What we are looking for

  • USD strength resumes: With risk appetite again deteriorating, the USD is once more storming to multi-decade highs. 
  • GBP selling again but slightly more orderly: It seems incredible to say it but there is at least a more orderly sense to the GBP selling this morning.
  • Indices fall over: Minor intraday rallies of yesterday were simply another chance to sell. US futures are breaking through the key June supports.
  • Commodities sell-off: The risk sell-off is hitting silver and oil. Gold is lower again but is slightly more contained.
  • Data trading: On the data front, the trade balance and pending home sales are fairly lower tier data, which may move USD slightly. There will be more focus on the array of Fed speakers scheduled throughout the day. Fed Chair Powell will be the highlight. 


After the capitulation of Friday and Monday, there was a sense that maybe a turnaround could take hold yesterday. That move was quickly snubbed out and risk appetite has faltered sharply into Wednesday. Geopolitical fears are once more bubbling up as the gas pipelines of Nordstream 1 & 2 have been sabotaged. Once more the USD is a massive outperformer on major forex, equity markets are under huge selling pressure and commodities are falling.

An update on the calamity that is the UK. In the wake of the unfunded tax cuts of the Government’s mini-budget on Friday, bond yields continue to shoot higher. The Bank of England (via chief economist Huw Pill) has said that it stands ready to support GBP but appears happy to just use verbal intervention for now. When asked for a comment on the BBC, former US Treasury Secretary Larry Summers said that it was the sort of IMF communication that was given “much more frequently to emerging markets with new governments than to a country like Britain”. Scathing indeed. UK assets continue to be sold.

Once more, it is all about the US and the Fed on the economic calendar today. The US Goods Trade Balance is expected to show a slight reduction in the deficit in August. Pending Home Sales are expected to decline by around -0.5% in August meaning a decline of -23% on a 12-month basis. Elsewhere there are as many as five Fed speakers scheduled for today, including Fed Chair Powell.

Today’s news

Market sentiment dives again: Risk appetite has once more deteriorated sharply, leaving the USD as the only asset that traders/investors are willing to buy in a sea of red.

Treasury yields continue higher: Longer-dated Treasuries are being sold (sending yields higher). The 10-year yield has hit 4% this morning.

Gas pipeline “sabotage”?: The gas leaks of Nordstream 1 and 2 could be the result of sabotage. However, the cause is yet unknown and the US says that it is not in anyone’s interest. There are reports out of Denmark of a geological survey that recorded two tremours around the time and location of the gas leaks. 

IMF criticises UK Government tax plans: In an unusual move, the IMF has criticised the UK Government for its planned tax cuts. The IMF has said that they are likely to increase inequality and also add to pricing pressures. 

Bank of England is ready to act: In response to the UK Government tax plans, the Bank of England’s chief economist Huw Pill has said that the Bank “cannot be indifferent” and that it would be ready to deliver a “significant monetary policy response” to protect GBP. The comments allude to a response in the scheduled November meeting rather than an emergency reaction. Presumably, that is, unless GBP moves further into freefall.

Cryptocurrencies fall over again: The near-term rallies of the last couple of days have been sold into. Crypto fell back into the close last night and is sharply lower again today. Bitcoin is -1.7% at $18750 whilst Ethereum is -3.5% at $1279. 

A swathe of Fed speakers: Fed Chair Powell speaks today at 14:10GMT. With the market turmoil currently being seen (especially in bond markets), Powell’s comments will be certainly watched. There are also several other Fed speakers to watch for. The FOMC’s Bostic (2024 voter, leans hawkish) is at 12:35 GMT. The FOMC’s Bowman (permanent voter, slightly hawkish) is at 15:00 GMT. And finally, the FOMC’s Evans (2023 voter, very dovish) is at 18:00 GMT.

Economic Data:

  • US Trade Balance - Goods (at 12:30 GMT) The deficit is expected to improve slightly to -$85.0bn in August (from -$89.1bn in July)
  • US Pending Home Sales (at 14:00 GMT) Pending sales are expected to decline further with the year-on-year sales falling to -23.0% in July (from -19.9% in August)

Major markets outlook

Broad outlook: A risk sell-off has resumed. Everything is being sold apart from the ever-strengthening USD. 

Forex: USD is decisively outperforming major forex, with the AUD and NZD the big underperformers. 

  • EUR/USD selling pressure has resumed. The attempts at a recovery early this week have faltered, leaving resistance at 0.9670/0.9700 and a move to new 20-year lows brings 0.9500 once more into view. Momentum is stretched and a technical rally is due. However, for now, there is little appetite to back a recovery that would involve selling the USD. It is now just round number support below.
  • GBP/USD rebounded from the spike low of 1.0327 but is struggling to build a recovery. Another drift back lower overnight has tested the support at 1.0630. For now, this is holding but if it goes, then a retest of the low at 1.0327 should not be ruled out. The initial resistance is 1.0740/1.0835. We expect elevated volatility to continue.
  • AUD/USD rallies just seem to be another chance to sell. An attempted technical rally yesterday was quickly sold into, leaving resistance at 0.6510 and the market has just continued lower. There is very minor support around 0.6370 and then 0.6250. After the accelerated sell-off, the RSI is down in the mid-20s and is at 10-month lows. This increases the potential for a technical rally, but for now, there is no real appetite to buy.

Commodities: Precious metals are under mounting selling pressure, as is oil.

  • Gold has continued to fall since the breakdown below $1655 on Friday. Intraday rallies are seen as a chance to sell, with the market falling to its lowest since April 2020. The RSI is looking stretched under 30, but during the July sell-off it fell as low as the mid-20s, so there is the capacity for further downside yet. There is now new resistance around $1653/$1654 with overhead supply towards $1680/$1691. We continue to favour selling into strength. Under $1620, the next support is between $1550/$1610.
  • Silver has turned decisively negative again. We previously discussed the reaction to the resistance between $18.77/$19.05 being an important gauge and this kicked in as a  barrier yesterday. Selling into strength is once more the strategy, with a retest of the $1755 September low likely now.   

  • Brent Crude oil picked up from $83.55 with a positive candle, but we continue to see rallies as a chance to sell. Old support acts as new resistance, with the previous September lows between $88.25/$89.75 now being the initial basis of overhead supply. Below $83.55 opens $80.00.

Indices: Wall Street is testing the June lows, but the DAX and FTSE 100 have already decisively breached their equivalent supports.

  • S&P 500 futures continue to find intraday rallies being used as a chance to sell. The June low at 3639 is coming under mounting pressure. Minor intraday breaches have been seen, but a closing breakdown would be the lowest level since December 2020 and open for further downside. Momentum is bearish but is becoming oversold near term with the RSI under 30. The importance of initial resistance between 3730/3740 is building.
  • German DAX broke the support of the key March and June lows around 12375 and with yesterday’s bull failure, this has now become the basis of overhead supply. It strengthens what will be the growing resistance now between 12375/12590Moving back below 12153, there is now little decisive support until the 11300 area. With the RSI below 30 this could tempt a technical rally, but it would remain a chance to sell.
  • FTSE 100 has fallen aggressively in the past two weeks. The move decisively below the June low at 6969 now opens the key March support at 6755. The RSI is increasingly stretched below 30 and a technical rally is becoming due. However, there is big resistance now between the old support between 6969/7080.

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.