After the huge volatility in the wake of the US CPI last week, the focus turns to inflation for other major economies in the coming days. Canada, the UK, the Eurozone (final data), New Zealand and Japan all announce September CPI data. We will then have a much better gauge of what central banks are facing for their meetings in the next few weeks. Subsequently, we expect major forex will sustain elevated volatility in the coming days. Whilst the USD has faced some near-term corrective pressure, there is little to change the long-held view of ongoing USD outperformance.

Watch for: 

  • North America – US Industrial Production and housing data. Canadian CPI and retail sales will also be important
  • Europe – UK CPI and retail sales, in addition to the German ZEW Economic Sentiment and Eurozone Consumer Confidence
  • Asia – New Zealand and Japanese CPI in addition to crucial Chinese GDP, industrial production and retail sales
  • LatAm – Just Mexican Retail Sales

North America

N.B. Forecasts are the latest available consensus 

US dollar (USD)

The higher-than-expected US CPI caused a wild ride of trading volatility at the end of last week. After the CPI came in hot last month, a big trend of USD strength took hold over the next couple of weeks. Although there has been a jag back against the USD near-term, we do not see that much has changed. With Fed Funds markets becoming ever more sure of a 75basis points hike, the question for this week is whether the prospect of 100bps is on the table. If so, the USD will likely drive strongly higher against major forex once more.

US data is largely lower tier this week, but there will still be some action for data traders. The industrial production data tends to be worth watching though, with an expected slight decline. We also watch the regional Fed surveys which are the current month and give a good indication of the direction of the tide for the country. Both Philly Fed and New York Fed are expected to tick slightly higher but remain in negative territory. No sustaining improvement yet then.

Canadian dollar (CAD)

After the US CPI came in higher than expected, the speculation will be whether the Canadian CPI follows suit this week. CAD has been hit hard by the USD strength but like the other commodity currencies, could be set up for a near-term technical rally.

  • USD/CAD – The big shooting star leaves the pair with a near-term corrective signal. However, we continue to believe that any potential downside will be short-lived and USD strength will reassert in due course. The importance of support at 1.3500 is clear.


Precious metals remain under pressure as the near-term move against the USD which helped commodities towards the back end of last week looks to be short-lived. With real US bond yields continuing to trend higher, we prefer to play the strong negative correlation with gold and silver. If yields remain elevated and continue to pull higher, this suggests further weakness in precious metals this week. 

After the jolt higher in the oil price following the OPEC+ decision, demand dynamics seem to be a factor that is weighing on oil once more. If the risk rebound from the remarkable rally of last Thursday begins to dissipate, then we expect oil to start to track lower once more. 

  • Brent Crude Oil – with the bull failure at $99.50 the market has retreated towards a near to medium-term pivot around $93.00. Reaction around this will be important this week. With the RSI around 50 momentum is beginning to reflect a mixed outlook. Support is at $88/$90.
  • Gold – The overhead supply between $1680/$1697 is once more a key barrier. Selling into strength is once more the preferred strategy this week. A decisive move below $1660 opens $1640 but the low at $1615 also cannot be ruled out. The primary downtrend falls from around $1710 to $1710 this week.
  • Silver – The price continues to show big swinging moves that last tend to last around two to three weeks before swinging the other way. The current move coming into this week is lower, meaning that the pressure will be on support around $17.95/$18.30. Initial resistance is at $19.30 for a swing back higher.

Wall Street

The big question coming into this week is how far the technical rally can go. The move on Thursday which showed a dramatic rebound from initial selling in the wake of the higher-than-expected US CPI data did not seem to be based on any significant fundamental ground. More likely, it was a short-covering rally as a wave of investors closed out equity and index puts. This snowballed into a big rebound. Once momentum dissipates, these moves tend to be short-lived. We still favour using rallies as a chance to sell. High inflation, aggressive Fed policy and a negative drift on economic activity add up to bearish sentiment for equities.

  • S&P 500 futures – rallies remain a chance to sell. The near-term positive aspect of a massive intraday turnaround may already be struggling. There is still scope for a continued rally but momentum still favours selling into strength. The resistance at 3820 is key but we favour a retest of old support at 3571 and towards 3500.
  • NASDAQ 100 futures – show a similar rebound signal as the S&P futures. However, once more, the outlook is negatively configured and we believe that any rallies will be short-lived. We favour a move back towards the 10485 low. The falling 21-day moving average remains a good gauge of resistance.
  • Dow futures – Although there is potential for continued recovery, we look to use failing rallies as a chance to sell. The resistance at 30510 is key this week. We see scope for renewed selling and a test of the lows around 28650.


N.B. Forecasts are the latest available consensus 

Euro (EUR)

As we move ever closer to the October ECB monetary policy meeting, the focus zeros in on the size of the next rate hike and the potential for future rate hikes. Hawkish noises from the ECB continue to point to a 75bps hike in October and then a 50bps hike in December. This would bring the rates closer to what they see as “neutral” territory (the main refinancing rate to 2.50%). 2023 would then be the moment to decide on how restrictive rates are beyond that (if at all). With economic data continuing to deteriorate they may struggle to hike much beyond neutral. 

  • EUR/USD – the lack of followthrough from the big positive reversal pattern on Thursday last week continues to reflect the reluctance to back against the USD. Subsequently, we continue to favour using rallies as a chance to sell. With resistance around 0.9800/0.9900 we favour moves to test the 0.9630 low and maybe even 0.9535.

British pound (GBP)

Volatility is alive and well in GBP. Sterling continues to fly around on moves in Gilt yields. Gilts are trading on rumour and expectation of a dramatic u-turn from the UK Government on its tax plans. As such, trading volatility on pairs such as GBP/USD remain elevated (the Average True Range is about double its average, at c. 260 pips). It means that traders need to be nimble with their positioning amidst fast-moving markets.

  • GBP/USD – With all the political turmoil in the UK, Cable continues to trade with elevated volatility. However, given the backdrop of ongoing USD strength, we continue to favour using rallies as a chance to sell. This leaves the resistance at1.1380 as potentially another key lower high. We prefer short positions for a test of 1.0925 this week. 


European indices are trading far more aligned with Wall Street now. The swings higher are subsequently also already being questioned and look to be short-lived. We continue to favour using rallies as a chance to sell.

  • DAX – The sharp rebound into the long-term overhead supply between 12375/12700 leaves this as key resistance that is a struggle to overcome. Given the unwind on daily momentum back towards neutral, already we see downside potential having been renewed. Moves back towards 11980 are likely in due course. 
  • FTSE 100 – Reaction to the massive turnaround last Thursday will be the key determinant for the trading outlook this week. Already there is a suggestion of resistance around 6970/7000 being a key barrier. A failure under here could see selling momentum taking hold once more. 


N.B. Forecasts are the latest available consensus 

Japanese yen (JPY)

As US yields continue to climb the outlook for JPY deteriorates further. However, as the JPY continues to post multi-decade lows against the USD, the prospect of further intervention from the Japanese authorities becomes ever more likely. The intervention three weeks ago only had a fleeting, if volatile impact before JPY steadily weakened once more.

  • USD/JPY – The pair has moved decisively through the 145.90 level around where the Japanese authorities intervened a few weeks ago. There is effectively no resistance as the market continues to track higher within the uptrend channel. Support for an intervention-driven pullback is 143.60/145.90. 
  • AUD/JPY – A near-term risk rally has helped recovery from 90.83. However, this move may be a short-term move as the technical rally unwinds from oversold. Resistance at 94.00/94.70 is key.

Australian dollar (AUD)

Risk appetite continues to be hit hard by rising inflation and the ever-more hawkish outlook of the Federal Reserve. The AUD is at the forefront of the negative risk appetite. AUD is the worst-performing major currency of the past month. However, the Chinese economic data will be crucial for the AUD performance this week. An improvement in the data for China could induce a near-term technical rally for the AUD.

  • AUD/USD – A near-term unwind within the downtrend channel looks to be a chance to sell. We look to sell the rally for a retest of the low at 0.6170. Resistance at 0.9360/0.9390 is key. 

New Zealand dollar (NZD)

NZD has been almost as bad a performer as the AUD in recent weeks, despite the hawkish lean of the Reserve Bank of New Zealand. Lower inflation may play into this move further. However, like the AUD, the oversold NZD may benefit from any signs of improvement in the Chinese data.

  • NZD/USD – Despite the reversal signal of last Thursday and positive momentum divergence, the recovery momentum is struggling for traction. We continue to favour using rallies as a chance to sell for a move back to test 0.5510. The falling 21-day moving average is a gauge of resistance.


N.B. Forecasts are the latest available consensus 

Brazilian real (BRL)

It is interesting to see several of the LatAm currencies outperforming an impressively strong USD over three months. The Brazilian real sits at the less volatile end of the scale.  

  • USD/BRL – with the fluctuations in the pair over recent months, it is very difficult to hold a trending view. The move back to find support between 5.1220/5.1500 has attracted buyers, but they still seem to be unable to push the market decisively through the 5.3100/5.3600 resistance that would open the market for moves higher.

Mexican peso (MXN)

Mexican retail sales are the only significant data of the week in the LatAm region. Sales are expected to grow by +0.4% on the month, which would drag year-on-year growth slightly lower, but only to a still healthy +4.7%. This should help to maintain the MXN stability.

  • USD/MXN –pair retains a very neutral trading outlook as the fluctuations within the multi-month range continue. Moves towards the support band 19.750/19.850 remains are bought into, whilst resistance is in place around 20.200/20.300. Util there are decisive breaks of these bands the outlook will remain neutral.

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.