What we are looking for

  • USD positive bias remains: With US Treasury yields tracking higher there is still a bias of USD strength on major forex pairs. Intraday moves against the USD continue to fade.
  • GBP underperforming: The political risk premium is weighing on GBP once more (also in the wake of a pretty terrible set of Retail Sales data).
  • Indices dropping back: The rally earlier in the week continues to unwind. Wall Street closed lower last night and US futures are again lower today. NASDAQ is underperforming due to the rise in Treasury yields.
  • Commodities weakening again: Precious metals continue to see rallies being sold into. 
  • Data traders: There is no US data to trouble USD traders today, although the comments of the FOMC’s Williams might be of interest. CAD traders will be watching for Canadian Retail Sales, whilst EUR may be impacted by the continued deterioration in Eurozone Consumer Confidence.


Another day, more political turmoil for the UK. Prime Minister Truss has resigned, but if you think that brings calm to a situation, look what might be up next. There is a strengthening possibility that Boris Johnson, a Prime Minister who resigned in July with integrity in tatters, could be making a return. A week-long election process of the Conservative Party leadership will now take place. GBP initially jumped on the news of Truss’s resignation but that has quickly faded. 

The broad sense of market sentiment remains cautious to negative. Rising US Treasury yields are once more drag on risk appetite. With this in mind, the USD strengthening trend is once more back in play across major forex. Indices are in decline, with NASDAQ underperforming on Wall Street. Commodities are also in decline, with gold and silver tracking lower.

The economic calendar is fairly quiet until Canadian Retail Sales early in the US session. Sales are expected to show mild monthly growth which would reduce Year-on-Year growth to a still healthy +6.5%. Eurozone Consumer Confidence is expected to continue to deteriorate to levels not seen since April 2009.

Today’s news

Market sentiment continues to sour: The USD positive trend is reasserting once more, with commodities dropping back and indices sliding lower.

Treasury yields are trending higher again: After another day of strong upside moves to multi-year highs, yields are ticking higher again today.

UK Prime Minister Truss resigns: After days of turmoil and political infighting, Liz Truss has resigned as Prime Minister (after just 45 days in office). There will be a leadership election in the next week to decide the next leader. The UK will have a new Prime Minister by next Friday. 

A return for Boris Johnson? The former Prime Minister who resigned just four months ago as swathes of his cabinet resigned at his conduct and “integrity”, could be making a remarkable return.

Truss's resignation GBP rally quickly fades: GBP initially rallied but the move lasted a matter of hours (not far short of Truss’s time as Prime Minister). One interesting benchmark in the days to come will be 1.1450 in GBP/USD. This is where Cable was trading the day that Truss became Prime Minister on 5th September and is also the key October lower high.

UK Retail Sales plummet: Monthly core sales were much worse than expected in September, falling by -1.5% (-0.3% exp). This means YoY sales decline has deteriorated to -6.2% from -5.3% (and improvement to -4.1% had been forecast)

Just the one Fed speaker today: John Williams (permanent voter, a shade hawkish) speaks at 13:10 GMT.

Cryptocurrencies supported, for now: Crypto closed lower for the third day in a row yesterday. There is a consolidation this morning, but if risk appetite continues to deteriorate, this should drag crypto lower again. Bitcoin is flat just a shade above $19000, with Ethereum +0.25% at $1285.

Economic Data:

  • Canadian Retail Sales (at 12:30 GMT) A slight gain of +0.2% is forecast for August which would leave YoY growth falling to +6.5% (from +8.0% in July)
  • Eurozone Consumer Confidence (at 14:00 GMT) Confidence is expected to continue to deteriorate in October to -30.0 (from -28.8 in September)

Major markets outlook

Broad outlook: A cautious and negative bias to market sentiment. 

Forex: USD is gaining once more, although EUR is holding up relatively well. GBP is the primary underperformer. 

  • EUR/USD once more failed in the band of overhead supply between 0.9800/0.9900. There is a slight tick back higher this morning, but intraday rallies are still struggling to hold. This retains the negative bias. The resistance at 0.9800/0.9875 is strengthening and a move below 0.9755 would open 0.9705 and 0.9630 supports. 
  • GBP/USD has seen the Truss resignation rally quickly fade (at 1.1336). This means that the market has posted another negative-looking candle and the continued move lower this morning reflects the downside bias. A move under 1.1150 would be a decisive corrective signal again. Resistance between 1.1380/1.1490 remains key. The RSIs on both the daily and four-hour charts are struggling under 50 again and we favour selling into strength. 
  • AUD/USD continued to falter around the strengthening resistance at 0.6345/0.6390. However, after yesterday’s intraday pull higher, the downtrend channel is not as decisive. Despite this, with the RSI struggling to even get about 40/45, we continue to see near-term rallies as a chance to sell. There is initial support at 0.6228 but we still favour a test of the low at 0.6170.

Commodities: Intraday rallies on precious metals are a chance to sell. Oil is again falling over.

  • Gold has continued to post lower highs and lower lows in the past couple of weeks, firming up the downtrend. The latest move lower has come close to testing the $1615 key low, but with the daily RSI only in the mid-30s, there is still downside potential in the current move lower. . The two-week downtrend falls around $1640/$1645 today. There is initial price resistance between $1640/$1645. Below $1615 is a two-and-a-half-year low, with the next support around $1560.

  • Silver is consistently failing around resistance between $18.90/$19.06 and selling into strength remains the strategy. With this morning’s move lower there is still a negative bias to momentum configuration and therefore an attraction towards testing the support at $18.08. A close above $19.06 would be a small base pattern.
  • Brent Crude oil looked to be improving yesterday but a bull failure once more back below what we have seen as a pivot around $93 has soured the outlook once more. This has left resistance at $95.20. Trading back under the pivot, and with the faltering of the four-hour chart RSI back under 50 again, there is a bias towards testing the support band $88/$90.

Indices: Wall Street has turned lower again, this is weighing on European indices too.

  • S&P 500 futures have posted two decisive negative candles in a row and are looking set up for a third down day today. Having found resistance at 3777 the RSI has failed at 50 and this maintains a negative configuration. . There is now a move to form lower highs and lower lows on intraday charts and a move back lower to test the reaction low at 3590 is increasingly likely now. Yesterday’s failure at 3695 is now a lower high. 
  • German DAX has fallen over and is posting lower highs and lower lows once more. The move that we saw as initially being a pullback into breakout support around 12600/12700 has gone beyond the support and is turning increasingly corrective again. Breaking back under 12592 has now opened a move back towards 12340/12400 initially. Resistance at 12935 is strengthening, with 12808 now a lower high. 
  • FTSE 100 has turned lower from 7021 (under the key near-term resistance at 7106). The move has been less aggressive than the unwinds on peer indices, but a move decisively below 6892 would be the next step in the correction. It would open the higher low at 6821. With the daily RSI faltering well under 50 this leaves a strategy of selling into strength being favoured.

This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. INFINOX is not authorised to provide investment advice. No opinion given in the material constitutes a recommendation by INFINOX or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.