble together a majority and the political uncertainly could push the yen, which is trading at 3-month lows, even lower. The election bombshell comes just ahead of the Bank of Japan’s on Oct. 31. The BoJ is expected to maintain policy settings and will release updated growth and inflation forecasts. The BoJ has intervened in the past when the yen showed a sharp and quick decline and there is speculation that the central bank might intervene if the yen falls to 155 or 160 per dollar. The US wrapped up the week with mixed results. Durable Goods Orders declined 0.8% in September, unchanged from a revised -0.8% reading in August and above the market estimate of -1%. The UoM Consumer Sentiment index improved slightly to 70.5 in October, above 70.1 in September, beating the market estimate of 69.0. USD/JPY Technical USD/JPY continues to push through resistance lines. The next resistance line is 153.94 152.03 and 151.68 are providing support

Five mega-cap technology stocks (Alphabet, Microsoft, Meta, Apple and Amazon) will report their respective earnings results this week. Bullish momentum of the recent 4-week rally seen in the 10-year US Treasury yield remains intact. A continuation of the surge in the 10-year US Treasury yield may challenge the positive vibes from the US mega-cap technology earnings results. Pivotal week for the Nasdaq 100 as five mega-cap technology stocks; Alphabet, Microsoft, Meta, Apple and Amazon that have a combined weightage of around 31% will report their respective Q3 earnings results this week. Ex-post earnings share performances of these five mega-cap technology firms after one to two days from their prior Q2 respective earnings results release dates had been lacklustre. So far rosy expectations have been set for the Q3 earnings results of Alphabet, Meta, and Amazon that are poised for double-digit earnings growth supported by ad spending. Apple may get an uplift on sales of its latest iPhone 16 model from its key China market accordingly to a news report from Bloomberg. Nasdaq 100 resilience may be tested by rising long-term 10-year US Treasury yield Fig 1: 10-year US Treasury yield long-term secular trend with Nasdaq 100/S&P 500 ratio & MOVE Index as of 25 Oct 2024 (Source: TradingView, click to enlarge chart) The Nasdaq 100 has so far managed to notch a month-to-date return of 1.45% for October as of 25 October while the 10-year US Treasury yield has rallied by 50 basis points over the same period, its biggest monthly jump in almost two years. This recent bout of significant push up in the 10-year US Treasury yield has been accompanied by rising interest rate implied volatility where the MOVE Index has jumped to a one-year high. Based on past data, such swift increase in the 10-year US Treasury yield and MOVE Index have saw the Nasdaq 100 staged a medium-term corrective decline between July 2023 to October 2023 and November 2021 to October 2022 (see Fig 1). The “Trump Trade” narrative has gained traction in the recent week due to rising odds of Republican nominee Trump winning the US presidential election based on data from betting markets (61%Trump versus 37% Harris based on Real Clear Politics data as of 27 October). So far Trump’s proposed key policies of a lower corporate tax rate, and higher trade tariffs on China and rest of the world imports to the US is likely to see a resurgence of inflationary pressure from a medium-term to long-term horizon. Hence, a rising 10-year US Treasury yield that is driven by inflationary rather than economic growth uplift is likely to be detrimental to the Nasdaq 100 from a valuation standpoint. Nasdaq 100’s market breadth has remained lacklustre Fig 2: Nasdaq 100 CFD major & medium-term trends as of 28 Oct 2024 (Source: TradingView, click to enlarge chart) The 10-day moving average of the Nasdaq 100’s 52-week high minus 52-week low market breadth indicator has continued to print a lower low and inched downwards. This observation suggests that there are fewer Nasdaq 100 component stocks hitting new 52-week highs; a potential bearish reversal may be looming on the horizon for the Nasdaq 100 (see Fig 2). Watch the 20,790 key long-term pivotal resistance on the Nasdaq 100 CFD Index (a proxy of Nasdaq 100 E-mini futures), a break below the 19,840 intermediate support (also the 50-day moving average) may expose the next medium-term supports of 19,155 and 18,310. On the other hand, a clearance above 20,790 long-term pivotal resistance invalidates the bearish scenario to see the next medium-term resistances coming in at 21,680 and 22,470/980.

Markets are in a holding pattern as investors weigh risks and uncertainties ahead of a busy week filled with key events. The US election is drawing closer, and markets may react to the possibility of a Trump victory, which could lead to a rise in the US Dollar and inflation expectations. The Bank of Japan (BoJ) meeting is a highlight in Asia, with market expectations leaning towards no rate hike. In the UK, the first budget by the Labor Party under Chancellor Rachel Reeves is highly anticipated. Read More: GBP/USD Technical: Bounce off Key Confluence Level Post PMI, Further Gains in Store? Week in Review: Markets Appear to be in Holding Pattern as Uncertainties Pile Up A mixed week comes to a close as markets appear to be balancing their risks ahead of a blockbuster week. Wall Street Indexes suffered early in the week before the Nasdaq and S&P 500 rallied late Thursday and into Friday on the back of a rise in Tesla stock. A good start with the rest of the ‘magnificent 7’ due to report next week.  The IMF conference in Washington will continue into the weekend with no significant developments coming thus far. A few speeches by Central Bank policymakers also throwing up nothing of note has left markets in a state of wait and see as risk and uncertainty begin to pile up. Market attention will start to turn toward the US election which draws closer. If markets begin to price in a Trump victory the US Dollar could continue to rise. Markets may see a potential rise in inflation and thus less rate cuts should Trump emerge victorious. There appears to be mixed polling thus far with betting markets pricing in a sizable Donald Trump lead, while a recent Reuters/IPSOS Poll saw a 3% lead in favor of Kamala Harris. The uncertainty is keeping markets on edge and could result in some wild swings as the election draws closer.  The UK saw some weakening PMI data and cooling price pressures this week which adds to the possibility of a BoE rate cut on November 7. However, the week ahead will focus on the first budget by the Labor Party and Chancellor Rachel Reeves. There have been mixed comments with the new Chancellor stating only yesterday that ‘debt will be redefined in the upcoming budget as a % of GDP’. There are also questions around tax hikes etc which makes this a key event for the UK economy.  British government bond yields rose sharply with the GB10YT=RR on Thursday after finance minister Rachel Reeves said she would change the fiscal rules to allow her to borrow more to invest. This has left the risk premium on British bonds at a one-year high. Source: LSEG Tokyo inflation data released on Friday have complicated matters for the BoJ, just as market optimism had been growing for further rate hikes. Tokyo Core CPI, a leading indicator of inflation trends in Japan, fell to 1.8% y/y in October, down from 2% in September and just above the market estimate of 1.7%.  For a full breakdown on the Tokyo CPI Read Here. Commodity markets continue to rise with Gold and Silver in particular continuing their stellar performance. Gold continues to find support as global uncertainties continue to rise. Oil prices look set for modest gains despite a turbulent week that saw some swings in price. The uncertainty in the Middle East continues to keep oil supported.  As long Middle East tensions remain in play, Oil prices will remain supported. The risk premium may continue to flow back and forth which will affect both Oil and Gold moving forward.  The Week Ahead: Magnificent 7 Earnings, NFP Data, UK Budget The week ahead kickstarts a two week frenzy of risk events and market uncertainties which could result in wild price swings and an upsurge in volatility. Highly awaited earnings from the ‘magnificent 7’ await with indices likely to see a surge in volatility. The S&P 500 and Nasdaq 100 are both within striking distance of their respective all-time highs.  US Jobs data could see rate cut expectations repriced once more and this could have a knock on effect on the US Dollar, US Yields and wall street indexes.  Asia Pacific Markets In Asia, the Bank of Japan (BoJ) meeting is the highlight of the week. I think the Tokyo data this week has provided a reality check for market participants who had gotten ahead of themselves hoping for a rate hike next week. I am of the belief that we will not get a rate hike next week but rather expect the BoJ to repeat that if the economy grows as they expect, they will keep adjusting monetary policy back to normal. According to LSEG data, markets are pricing in an 84% probability that the Central Bank will keep rates on hold.  Source: LSEG Workspace Everyone will be watching the BoJ quarterly report closely. There is a possibility that inflation for 2024 might be predicted to go higher, but no big changes are expected for next year. However, the GDP forecast for the fiscal year 2024 might be lowered because of recent drops in production in the car industry and natural disasters. In Australia, inflation is getting closer to the target. Year-on-year inflation is expected to drop in the third quarter, reaching the 2-3% target range for the first time since mid-2021, mainly due to lower gasoline and electricity rebates. However, core inflation is likely to stay above 3% because of the tight job market, meaning the Reserve Bank of Australia probably won’t cut rates in their November meeting. Europe + UK + US In developed markets, the Eurozone will get the Q3 preliminary GDP numbers which may provide a better picture into the health of the economy. The question for the Euro Area appears to be one of growth now rather than a focus on inflation, much like how the US focus has shifted to the job market. A poor GDP print might increase the rate cut probabilities for the ECB and this could weigh on the Euro.  The US has a pretty busy week with earnings expected from megacap technology firms including Alphabet GOOGL.O, Apple AAPL.O and Microsoft MSFT.O are also due, along with the nonfarm payrolls report for October.  Different earnings results in various sectors and ongoing uncertainty about the U.S. election have made investors careful. However, it would appear markets have begun to consider the possibility of Donald Trump being re-elected recently as reflected in betting data. According to historical data, US stock markets perform better under a unified government as you can see from the chart below.  Source: LSEG, Evercore In the UK markets wait with bated breath for the first budget of the Labor Government to be presented by Chancellor Rachel Reeves on Thursdays November 30. Chancellor Reeves will likely need to spend more on government departments each day, which means taxes might go up, especially for employers. While there will be more investment, it will probably be small because the Treasury wants to avoid borrowing too much and worrying the markets. All in all it is expected to be challenging for Reeves hence why this budget will be intriguing. For all market-moving economic releases and events, see the MarketPulse Economic Calendar. Chart of the Week This week’s focus is on the GBP/USD which i have been monitoring for a while. There is a the possibility of a breakout in either direction and given the host of data affecting the US Dollar and the GBP, i think they could be the catalyst to facilitate a move. Cable bounced out off a key confluence zone by recording its third touch of the ascending trendline before recording a bullish engulfing daily candle close. This saw a bounce on Friday but the pair continues to struggle to gain acceptance above the 1.3000 psychological level. There is the possibility of a break below the trendline and retest of the 200-day MA resting lower at the 1.2800 handle. As much as the confluences support a narrative i would caution against being too biased on any setup next week. Given the fundamental risk at play we could see wild price swings which could influence potential setups. GBP/USD Daily Chart – October 25, 2024 Source:TradingView.Com (click to enlarge) Key Levels to Consider: Support 1.2940 1.2800 1.2750 Resistance 1.3000 1.3100 1.3250 Follow Zain on Twitter/X for Additional Market News and Insights @zvawda

The US stock markets have steadily climbed since the 2008 financial crisis, achieving a remarkable 740% growth between 2009 and 2024. This upward trajectory, while occasionally disrupted by events like COVID-19 and the Ukraine War, has consistently rebounded, defying recession predictions and showcasing market resilience. The S&P 500’s performance since 2008 is illustrated in the chart below, highlighting some of key events that potentially impacted the market. Despite these events, the upward trend has persisted through various political administrations, fiscal policies, and fluctuating interest rates. Source: Tradingview.com The Equity markets in general are driven by multiple different factors, some of the main drivers are a sector’s performance, company’s earnings, potential future growth, how much investors value a stock and are willing to pay for it. However, businesses need a friendly economic environment to thrive, and the overall health of the US economy can have a major impact on businesses which is then reflected onto the stock market indices such as the S&P 500. What are some of the key economic indicators to gauge the health of the US economy? By monitoring these indicators, market participants can gain a better understanding of the economy’s current state and potential future direction, which helps them make informed investment decisions. Inflation Inflation is the general increase in the prices of goods and services over a period of time, higher inflation reduces the spending power of a currency over the long term and can significantly impact economic growth. Firstly, when inflation is high, businesses often face higher interest rates on loans. This is because lenders typically adjust interest rates to reflect the increasing cost of living. Higher interest rates make it more expensive for businesses to borrow money, which can limit their ability to invest in new projects, expand operations, or hire more employees. As a result, businesses may experience slower growth or even be forced to scale back their operations. Secondly, inflation also affects consumer spending. When prices rise, consumers may have less disposable income as a larger portion of their budget goes toward essential expenses such as housing, food, and transportation. This can lead to consumers becoming more selective with their spending, opting for cheaper alternatives or postponing non-essential purchases. As a result, businesses that rely on consumer spending may experience a decline in sales and revenue, further impacting overall economic growth. Additionally, inflation can disrupt long-term planning and investment decisions, as businesses and individuals become more uncertain about the future value of money. This uncertainty can lead to a reluctance to commit to major projects or investments, further slowing down economic growth. Therefore, policymakers and central banks often prioritize controlling inflation to maintain stable economic conditions and foster sustainable growth. Measures such as raising interest rates, adjusting monetary policies, and implementing targeted interventions may be employed to curb inflation and mitigate its negative effects on businesses and consumer spending. In the US, the Federal Reserve’s inflation target rate is 2%, this percentage can stimulate spending which keeps the economy growing. However, if inflation is higher than wage growth, it can be a sign of a struggling economy. The US Consumer Price Index is an economic indicator that measures inflation in the US, it measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. The indicator comes in different forms, the Core CPI provides data that excludes volatile components like energy and food products. Other inflation indicators are also watched closely by traders such as Core Personal Consumption Expenditure (Core PCE) , the FED’s preferred inflation gauge.  Source: Bloomberg Terminal As indicated on the above chart, the US CPI has been fluctuating around the 2% level from 2008 till early 2021, in some cases, it was as low as -2.0% and as high as 5.0%, mostly affected by the impact of the 2008 financial crisis as well as the sharp swings in energy prices, however, the Core CPI and Core PCE remained stable around the 2.0% level for the same period. Following the COVID19 Pandemic, global inflation rose significantly, CPI reached 9.1%, Core CPI 6.6% and Core PCE 5.6%. In March of 2022, the Federal Reserve raised interest rates for the first time since 2018 and continued its interest rate hike path up to 5.25% – 5.5% range. The US CPI is currently at 3.4%, Core CPI at 2.9% and Core PCE at 2.6% As inflation began and continued to decline over the past 2 years. The FED pivoted in December of 2023, stopped raising rates and kept the markets on hold anticipating the FED’s first rate cut which took place on September 18th, 2024 when the FED cut interest rates by 50 basis points, setting the current FED Funds Rate at the range of 4.75% – 5.0%. According to Bloomberg’s Analysts surveys, economists see US Inflation reaching the Federal Reserve’s target early next year, the surveys show that the PCE gauge averaging 2.1% in early 2025. Job Market Data  Job market data includes employment figures and unemployment rates, which indicate the strength of the labor market and the overall economic health. Traders in general pay attention to Non-Farm Payrolls and Unemployment Rate. The Non-Farm Payrolls (NFP) is a key economic indicator that measures the number of jobs added or lost in the US economy, excluding the farming sector. Following the spikes in job numbers caused by COVID19, the Non-Farm payroll figures continued to beat expectations over the past few years, reflecting the strength of the US economy as more jobs were added. However, the number of added jobs has recently stabilized, sending warnings of a potential slow down. The Unemployment Rate currently hovers around 4.1%, its latest reading for September 2024. Over the past few years, and as the world was getting out of COVID restrictions, the unemployment rate in the USA declined to some of its historic lowest levels reaching 3.4%, reflecting the strength of the US economy and supporting a slower FED in its rate cut path. FOMC – Monetary Policy and Interest Rates The Federal Reserve’s interest rate policy affects the US economy by influencing borrowing costs, spending, and investment. Lower interest rates encourage borrowing and spending, stimulating economic growth. Conversely, higher interest rates can slow the economy by making borrowing more expensive. The Federal Reserve uses its interest rate policy to manage inflation and promote economic stability.  The FED, same as other global central banks, have said multiple times that any interest rate decisions will be data dependent, and that the FED continues to monitor the markets closely, aiming to keep inflation under control within a sustained economic growth environment. Source: CME Group The next upcoming FED meetings for 2024 and early 2025 are scheduled for November 7th, 2024, December 18th, 2024 and January 29th, 2024. According to the most recent review of the CME FedWatch tool, market participants still anticipate an average of three x 25 basis point interest rate cuts between November 7th, 2024, and January 29th, 2025, however, at lesser percentages than seen in prior weeks. For the November 7th, 2024, meeting, the percentage of participants expecting a 25-basis point rate cut stands at 93.0%, while those expecting rates to remain on hold stands at 7.0%. As for the December 18th, 2024, Fed’s meeting, the percentage of a further 25-basis points rate cut currently stands at 69.8%.  What are the potential risks facing the US stock market in the current market environment? Some examples of the potential risks may include but are not limited to:  Interest Rate Uncertainty: The market is divided on future Fed rate cuts, causing uncertainty and potential volatility. Economic Data Sensitivity: Upcoming data releases could cause market reactions if they deviate from expectations. Political Pressure: The US elections risk, and the fact that some politicians were calling for more aggressive rate cuts, which could influence the market sentiment around the FED decisions. Global Factors: The potential impact of global events on the US stock market. Remember, these are just some potential challenges. The market is constantly influenced by a wide range of other major factors such as companies earnings, growth as well as many other factors. Technical Analysis SPX500 Weekly Chart Source: Tradingview.com As previously mentioned, the S&P 500 Index has been in an uptrend since the markets got out of the financial crisis in 2008, the long term uptrend faced multiple hiccups along the way, however, the index was able to resume its uptrend reaching historic highs. The MACD indicator reflects that the price action deviation from its moving averages has remained near its widest points for an extended period, and currently has a negative divergence to price action for the later part of the uptrend, suggesting weakness in the ongoing trend, marked by the red lines. The MACD line remains above the signal line, however, it is yet to break below it. Price action is currently finding resistance along its Monthly R1 standard calculation of 5904, a weekly close price near the 5780 area, will complete a bearish engulfing candle on the weekly timeframe. A confluence of support lies below the price, represented by the EMA9 and the SMA9  intersecting with the monthly pivot point 5645.4, a second confluence of support lies below, represented by the SMA21, the redline lower channel border and the monthly S1 standard calculation of 5506.4. Market Sentiment – COT Source: cotbase.com The COT report for the week ending on Friday, October 18th, 2024 (Includes data up to the end of day Tuesday, October 15th, 2024) reflects the following: Asset Manager/Institutional position levels have been in line with price action since early 2020 (Blue lines). However, as the long position level historic extremes were reached, a negative divergence can be seen between price action and Asset Manager/Institutional positions. Price action is making higher highs, while Asset Manager/Institutional’ long positions are making lower highs (Red lines), suggesting a potential change in sentiment. The latest COT report also reflects a discrepancy, the positions data reflects that Other Reportables are moving towards sell while the Small Speculators category are moving towards long. In conclusion, the US stock market’s future trajectory is contingent upon a multitude of factors, including economic indicators, Federal Reserve policy, and global events. While the market has demonstrated resilience in the face of past challenges, investors must remain vigilant and adaptable in this evolving landscape. By carefully considering economic data, technical analysis, and market sentiment, investors can position themselves to navigate the next chapter of the US stock market with greater confidence.

EUR/USD saw early gains on Thursday but fell as US PMI data exceeded expectations. Diverging economic paths and monetary policies between the US and Eurozone could impact EUR/USD. Technical analysis suggests a potential bullish move for EUR/USD, despite fundamental factors favoring the US Dollar. Most Read: Gold (XAU/USD), Silver (XAG/USD) Print Fresh Highs as the DXY Eyes 105.00 The Euro has lost some of its early Thursday gains as US PMI data exceeded expectations. A weaker US Dollar has helped the Euro while the technicals have also been flashing signs of a potential bounce for the pair.  PMI Insights: A Story of Diverging Outcomes Looking at the data today, Euro PMI data continued its decline. The HCOB Flash Eurozone Composite PMI increased slightly to 49.7 in October, up from a seven-month low of 49.6 in September, yet it fell just short of the predicted 49.8 and indicated a slight contraction in business activity. Growth in the services sector slowed a bit (51.2 compared to 51.4), while the decline in manufacturing eased (45.9 versus 45). Source: HCOB, S&P Global PMI Companies scaled back production due to weakening demand, with new orders decreasing for the fifth consecutive month. As a result, firms reduced employment at the most significant rate in nearly four years, and business confidence hit an 11-month low. Meanwhile, input costs rose at their slowest rate since November 2020, and output charge inflation dropped to a 44-month low. Germany and France remained the main contributors to the decline, experiencing further significant reductions in business activity. The US PMI data painted a completely different picture and thus raises concerns about a Euro recovery. The S&P Global US Composite PMI increased to 54.3 in October 2024 from 54.0 in September, indicating robust growth in business activity at the beginning of the fourth quarter, according to preliminary data. This growth was primarily fueled by the service sector, which recorded a PMI of 55.3, while manufacturing output saw its third consecutive month of contraction with a PMI of 47.8. Employment experienced a slight decline for the third month in a row, reflecting uncertainty surrounding the upcoming Presidential Election. However, confidence looking forward improved after a steep decline in September, as businesses anticipated greater stability following the election. The survey also revealed a slowdown in inflation for both input costs and prices charged, with a notable decrease in inflation within the service sector. The diverging paths of the two economies look set to extend into monetary policy as well. At Least this seems to be the biggest risk to a euro recovery as markets price in more aggressive cuts from the ECB than the US Federal Reserve. This could affect EUR/USD in both the short and longer term. Tomorrow we have a bunch of medium tier data releases from both the US and the EU which should not have a massive impact on EUR/USD. A bunch of speakers from both the ECB and Fed are also on the docket and that see adjustments to rate cut expectations. For all market-moving economic releases and events, see the MarketPulse Economic Calendar. Technical Analysis EUR/USD has been on a move lower since forming a double top pattern at the key 1.1200 handle. The move has been swift and this leaves the door open for a potential retracement. There is consensus beginning to build for a potential bullish move. The RSI on the daily has printed a higher low with price having made a lower low, this divergence in play. The RSI is also eyeing a cross back above 30 level hinting at shifting momentum. Looking at the candlesticks and we could have a bullish engulfing daily close which would be excellent for potential longs. This would just add another form of confirmation to the potential setup. This is a very technical setup, as I pointed out above the fundamental picture really points towards continued US Dollar dominance and weakness for the Euro. The technicals however are starting to paint an intriguing picture.  EUR/USD Daily Chart, October 24, 2024 Source:TradingView.com Support 1.0755 1.0700 1.0600 Resistance 1.0800 1.0840 1.0900 Follow Zain on Twitter/X for Additional Market News and Insights @zvawda

The Canadian dollar is unchanged on Tuesday. In the European session, USD/CAD is trading at 1.3831 at the time of writing. The Canadian dollar is under pressure and is having a miserable October, down 2.2%. BoC expected to chop rates by 50 bps The Bank of Canada makes its next interest rate decision on Wednesday and the central bank is widely expected to cut rates for a fourth time this year. Will the BoC deliver a modest 25-basis point cut as in previous meetings, or opt for an aggressive 50-bp cut? The markets anticipate an oversized 50bp cut, as economic growth has been weak, wage growth remains high and inflation is heading lower. Inflation dropped to 1.6% y/y in September, below expectations and moving back below the BoC’s target of 2% for the first time in three years. With inflation largely contained, the BoC is keeping a close eye on the employment front, but that has made the rate path more complicated. The September employment report showed a strong increase in job growth and a drop in unemployment. The strong job numbers indicate that the labor market remains in decent shape and supports a smaller 25-bps cut. BoC policymakers will have to decide on the size of the cut and may face the same dilemma at the following meeting in December. The current cash rate of 4.25% is too high and although the BoC has trimmed the rate by 75 bp this year, more needs to be done to boost the economy. The key question is how aggressive will the BoC be in its rate-cutting cycle, which will continue well into 2025. USD/CAD Technical USD/CAD tested support at 1.3827 earlier. Below, there is support at 1.3805 1.3855 and 1.3877 are the next resistance lines

Republican president nominee Donald Trump prospect of winning the White House has increased in the past week based on data from betting markets. Resurgence of “Trump Trade” narrative has triggered a positive feedback loop into Gold (XAU/USD). An increase in tail-risk hedging activities also led to higher demand for Gold (XAU/USD). Watch the US$2,590 key medium-term support on Gold (XAU/USD) This is a follow-up analysis of our prior report “Gold Technical: Poised for a potential bullish breakout as US CPI looms” published on 11 September 2024. Click here for a recap. Since our last publication, the price actions of Gold (XAU/USD) have staged the bullish breakout and cleared above the US$2,640/715 medium-term resistance. The yellow metal has rallied by 9.6% from 11 September to Monday, 21 October current all-time high of US$2,740. “Trump Trade” narrative has reinforced the uptrend in Gold The “Trump Trade” narrative has gained traction in the recent week due to rising odds of Trump winning the US election based on data from betting markets (60%Trump versus 39% Harris based on Real Clear Politics data as of 20 October). Given that Trump’s “generous” corporate tax cuts proposal to reduce the tax rate to 15% from 21% will likely widen the US federal deficit further, in turn leading the market to question the credit standing of the US government (such as the prospect of more frequent government shutdowns) that may see an erosion of confidence in US Treasuries and strengthened Gold (XAU/USD). Gold is being used as tail-risk hedge Fig 1: S&P 500 & S&P 500/Gold ratio long-term secular trends as of 22 Oct 2024 (Source: TradingView, click to enlarge chart) Trump’s proposed tax and trade tariffs policies are likely to reignite upward inflationary pressures in the medium to long-term. In addition, geopolitical risk premium has not been totally eradicated yet in the Middle East due to the ongoing Israel-Hamas war. Hence, higher inflationary pressure and an increase in geopolitical risk premium are deadly concoctions that may lead to stagflation which in turn can spark a potential risk-off episode in the global financial markets. In the lens of technical analysis, the ratio chart of S&P 500 over Gold (XAU/USD) together with its monthly RSI momentum indictor of the S&P 500 / Gold (XAU/USD) ratio has displayed a significant underperformance of S&P 500 against Gold (XAU/USD) since February 2024 (see Fig 1). Similar observation has been detected in the past during the peak of the Dot.com bubble in August 2000 before the S&P 500 staged a major correction of 35% over the next two years. Therefore, the recent heightened demand for Gold (XAU/USD) is likely reinforced by portfolio tail-risk hedging activities as well. Medium-term uptrend remains intact Fig 2: Gold (XAU/USD) medium-term & major trends as of 22 Oct 2024 (Source: TradingView, click to enlarge chart) The price actions of Gold (XAU/USD) have been trading firmly above its rising 20-day and 50-day moving averages since 9 August 2024 supported by a parallel ascending trendline support seen in the daily RSI momentum indicator (see Fig 2). These observations suggest that medium-term upside momentum remains intact for Gold (XAU/USD). Watch the US$2,590 key medium-term pivotal support for the potential continuation of the impulsive up move sequence for the next medium-term resistances to come in at US$2,850/886 and US$2,933 (also the upper boundary of the medium-term ascending channel from 15 February 2024 low). On the flipside, failure to hold at US$2,590 negates the bullish tone for a multi-week correction sequence to unfold within its major uptrend phase to expose the next medium-term supports at US$2,484 and US$2,360 (also the 200-day moving average).

USD/CHF is showing potential for bullish continuation. The Swiss National Bank may welcome a weaker CHF due to pressure from the swiss export sector. Upcoming US data and geopolitical events, including the IMF meeting and US election, could impact USD/CHF. Most Read: Markets Weekly Outlook – PMI Data and IMF Meeting Dominate the Agenda s eyeing an extended move to the upside as it hovers around a support area on Monday. Safe Haven appeal appears to be keeping the Swiss Franc supported at present as USD bulls eye further gains.  As expectations around Fed policy continue to shift, the CHF and the Swiss National Bank have faced different challenges. After exporters urged the government to do something and the strong CHF, the Central Bank will actually welcome some organic weakness in the CHF.  Switzerland has enjoyed easing price pressures for a while now which have raised expectations for further rate cuts from the Swiss National Bank (SNB). In September, Switzerland’s annual Consumer Price Index (CPI) slowed to 0.8%, the lowest in over three years, even though the Swiss National Bank cut its key interest rates at all three meetings this year.  This could lead to policy divergence if the trend continues and this could weigh on the CHF and thus push USD/CHF higher.  Swiss National Bank Interest Rate Probabilities Source: LSEG Workspace US Data Ahead There is not a lot in terms of data from the US this week with larger volatility and price swings expected from the IMF meeting in Washington. The meeting will provide a platform for major Central Bank Governors to provide comments and discuss what they see as the path forward. Geopolitical tensions remain key given the CHF often attracted haven demand. The US election has been adding another layer of uncertainty as it draws nearer.   Source: For all market-moving economic releases and events, see the MarketPulse Economic Calendar.  (click to enlarge) Technical Analysis From a technical standpoint, USD/CHF on a weekly chart below finished last week extremely bullish and just a few pips off the weekly high. USD/CHF is experiencing a slight pullback today as it languishes between the inner and outer trendline. USD/CHF Weekly Chart, October 21, 2024 Source: TradingView (click to enlarge) Looking down to the daily chart below and you can see price is currently resting on the support handle.Immediate resistance rests at 0.8700 which is the 100-day MA before.  A break above this level will finally give the pair a chance to retest the descending trendline. Will we get a break or a bounce?  Now there are other scenarios that may develop depending on external circumstances. There may be a short-term pullback toward 0.8550 support or the 0.8500 handle. **Please note that this is a follow- up piece. Further technical analysis here: USD/CHF Technical Outlook: Confluence Area Hints at Bullish Breakout USD/CHF Daily Chart, October 21, 2024 Source: TradingView (click to enlarge) Support 0.8633 0.8550 0.8400 Resistance 0.8700 0.8756 0.8890 Follow Zain on Twitter/X for Additional Market News and Insights @zvawda

The yen is slightly lower on Monday. In the European session, USD/JPY is trading at 149.96, up 0.30%. China lowers key lending rates by 25 basis points. China cuts key lending rates China lowered its key lending rates by 25 basis points on Monday. This brings the one-year loan prime rate (LPR) down to 3.1% and the 5-year LPR down to 3.6%. The move was expected and follows lending cuts in September, as China’s central bank is increasing stimulus measures in order to boost flagging economic growth. On Friday, China’s third-quarter GDP which showed a gain of 4.6% y/y, above the market estimate of 4.5% but below the 4.7% clip in Q2. This was the slowest annual growth rate since Q1 2023. China’s economy is struggling due to a variety of factors, including a property crisis, weak domestic demand and deflation. Imports have fallen off and that is a major concern for Japan, as China is Japan’s largest export market. China’s GDP target is around 5% and September’s retail sales and industrial production provided positive news, as both accelerated in September and were stronger than expected. Retail sales climbed 3.2% y/y, up from 2.1% in August and above the market estimate of 2.5%. Industrial production rose 5.4%, well above the August gain of 4.5% and blowing past the market estimate of 4.6%. The Bank of Japan holds its two-day meeting which concludes on Oct. 31, just four days after a snap general election. The BoJ is expected to maintain policy settings at the meeting. New Prime Minister Shigeru Ishiba had been considered a monetary hawk but since becoming prime minister has said he would leave monetary policy to the BoJ. USD/JPY Technical USD/JPY has pushed above resistance at 149.74 and is putting pressure on resistance at 150.10 148.83 and 148.28 are providing support

The Australian dollar is calm on Monday. In the European session, AUD/USD is trading at 0.6689, down 0.18%. The Aussie posted its third straight losing week and has declined 3.2% in October. On the data calendar, there are no US or Australian economic releases. RBA’s Hauser: policy could move in either direction The markets are trying to get a feel for when the Reserve Bank of Australia might make a rate move. The RBA has held rates at 4.35% for close to a year and has been hawkish in its stance, as board members have considered the possibility of rate hikes at recent meetings. Traders are betting that the RBA’s first move will be a rate cut, but not until early next year. The September employment report was stronger than expected, which has eased the pressure on the RBA to lower rates. RBA Deputy Governor Andrew Hauser said on Monday that he was surprised that job growth has been so strong. Hauser noted that inflation remained too high and that the RBA could make a rate move in either direction. A rate hike would make the RBA an outlier among the major central banks, most of which are in a rate-cutting cycle in response to falling inflation. The two key factors with regard to rate policy are inflation and employment and neither one supports the case for a rate cut. Inflation rose to 3.8% in the second quarter, up from 3.6% and close to double the central bank’s target of 2%, while the labor market remains strong. The RBA won’t be in a position to consider a cut until it sees lower inflation and a weaker employment data. The next rate meeting is on November 5 and the RBA is widely expected to stay on the sidelines. AUD/USD Technical AUD/USD pushed below support at 0.6745 and 0.6720 earlier. Next, there is support at 0.6692 There is resistance at 0.6773 and 0.6798  

Global markets are reacting to shifts in central bank policies, with the US dollar strengthening and rate cut expectations changing. The upcoming week will be busy with the IMF meeting, PMI data releases, central bank announcements, and US earnings reports. The US Dollar Index is in focus as technical factors may play a more significant role in its movement amidst a lighter data week. Read More: Gold (XAU/USD) Price Smashes Through $2700/oz – Further Gains Ahead? Week in Review: US Earnings Surprise and Gold Hits Fresh Highs The week drew to a close with fresh highs for the S&P 500 and Gold while US earnings continued on its impressive path.  As markets digest US earnings, rate cut bets in the US remain steady from a week ago. Markets are still pricing in around a 92.3% chance of a 25 bps cut from the Fed in November, up from 89.5% last week.  Source: SME FedWatch Tool On the whole, the week itself was a bit of a hit and miss with quite a bit of choppy price action in the early part of the week. However, UK data and the ECB interest rate meeting have seen markets face up to the fact that the global rate environment is set for a correction. The Bank of England (BoE) which was expected to see its policy diverge from the Fed and ECB has found itself in the spotlight as softer inflation figures ramped up rate cut expectations. The impact of this realization saw the UD Dollar emerge as the front-runner for the week once more. The greenback continued its impressive run of late as we approached the US elections in November.  Looking at fellow commodities and metals, Oil prices continued its slide this week. Softer data globally and renewed concerns around Chinese growth saw both OPEC + and the IEA downgrade their forecasts once more. Silver breached the 32.00 handle and similar to gold, analysts are predicting a further 12 months of bullish price action with a target price for silver set at $45/oz..  The FX front, as mentioned the US Dollar continued its rise this week. The Japanese Yen experienced whiplash price action as news filtered through of a possible rate hike which was immediately rebuked by the BoJ.  Bitcoin has enjoyed a renaissance this week with the world’s largest cryptocurrency having risen to trade at 68500 at the time of writing. This leaves the world’s largest cryptocurrency just 8% of its all-time highs.  The Week Ahead: US Earnings, IMF Meeting, Central Banks and PMI The week ahead is a busy one underlined by the IMF meeting taking place in Washington next week. This is but one pillar of what is shaping up to be a busy week for markets across the globe.  We have PMI data from a host of countries, a couple of Central Bank meetings, US earnings and geopolitical developments to consider. One has to wonder which event may deliver the greatest impact where markets are concerned and that is a tough question to answer.  Asia Pacific Markets In Asia, the week is quiet following a busy period that culminated with a data dump from China this week. The biggest event in Asia will likely be Tokyo inflation data. Given the mixed rhetoric around rate hikes by the Bank of Japan (BoJ), the inflation data could meaningfully influence the timing of the Bank of Japan’s next move. Australia and New Zealand will also be enjoying a quiet week with both countries likely to be affected by external factors in the week ahead. There is a speech by RBNZ Governor Adrian Orr which could affect the NZD. Europe + UK + US In developed markets, the European Central Bank has seen an increase in the probability of a 50 bps cut in December as much as they have tried to avoid it. Growth in the Euro Area has become a key area of focus and that makes next week a big one as PMIs will be crucial for the eurozone.  Since May, the composite PMI has generally been declining, except for a temporary boost in August due to the Olympics. September’s reading fell below 50, indicating contraction and heightening fears of a potential recession. While these fears might be exaggerated, an economic slowdown seems likely. The October figures will reveal if there’s any improvement; if not, concerns about a slowdown will intensify. Poor PMIs could send the Euro spiraling lower as market participants are likely to increase bets on a 50 bps rate cut. The UK has just come off a week that has shifted the narrative for the Bank of England. A significant slowdown in inflation, more importantly services inflation and rate cuts are back on. Service PMIs have been gradually declining, aligning with slower growth rates in the year’s second half. If this trend persists, coupled with the recent slowdown in services inflation, the BoE might accelerate its rate cuts. Keep an eye out for any indications of this during Governor Bailey’s appearances in Washington next week. The US data calendar is pretty bare next week with the Fed’s beige book being the biggest event. I expect we will hear more chatter from Federal Reserve Policymakers which could add volatility to markets. It will be interesting to gauge if the US Dollar can hold onto recent gains. Canada will enjoy a bigger week with the Bank of Canada (BoC) rate decision expected on Wednesday. The market expects a big change due to low inflation and weaker activity, but I think the decision will be tight, with most officials cautious about moving too quickly. Markets are pricing in a 91.4% chance that the BoC will deliver a 50 bps cut.  Source: LSEG Refinitiv Geopolitical developments and US earnings could have a major impact next week. I would also say that any comments from Central Bank Governors at the IMF may be worth paying attention to as policy rates remain a hot topic globally.  For all market-moving economic releases and events, see the MarketPulse Economic Calendar. Chart of the Week This week’s focus is back on the US Dollar Index (DXY) as we have a lack of data which could mean the technicals become more important.  Having enjoyed a stellar rally the DXY appears to have finally found resistance at the 200-day MA. There are signs that point to a retracement but given the overarching macro economic outlook the downside might be limited. The Fed are now expected to cut less than the BoE and the ECB which is contributing to the USD rise over the month of October. The RSI on the daily has now flashed a potential sell signal having broken back below the 70 level from overbought territory. This is usually a sign of shifting momentum and that a drop in price may continue. The DXY is also caught between the 100 and 200-day MA with the 100-day MA likely to serve as a key support area around 103.180.A break below this support level could open up a retest of 102.65 and potentially 102.100. Now a break above the 200-day MA remains possible and could open up a run toward the 104.oo and 104.50 handle. US Dollar Index Daily Chart – October 18, 2024 Source:TradingView.Com (click to enlarge) Key Levels to Consider: Support: 103.18 102.65 102.00 Resistance: 104.00 104.50 105.00 105.63 Follow Zain on Twitter/X for Additional Market News and Insights @zvawda

Wall Street indexes rebounded from Tuesday’s selloff, driven by strong earnings from TSMC and positive economic data. Nasdaq 100 approaches all-time highs, fueled by TSMC’s success and AI demand. Market sentiment remains optimistic, but concerns persist over high valuations. Most Read: GBP Price Action Ideas: GBP/USD, GBP/JPY and EUR/GBP The major Wall Street indexes have bounced back completely from Tuesday’s selloff, which was driven by concerns over tech stocks, particularly chip stocks. The indices surged after Taiwan Semiconductor Manufacturing Co. (TSMC) released its Q3 earnings. The world’s largest contract chipmaker smashed market estimates for profit while also predicting an increase in fourth quarter revenue (Q4) on AI demand. The U.S.-listed shares of the chipmaker, TSM.N, skyrocketed by 12.2%, while Nvidia, a popular AI-trade stock and TSMC customer, rose by 3%, reaching a new record high. Nasdaq 100 Heatmap Source: TradingView This renewed optimism was further enhanced by an increase in retail sales of 0.4% and a drop in the weekly jobless claims print. All of the data together has led the S&P 500 to fresh highs and the Nasdaq 100 closer to its all-time highs. The question now is will the remaining earnings from the magnificent 7 be enough to push indices even higher? Later today we have Netflix reporting after the bell which could have an impact as well. There is a lack of high impact data from the US to end the week and general market sentiment is likely to drive markets toward the end of the week. We could see a short-term pullback as some market participants might embark on profit taking ahead of the weekend. The Morgan Stanley current market sentiment indicator reflects a risk-positive outlook which suggests that market participants are optimistic about the market’s future performance. Source: Morgan Stanley, Isabelnet Over the medium-term, many analysts remain concerned that stock prices might be too high, with big expectations for earnings and potential market swings as the U.S. presidential election in November approaches. This makes the reporting by the magnificent 7 even more intriguing as it arrives just before the US election.   Technical Analysis  S&P 500 From a technical standpoint, the S&P is continuing its long term move to the upside. For those who have followed my previous articles, the S&P 500 broke out of a triangle pattern a few weeks back. As technical patterns go, the potential targets following the breakout rest around the 5910 handle 6100 handle with the index reaching a fresh high of 5880 today. The pullback on Tuesday is a positive in my book but as discussed above the risks around stretched valuations etc may concern bulls as we trade at unprecedented levels.  A break above the 5910 handle will lead to a run toward the psychological 6000 handle which could prove a stubborn stumbling block. This could mean that a retracement may take place before the index makes a run for the 61000 handle. Looking at immediate support and a key level rests at 5757 with a break lower running into the ascending trendline. A daily candle close below the swing low at 5669 invalidates the bullish setup and could see the S&P 500 record a deeper pullback. S&P 500 Daily Chart, October 17, 2024 Source: TradingView (click to enlarge)  Support 5757 5669 5635 Resistance 5880 5910 6000 Nasdaq 100 The nasdaq 100 looked set to be closing as a morningstar candlestick pattern but a pullback just before i wrote this article leaves the pattern up in the air. A morningstar candlestick pattern is no guarantee but would increase the probability of a breakout above the immediate highs at 20484. The bullish trend remains valid as long as the Nasdaq 100 remains above the swing low at 19750. A daily candle close below this level would invalidate a potential bullish continuation. Immediate support rests at 20000 and then of course 19750 and the 100-day MA at 19536.  Nasdaq 100 Daily Chart, October 17, 2024 Source: TradingView (click to enlarge)  Support 20000 19750 19536 Resistance 20484 20790 (all-time highs) 21000 Follow Zain on Twitter/X for Additional Market News and Insights @zvawda

The Canadian dollar is showing limited movement on Wednesday. In the European session, USD/CAD is trading at 1.3786 at the time of writing, up 0.09%. The Canadian dollar finally ended a nasty nine-day slide on Tuesday, posting slight gains after Canada’s CPI report. Canada’s inflation rate falls to 1.6% Canada’s inflation rate continued on its downward path and fell to 1.6% y/y in September, down from 2% in August and below the market estimate of 1.8.%. This marked the lowest inflation level since February 2021. Monthly, inflation declined by 0.4%, below the August reading of -0.2% and the market estimate of -0.2%. The driver of the decline was a sharp drop in gasoline prices. The average of two Bank of Canada core inflation indicators was 2.35%, unchanged from August. The CPI release was the last key economic report before the Bank of Canada announces its next rate decision on October 23. The BoC is poised to cut rates, but policymakers will have to make a tough choice, whether to cut by 25 or 50 basis points. The BoC would likely prefer to trim gradually in modest 25-bps increments. The September jobs report, which was stronger than expected, reinforced a 25-bps cut at next week’s meeting. However, the better-than-expected inflation release supports the case for an oversized cut of 50 bps. Inflation is fast becoming a non-issue now that inflation is comfortably below the BoC’s target of 2% and the central bank is looking to ease rates and boost economic growth. The BoC has cut rates by 75 bps this year but the economy has been slow to respond, and a 50-bps cut would encourage stronger consumer spending. USD/CAD Technical USD/CAD is putting pressure on resistance at 1.3795. Above, there is resistance at 1.3819 1.3750 and 1.3726 are the next support levels

Trump’s trade war 2.0 narrative & steep sell-off in ASML spooked the performances of the major US stock indices on Tuesday, 15 October. Implied volatility in the US stock market, measured by the VIX tends to be highest in October based on data during past US presidential election years since 1992. VIX/MOVE ratio has started to show outperformance of VIX. The S&P 500’on-going 4-week rally has flashed out exhaustion conditions. The S&P 500 shed 0.75% on Tuesday, 15 October after it printed its 46th record high for 2024 on Monday. Yesterday’s daily loss of 0.75% was the largest seen in the past two weeks and attributed to the underperformance of the artificial intelligence (AI) juggernaut, Nvidia (second largest market cap stock in the S&P 500) which tumbled by 4.68% after a related bellwether semiconductor chip-making equipment firm, ASML issued a downgrade to its revenue guidance for 2025 that saw its share price plummeted by 16%, its worst daily performance since 12 June 1998. In addition, an adverse macro factor also attributed to yesterday’s weakness inflicted in all the major US stock indices except for the Russell 2000 which closed almost unchanged; Nasdaq 100 (-1.37%) and Dow Jones Industrial Average (-0.75%). US trade tensions with China narrative is now back on the radar of market participants after US Republican presidential nominee Donald Trump reaffirmed his preference for higher tariffs on China and the rest of the world’s exports to the US as he remarked that “tariffs are the most beautiful word in the dictionary” during yesterday’s live in-person interview with Bloomberg News organized by The Economic Club of Chicago. With less than four weeks to go before the 5 November US presidential election day, betting markets are now indicating Trump has a lead of 56% over Democratic presidential nominee Harris (43%) according to betting average data as of 15 October compiled by Real Clear Politics. October recorded the highest level of VIX during past US presidential election years Fig 1: Average monthly VIX during US presidential election years since 1992 as of 2 Aug 2024 (Source: TradingView) Regardless of who wins the White House race, based on past data during US presidential election years since 1992, the VIX, a measurement of the implied volatility of the US S&P 500 has increased in the four months (July to October) before the election month of November; a jump of around 40 percent, and reach an average monthly high of 25.97 in October (see Fig 1). Hence, the S&P 500 now faces an increased risk of a jump in the VIX which in turn may spark a multi-week risk-off episode in the global financial markets. VIX is now showing outperformance conditions over the MOVE Index Fig 2: Major trends of MOVE Index, VIX & VIX/MOVE ratio as of 16 Oct 2024 (Source: TradingView) The Merrill Lynch Option Volatility Estimate (MOVE) Index reflects the level of volatility in U.S. Treasury futures. The index is considered a proxy for term premiums of U.S. Treasury bonds (the yield spread between long-term and short-term bonds). The movement of the MOVE Index has a strong direct correlation with VIX (implied volatility of the US stock market; S&P 500) since 2018 (see Fig 2). Since the week of 16 September 2024, the MOVE Index has surged upwards significantly and cleared above a key medium-term resistance of 112.80. The VIX has tagged along as well but has yet to break above its key medium-term resistance of 23.38 (currently trading at 20.80). Interestingly, the ratio of VIX/MOVE has printed a series of “higher lows” and staged a bullish breakout from a major descending trendline resistance on the week of 15 July 2024 which suggests outperformance conditions of the VIX over MOVE Index have surfaced. All these observations suggest a potential imminent jump in the VIX. Watch the 5,930 key resistance on the S&P 500 Fig 3: Medium-term & major trends of the US S&P 500 CFD Index as of 16 Oct 2024 (Source: TradingView) In the lens of technical analysis, the price actions of the US S&P 500 CFD Index (a proxy of the S&P 500 E-mini futures) have started to show signs of fatigue despite a string of record highs reached in the past four weeks. Since 22 August 2024, the US S&P 500 CFD Index has evolved into a bearish “Ascending Wedge” configuration coupled with a bearish divergence condition sighted on the MACD Histogram in the same period which suggests its medium-term upside momentum has started to wane. 5,930 key medium-term pivotal resistance on the Index and a break below 5,675 key intermediate support (also the 50-day moving average) is likely to trigger a medium-term (multi-week) corrective decline sequence to expose the next medium-term supports of 5,390 (close to the 200-day moving average) and 5,100 (see Fig 3). On the flip side, a daily close and a clearance above 5,930 invalidate the bearish scenario for a continuation of the impulsive upmove for the next medium-term resistances to come in at 6,110/130 and 6,390 (also the upper boundary of the major ascending channel in place since March 2020 pandemic low).

Wall Street indexes showed positive momentum, driven by strong bank earnings reports. Tech sector earnings, expected later in October, could further boost US indices. S&P 500 technical analysis suggests potential bullish continuation with key resistance levels identified. Most Read: Brent Crude – OPEC + Cuts Forecasts Again as Chinese Imports Fall, Brent Holds Above $78/Barrel The major Wall Street Indexes took a breather this morning following a stellar rally yesterday. The Dow Jones Industrial Index touched the 43000 handle for the first time while the S&P and Nasdaq 100 both continued to advance as well. The Nasdaq 100 continues to lag its peers however and still remains around 300 points of its all time highs of 20790.  Earnings season got underway last week with major banks JpMorgan Chase JPM.N and Wells Fargo WFC.N both posting surprisingly positive results. This week however steps things up a bit with 41 S&P 500 companies scheduled to report earnings, which could stoke a lot of volatility in US indices.  Earnings from Bank of America today were not as upbeat as some of its peers but the share price has recovered from an initial drop to trade in green for the day. Goldman Sachs and CitiGroup however smashed estimates with their earnings releases which could be the reason for the recovery in US indexes this morning. Johnson and Johnson were another name that beat estimates on both profits and sales forecasts as well as the expectations by Wall Street. On the flip side, Oil stocks were lower today as Crude Oil prices plummeted on hopes that supply disruptions in the Middle East would not materialize. Exxon Mobil XOM.N, Occidental Petroleum OXY.N, and Chevron all falling between 2.5% and 3% on the day. It has been an interesting start to earnings with the banks surprising thus far. Given that markets are expecting the Technology and Communication sectors to boom and post their largest YoY growth, this could set up US indices for further gains. The tech heavyweights are scheduled to report toward the backend of October and thus could propel US indexes higher just before the US election.  This is intriguing to say the least given that markets do usually experience a ‘Santa Rally’ in December meaning that US Indices could continue their upward trend heading into 2025.   NAS 100 Early Session Heatmap Source: TradingView.com (click to enlarge) Looking ahead to the rest of today’s session, US data is sparse. All earnings releases are also out of the way with nothing scheduled after market close which shifts the focus to comments from Federal Reserve policymakers. On the docket we have comments from Fed policymaker Mary Daly and Adriana Kugler which may provide further insights into policy making heading into the November meeting and beyond. Barring any surprise comments I do not expect any material change to market expectations around the upcoming Fed meetings. Technical Analysis  S&P 500 From a technical standpoint, the S&P is continuing its long term move to the upside. For those who have followed my previous articles, the S&P 500 broke out of a triangle pattern a few weeks back. As technical patterns go, the potential targets following the breakout rest around the 5910 handle 6169 handle with the index reaching a fresh high of 5872 yesterday. However, given the amount of movement we have already had the opportunity for would be bulls to get involved may be gone by now. There is a possibility of getting one or two small scalps in before the index reaches its first potential target at 5910. A break above the 5910 handle will lead to a run toward the psychological 6000 handle which could prove a stubborn stumbling block. This could mean that a retracement may take place before the index makes a run for the 6169 handle. S&P 500 Daily Chart, October 15, 2024 Source: TradingView (click to enlarge)  Support 5757 5669 5613 Resistance 5913 6000 6169   Follow Zain on Twitter/X for Additional Market News and Insights @zvawda