What we are looking for

  • USD out of favour, for now: With risk appetite boosted by the rebound on GBP, the USD is out of favour on major forex. However, this is still likely to only be a near-term knee-jerk move.
  • GBP jumps: Initially GBP was the main underperformer of the day. However, as rumours of a government u-turn on tax have come through GBP has jumped. 
  • Indices lower, but off their lows: European indices are still lower, but they are off their lows, as US futures have turned from negative to slightly positive.
  • Commodities moving higher: A jump in the oil price amid weekend reports of OPEC+ cutting production by -1 million barrels or more. 
  • Data trading: The US ISM Manufacturing will drive USD later in the session. The UK Manufacturing PMI is a revision to the flash, so GBP may not get too much action from it. 


Volatility in UK assets remains significant on Monday morning. A UK Government u-turn on cutting the top rate of income tax has helped to support GBP today. However, there will be serious questions over the authority of Prime Minister Truss already. The near-term strength may not last, but elevated volatility is likely to continue.

For the time being there has been a pop higher in risk appetite. The USD is out of favour and commodities are higher. However, equity markets remain vulnerable. There are also contagion risks in the banking world bubbling under. Over the weekend, Swiss banking giant Credit Suisse was reported to require a capital injection. This will be one to watch in the coming weeks.

The ISM data is key on the economic calendar today. Throughout the morning, the European PMIs are announced. However, their impact is reduced by the fact that they are just final revisions to the flash data released a couple of weeks ago. The UK Manufacturing PMI is expected to be unrevised. The US ISM Manufacturing is expected to be unchanged from the August data. This might in itself be a disappointment as other countries have had PMI surveys that have shown a mild pick up in September.

Today’s news

Market sentiment is very mixed: USD weakening and commodities higher. However, equities and crypto are lower.

Treasury yields quiet to start the week: There has been little movement in Treasury yields this morning.

UK chaotic “mini-budget” continues: Over the weekend, UK Prime Minister suggested there would be no backing down. However, there has been growing pressure from Conservative MPs in her party to change the policy on cutting the 45% bracket of income tax for top earners. Rumours of a U-turn have turned out to be true as the UK Government has backtracked. GBP is rebounding again.

Trouble brewing in the banking world: Swiss investment bank, Credit Suisse, is reportedly looking to reassure its investors in the hope of raising more capital. For now, the situation is stable, but there will be more talk of “contagion risk”. This could be another warning shot that begins to usher in a less aggressive stance on monetary policy from central banks such as the Fed. This is certainly a topic to keep an eye on in the coming weeks. It will likely play into the safe haven attraction of the USD.  

OPEC oil production cuts: Oil has jumped over +4% this morning as sources from OPEC+ have said the group may cut production by over 1 million barrels per day.

Cryptocurrencies remain under pressure: Cryptocurrencies are still under pressure this morning. Bitcoin is -1% lower at c. $19200, with Ethereum -3% at $1290.

Three Fed speakers to start the week: There are three Fed members today. The FOMC’s Bostic (2024, leans hawkish) is at 13:05 GMT. The FOMC’s Barkin (2024 voter, hawkish) is at 15:45 GMT. And the FOMC’s George (2022, centrist) is at 18:15 GMT.

Economic Data:

  • UK Manufacturing PMI - final (at 09:30 GMT) The final reading is expected to be unrevised at 48.5 in September (up from the 47.3 final August)
  • US ISM Manufacturing (at 15:00 GMT) The ISM is expected to remain flat in September at 50.8 (52.8 in August)

Major markets outlook

Broad outlook: Market sentiment is very mixed. Commodities are stronger, helping AUD and NZD to outperform major forex. However, indices and cryptocurrencies are falling. 

Forex: NZD and AUD are the main outperformers, whilst GBP has rebounded from a low base. USD is out of favour for now. 

  • EUR/USD rebounded towards the end of last week but ended with a “spinning top” candle on Friday, which suggests caution. The early rebound today is positive but the overhead supply between 0.9865/0.9950 is a barrier. We still see near-term rallies as a chance to sell and there is considerable resistance above. A move below 0.9735/0.9750 initial support would see the rebound fading, whilst below 0.9635 turns negative again.
  • GBP/USD has rebounded strongly in recent sessions and is being helped again by a news-driven move this morning. A rally into the 1.1350/1.1450 resistance area could be seen. However, this remains an unwind from oversold within a bearish outlook. For now, the recovery is holding, but we expect to see the selling pressure resuming in due course. Initial support is at 1.1025 and a decisive failure below there could see the downside momentum taking hold.
  • AUD/USD has stumbled and pulled back from resistance between 0.6525/0.6535. The market is rebounding this morning, but this comes after a strong negative session on Friday. The configuration on momentum continues to suggest selling into strength and that rallies will struggle. A move above 0.6535 is needed to engage a near-term bounce. Support at 0.6363 is key.

Commodities: A recovery in precious metals and oil is developing.

  • Gold has been stalling in its rally in recent days. Two very small-bodied candles reflect the uncertainty. This is coming under the key overhead supply between $1680/$1691 and just as the daily RSI once more unwinds back towards 45/50. We look for a sell signal for renewed downside as we favour selling into strength. A break above $1691 would open a bigger rebound towards $1720/$1735. Initial support is at $1659 with $1641 now a higher low.
  • Silver has continued to recover this morning and is now eyeing a test of the five-month downtrend (currently at $19.64). This is an important moment as the RSI is again in the 50/60 area where the September rally faltered. The key price resistance is $19.90/$20.00. Initial support is at $18.86.
  • Brent Crude oil has rallied to test the resistance of the previous September lows between $88.25/$89.75 as the initial basis of overhead supply. Already there has been a move to break the resistance of a four-week downtrend. However, a move above $90 would open for a bigger near-term rally and a test of the key resistance overhead between $93.25/$96.60. We favour waiting for the rally to play out before looking to sell into strength for a retest of the $83.55 low in due course.

Indices: Equities still struggling this morning.

  • S&P 500 futures decisively breached the support band between 3613/3639 with Friday’s strong bear candle. The early moves this morning reflect a continued struggle for any gains. The daily RSI is still looking to unwind from oversold (from under 30) and there is scope for a rebound to develop. However, as yet there is little sign of one. A rally above 3750 is needed to suggest a sustainable rebound can kick in. 
  • German DAX fell again on Friday and is lower once more this morning. The sharp three-week downtrend continues to track the market lower. The daily RSI remains negative but will look to unwind from 30. There is considerable resistance to recovery between 12310/12375. Beyond this morning’s support at 11797 there is little support until 11320 (October 2020 low).
  • FTSE 100 remains under selling pressure. Falling again on Friday and lower once more this morning, there is a struggle to hold any intraday gains right now. There is an oversold position on the daily RSI which may induce a near-term technical rally. The resistance builds between 6937/7010. A retest of the March low at 6755 is increasingly likely.

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.