FX Weekly Recap: October 23 -27, 2023

The Aussie greenback took the highest spot this week, intently adopted through the Eastern yen, each most probably bid increased after robust inflation updates hit the wires from their respective international locations.

And sadly for Loonie bulls, the Canadian greenback used to be the most important loser, most probably pushed decrease through falling oil costs and internet unfavorable observation from the Financial institution of Canada this week.

USD Pairs

Overlay of USD vs. Primary Currencies Chart through TradingView

The U.S. greenback used to be a internet winner this week, proceeding to seek out bids as a “protected haven” asset off of geopolitical fears, but in addition on internet certain U.S. financial updates during the week.

Each industry sentiment and tough knowledge updates like sturdy items and GDP confirmed persevered resiliency within the U.S. economic system, in addition to proceeding to offer the Federal Reserve room to stay rates of interest and financial coverage tight.

🟢 Bullish Headline Arguments

Chicago Fed nationwide task index +0.02 vs -0.16 prior

S&P International Flash US Production PMI for October: 50 vs. 49.8 in September: “The upward push in staff numbers used to be led through provider suppliers, as production corporations registered a fractional drop in staffing numbers at the month.”; “charges of building up in enter prices and output fees slowed at the beginning of the fourth quarter.”

U.S. New House Gross sales for September: 12.3% m/m (-11.0% m/m forecast; -8.2% m/m earlier)

Kansas town fed production precise -8 (Forecast -, earlier -13)

U.S Pending house gross sales for September: 1.1% m/m (-2.0% m/m forecast; -7.1% earlier)

U.S. Sturdy Items in September: 4.7% m/m (1.1% m/m forecast; -0.1% m/m earlier)

U.S. Advance GDP for Q3 2023: 4.9% q/q (4.0% q/q forecast; 2.1% q/q earlier); core PCE Costs used to be 2.4% q/q (3.1% q/q forecast; 3.7% q/q earlier)

U.S. Core PCE Value Index for September: 0.3% m/m (0.2% m/m forecast; 0.1% m/m earlier); non-public spending rose through greater than anticipated / earlier at 0.7% m/m (0.5% m/m forecast; 0.4% m/m earlier)

U.S. Shopper Sentiment Index (Revised) for October: 63.8 vs (63.0 forecast; 68.1 earlier)

🔴 Bearish Headline Arguments

Richmond Production Process Index for October got here inline with expectancies at 3 vs. 5 earlier

MBA Loan Packages had been down -1.0% w/w vs. -6.9% w/w earlier; the typical 30-Yr Loan Fee rose from 7.7% to 7.9%

Weekly U.S. Preliminary jobless claims: 210K (200K forecast / earlier); proceeding claims rose to one.79M vs. 1.727M earlier

EUR Pairs

Overlay of EUR vs. Primary Currencies Chart through TradingView

The euro had an enchanting week as we noticed motion on all sides, sooner or later resulting in a combined shut in opposition to the majors. After a Monday rally, the tide became briefly for the euro after some other disappointing flash production and products and services PMI replace from the Euro space.

After the autumn stabilized on Wednesday, buyers stayed at the sidelines most probably looking ahead to the approaching financial coverage commentary from the Eu Central Financial institution of Thursday. This tournament if truth be told performed out as anticipated, keeping off on rate of interest adjustments and noting dangers to financial enlargement within the area, and sparking little or no response from the euro at the consultation.

🟢 Bullish Headline Arguments

German Ifo Trade Local weather for October: 86.9 (85.3 forecast; 85.8 earlier)

ECB President Lagarde says “We don’t seem to be performed but” preventing top inflation and are “very attentive” in tracking Center East battle dangers

The Eu Central Financial institution held its major rate of interest at 4.50% as anticipated on Thursday; ECB’s President Lagarde: I’m really not going to mention we’re at height charges.

🔴 Bearish Headline Arguments

Euro Space Flash Shopper Self assurance for October got here at -18, inline with forecast / earlier

Germany’s GfK shopper local weather deteriorated from -26.7 to -28.1 in October; “With the 3rd decline in a row, hopes of a restoration in shopper sentiment this yr should after all be laid to leisure”

Germany’s production PMI progressed from 39.6 to 40.7; Services and products PMI dropped to contraction territory at 48.0 in October (from 50.3 in September)

Eurozone’s production PMI worsened from 43.4 to 43.0; Services and products PMI additionally deeper into contraction from 48.7 to 47.8 in October

ECB President Lagarde sees doable stagnation prerequisites over the following couple of quarters, costs threat changing into extra balanced, and indicators of monetary weakening

Spain’s unemployment fee went up from 11.6% to 11.8% in Q3

GBP Pairs

Overlay of GBP vs. Primary Currencies Chart through TradingView

There used to be little or no information from the U.Okay. for Sterling buyers to paintings with, and what little we noticed used to be just about unfavorable. Essentially the most notable used to be the most recent production & products and services PMI updates, sparking an excessively forged run decrease for the bears right through the Tuesday consultation.

For the remainder of the week, the British pound traded as a counter foreign money and stale vast threat flows, which used to be most commonly unfavorable this week and most probably why GBP used to be a internet loser on the Friday shut.

🔴 Bearish Headline Arguments

U.Okay.’s adjusted experimental unemployment fee remained at 4.2% within the 3 months to August; Jobless claimants swell from -9.0K to twenty.4K in September

U.Okay.’s production PMI progressed from 44.3 to 45.2 in October; Services and products PMI dipped from 49.3 to 49.2

U.Okay. Retail Gross sales Volumes in October: -36.0 (-10.0 forecast; -14.0 earlier)

CHF Pairs

Overlay of CHF vs. Primary Currencies Chart through TradingView

There used to be just one replace from Switzerland this week to probably affect the Swiss franc, and in response to the chart above, there would possibly had been a slight bearish impact from the weaker-than-expected Swiss financial sentiment index replace.

Total, the Swiss franc used to be in undergo mode all week, a bit of peculiar given the vast risk-off undertones that drove this weeks’ worth motion. However one can argue that this week’s geopolitical information glide used to be internet much less horrifying with talks of hostage releases, humanitarian support supply, and flooring invasion delays.

It’s imaginable that CHF weak point used to be a place transfer; arguably buyers had been lightening up on franc longs sparked through the upward push in geopolitical dangers, which if truth be told has made the Swiss franc the most efficient appearing main foreign money because the get started of the Israeli-Hamas struggle in early October.

🔴 Bearish Headline Arguments

Swiss Financial Sentiment Index: -37.8 (-24.0 forecast; -27.6 earlier)

CAD Pairs

Overlay of CAD vs. Primary Currencies Chart through TradingView

The Loonie used to be a large internet loser this week, most probably at the mixture of falling oil costs (fading “struggle top rate” and emerging inventories) and internet bearish Financial institution of Canada financial coverage commentary.

The BOC held the primary coverage fee at 5.00% as anticipated given the hot misses in onerous knowledge, particularly the autumn in Canadian retail gross sales and decelerate in inflation charges in September CPI (-0.1% m/m vs. 0.5% m/m forecast; 0.4% m/m earlier).

Of their commentary, they downgraded their enlargement outlook for 2023 to one.2% and in 2024 to 0.9%, however sees cussed inflation prerequisites as they driven again the go back of two% inflation hitting on the finish of 2025 (vs. mid-2025)

🔴 Bearish Headline Arguments

Canada Nationwide Housing Value Index for September: -0.2% m/m (0.0% m/m forecast; 0.1% m/m earlier)

The Financial institution of Canada held the primary coverage rate of interest at 5.00% on Wednesday; additionally downgraded their outlook for financial enlargement for each 2023 and 2024.

AUD Pairs

Overlay of AUD vs. Primary Currencies Chart through TradingView

The Aussie greenback used to be on rollercoaster journey this week due to inflation updates and observation from Reserve Financial institution of Australia Governor Bullock.

With a bit of of falling vast threat aversion sentiment and expectancies of internet increased inflation charges in some metrics, the Aussie rallied early within the week, however then briefly fell proper after the CPI replace from Australia. Was once this a “buy-the-rumor, sell-the-news” state of affairs or did geopolitical dangers crush the inflation replace?

We’re now not certain, nevertheless it when we were given feedback at the replace from Reserve Financial institution of Australia Governor Bullock on Thursday and a higher-than-expected learn on Australian import costs, the Aussie took off increased as soon as once more and didn’t glance again, most probably with the assistance of one ultimate inflation replace on Friday within the type of the most recent Australian manufacturer costs index.

🟢 Bullish Headline Arguments

Australia’s inflation accelerated from 5.2% y/y to five.4% y/y in September; quarterly CPI additionally went up from 0.8% to one.2% in Q3

Australia’s import costs inched up 0.8% m/m (vs. 0.2% anticipated, -0.8% earlier) in Q3

Australia’s quarterly manufacturer costs increased from 0.5% q/q to one.8% q/q in Q3

🔴 Bearish Headline Arguments

Australia’s production PMI fell from 48.7 to 48.0 in October; Services and products PMI additionally weakened from 51.8 to 47.6 for the month

Talking on Thursday, RBA Governor Bullock mentioned that the most recent inflation replace will most probably alternate forecast, however wasn’t certain if it’s going to be subject matter as this result used to be just a little increased than anticipated.

NZD Pairs

Overlay of NZD vs. Primary Currencies Chart through TradingView

There have been no knowledge or information headlines from New Zealand this week, so in response to worth motion on my own, it seems find it irresistible reflected the Aussie bucks actions for a large number of the week.

Sadly for the bulls, it wasn’t a 1:1 correlation with its shut buying and selling spouse as geopolitical aversion sentiment (because of announcement of Israel flooring operations increasing) got here in on the ultimate minute to push the Kiwi decrease, shifting it into internet loser standing on the Friday shut.

JPY Pairs

Overlay of JPY vs. Primary Currencies Chart through TradingView

It used to be an atypical week of worth habits this week for the Eastern yen as yen buyers balanced USD/JPY breaking above the 150.00 deal with (the extent had been many noticed the BOJ intervening within the FX marketplace), robust inflation updates, vulnerable PMI replace, and geopolitical pushed vast threat sentiment influences.

Total, robust inflation and risking threat aversion sentiment used to be sufficient for Eastern yen buyers to realize in opposition to the majors this week, falling most effective the Aussie, which additionally discovered bids on robust inflation updates as smartly.

🟢 Bullish Headline Arguments

BOJ’s core CPI ticked up from 3.3% to three.4% y/y in September

Japan’s provider manufacturers worth index remained at 2.1% y/y (vs. 2.0% anticipated) in September

Tokyo’s core CPI rose from 2.5% y/y to two.7% y/y in October

🔴 Bearish Headline Arguments

Japan’s au Jibun flash production PMI steadied at 48.5 in October (vs. 48.9 anticipated); “A sustained aid in new orders resulted in manufacturing shrinking on the quickest fee in 8 months.”