FOREX: Asia-Pac USD: BBDXY Testing Above 1220 As Risk Extends Lower
The BBDXY has had a range today of 1219.71 - 1220.63 in the Asia-Pac session; it is currently trading around 1220, +0.05%. The USD has drifted sideways in our session even with risk having another leg lower. The USD has bounced nicely off the 1210-1215 support area where it found some solid demand first up. Risk started the week on the backfoot yesterday again and the USD was the beneficiary. I continue to watch for signs of a base forming from which to move higher again if risk stays under pressure. On the day look for dips toward 1217-18 to now be supported first up, a break of the 1221-1222 area remains the pivot on the topside, above there and it could look to rebuild momentum for a test of the 1230-35 area.
- EUR/USD - Asian range 1.1585 - 1.1597, Asia is currently trading 1.1595. The pair stalled and moved lower after finding some decent resistance toward the 1.1650-1.1700 area. This has been the pivot within the larger 1.1400-1.1900 range over the past few months. On the day look for the 1.1615-30 area to cap looking for a move lower.
- GBP/USD - Asian range 1.3145 - 1.3160, Asia is currently dealing around 1.3150. I continue to favor fading rallies, as GBP looks to have put in a medium term top. A sustained move back below 1.3080-1.3100 support would see the momentum lower reinstated and focus turn back toward the 1.3000 area. Suspect rallies back toward the 1.3250-1.3300 will be sold into if we see a bounce.
- Cross asset : SPX -0.70%, Gold $4010, US 10-Year 4.11%, BBDXY 1220, Crude Oil $59.46
- Data/Events : Spain Home sales
Fig 1: EUR/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
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LOOK AHEAD: US Week Ahead Headlined By Delayed CPI Report On Friday
- The September US CPI report will be released on Friday, delayed amidst the government shutdown but with the BLS making a special exception on social security payment considerations.
- Bloomberg consensus looks for headline CPI inflation at a rounded 0.4% M/M after 0.38% back in August and for Y/Y inflation to firm two tenths to 3.1% for what would be its highest since May 2024.
- Core inflation is seen at a rounded 0.3% M/M after 0.35% in August (exceeding the median unrounded estimate of 0.31%) and 0.32% in July. It’s expected to see core CPI inflation hold at 3.1% Y/Y having in August increased to its highest since February.
- Core details should see focus on both goods and services angles: underlying goods inflation has clearly firmed in recent months on tariff pressures although the median increase has currently seen a peak back in June, whilst services will be watched for any spillover after some strong recent non-housing readings.
- The report will come within the FOMC blackout period ahead of the Oct 28-29 decision, with a 25bp cut fully priced and likely needing a large surprise to alter this.
- As for broader inflation details, Fed Chair Powell this week confusingly suggested that we will have the September PPI report but the BLS had previously said “No other releases will be rescheduled or produced until the resumption of regular government services”.
US DATA: Latest Jobless Claims Estimates During The Shutdown
As noted earlier, MNI estimates initial jobless claims at a seasonally adjusted 218k in the week to Oct 11 and continuing claims at a seasonally adjusted 1929k in the week to Oct 4.
- To give a better idea of sensitivity around these estimates, which rely on estimates for some missing states, we note the below analyst estimates:
- Goldman Sachs have a central estimate of 217k for initial claims in a range of 211-225k, whilst they see continuing claims at 1917k in a range of 1885-1930k.
- JPMorgan meanwhile also see 217k for initial claims whilst they see continuing claims as having held constant at 1927k.
NATGAS: Venture Global in Talks with Ukraine for more LNG Deliveries, Reuters
Ukraine is seeking more cargoes from Venture’s Plaquemines facility as the embattled nation approaches the winter heating season, according to Reuters sources
- Venture is in talks with Ukraine’s DTEK to procure more LNG cargoes after a year of gas infrastructure attacks by the Russians.
- Venture Global CEO Michael Sabel met with President Volodymyr Zelenskiy on Thursday October 16.
- DTEK signed an agreement in 2024 for an undisclosed amount of LNG from the facility, as well as 2 mtpa from Calcasieu Pass Phase 2 currently under construction.
- Plaquemines currently has spare capacity to deliver more cargoes to Ukraine on the spot market, per Reuters.
- Plaquemines now sends out the second highest LNG volume in the US, with feedgas demand averaging 3.45 bcf/d according to MNI figures.
