Market News

Bitcoin broke below the key support zone around the 80,000 level recently as fears of potential US strikes on Iran over the weekend weighed on the crypto market. The lack of US attacks eased the bearish momentum but didn’t change the bigger picture as the persistent risk of another escalation continues to limit the upside.

The focus is now on the FOMC decision due tomorrow where the Fed is expected to keep interest rates unchanged and maintain the current stance. We won’t get the dot plot at this meeting, so the attention will be mostly on Fed Chair Warsh.

A surprise rate hike will likely trigger a strong selloff in Bitcoin on a hawkish repricing and increased concerns about…

The ECB just released its latest bank lending survey and it's not exactly painting a particularly encouraging picture for the euro area economy. Of note, banks are tightening their lending standards further while demand for loans is falling across the board, largely due to the backdrop of higher interest rates continuing to weigh on borrowing activity.

According to the October survey, which covers developments in Q3, the main takeaways are:

• Corporate lending: A net 9% of banks reported tighter credit standards, exceeding the 5% previously expected
• Consumer credit: A net 14% of banks reported tighter lending standards, while housing loan standards were unchanged
• Corporate loan demand: Fell by a net 6%, reversing a 3% increase in Q2
• Housing loan…

Crude oil is consolidating around recent highs as the fears of imminent US attacks on Iran eased. Nevertheless, the market remains supported amid persistent escalation risk given the prolonged stalemate in negotiations.

Moreover, the talks between Saudi Arabia and Iran failed to produce any meaningful breakthrough, with no agreement announced to halt Houthi attacks or de-escalate the Saudi-Houthi conflict.

Meanwhile, the Houthis yesterday targeted the Saudi’s East-West oil pipeline pumping stations and Riyadh airport. As a reminder, the East-West pipeline is a critical alternative export route and disruptions in September contributed to a surge in oil prices.

Looking ahead, oil…

Gold got stuck in a consolidation around the 4,000 level as traders await the next key catalysts to pick a direction. The first one is tomorrow’s FOMC decision where the Fed is widely expected to keep interest rates unchanged and keep the current stance.

We could see a relief rebound if the Fed delivers on expectations. If the Fed surprises with a rate hike, on the other hand, the bearish pressure will likely increase.

The developments in the Middle East will also remain in focus given the persistent risk of another military escalation between the US and Iran.

Finally, the US midterm elections next week could be another important catalyst for gold as a Democratic sweep may…

European stocks are opening lower across the board today in giving back some of yesterday's gains as investors remain cautious ahead of major central bank decisions and big tech earnings later this week. Here are the opening changes:

• Eurostoxx -0.2%
• Germany DAX -0.1%
• France CAC 40 -0.4%
• UK FTSE -0.9%
• Spain IBEX -0.3%
• Italy FTSE MIB -0.4%

The FTSE 100 is leading declines to start the session, with a sharp drop in HSBC shares weighing on sentiment after the bank reported weaker-than-expected revenue. HSBC shares are down nearly 7% in early trading, putting pressure on the wider European banking sector. Besides that, broader caution ahead of the UK budget announcement tomorrow is also a consideration for the time being.

Meanwhile, French stocks are…

Things may be looking quieter and calmer in European pre-market but it wasn't really the case in Asia trading, or more specifically Chinese markets. While stocks in Japan and South Korea held up today, it was a different story in China as tech shares there took a heavy beating. The latest selloff is making for some rather ugly viewing, especially when you look at the charts. And considering how nervous investors have been about the AI trade lately, this may be something worth noting just in case it begins to reverberate across the globe.

The CSI Semiconductor Industry index tumbled by nearly 6% today, falling to its lowest level since April. Meanwhile, the CSI Artificial Intelligence index fell by almost 4%, threatening to break below its…

• France October consumer confidence 80 vs 85 expected
• Prior 86; revised to 85

That's a major blow. French household confidence falls to its lowest since 2013 in October as fiscal worries and concerns over the country's public finances weigh heavily on sentiment. That is not a good look as the index strays further away from the long-term average of 100, in which we haven't seen since December 2021.

There were marked deteriorations in sentiment among most sub-indices, as households noted worsening past and expected financial situations. Meanwhile, the sub-index measuring past and future standard of living conditions also showed a big drop in October.

Adding to those concerns, consumers are also fearing that inflation pressures are going to…

So far this week, gold is hanging on around the $4,000 mark as buyers are hoping to prevent a bigger breakdown on the charts. After spending much of October struggling to find its footing, gold price is in a very vulnerable spot as we approach some major risk events later this week. The stakes are high for buyers to try and keep a defense of the key psychological level.

Looking at the daily chart, gold continues to make lower highs through the month and is trading well below both its key daily moving averages. That reaffirms that sellers are in control with the recent rejection around $4,200 only adding to the downside pressure in the latest decline toward the $4,000 level.

At the same time, we're also starting to see the June to Jule lows…

Japan finance minister Katayama is out with another warning to markets today, reaffirming that Tokyo remains ready to step in if necessary to defend the yen. Her comments:

• Government stands ready to take decisive action in the FX market
• Always watching market moves with a high sense of urgency, including at this very moment
• Must ensure yen movements reflect economic fundamentals
• Hopes to maintain market trust in the yen and the Takaichi administration's fiscal policy through transparent, consistent communication

Her remarks are not anything that we haven't heard of before. But as always, it is best for traders to take note on the tone and frequency of the communication.

The comments above certainly underscore a more firm language, particularly…

There are a couple of key expiry levels to take note of on the day, as highlighted in bold below.

The first is for EUR/USD at the 1.1175 level, with the strike holding roughly within 10 pips of the spot price. That could help keep price action more contained around current levels, particularly with markets awaiting major central bank decisions later this week. Having said that, the technical downside momentum looks to be taking over again for EUR/USD and that could open up a push towards testing the month's lows around 1.1111 in the bigger picture.

Then, there is a sizable cluster of expiries for USD/JPY layered between 157.75 to 158.00. All three are sitting just above the current spot price, so they could exert some magnetic pull on price…

European traders will be greeted with a rather bare economic calendar when they get to their desks today, and I reckon that might suit some market players just fine considering what is on the agenda later this week.

In terms of data releases, we only have French consumer confidence for October and the ECB's survey on euro area lending for September. Otherwise, markets will largely be left to their own devices as traders wait on the central bank bonanza to roll into town.

Wall Street at least provided a more positive lead in overnight trading, with the S&P 500 posting 0.7% gains and the Nasdaq closing 0.8% higher. Tech stocks helped to drive the rebound but caution is very much still up in the air, especially with the recent volatility…