CHINA PRESS: China Seen To Raise Deficit In 2025
China is expected to raise its deficit-to-GDP ratio higher next year from 2024’s 3%, following the Ministry of Finance’s pledge to increase fiscal policy intensity, Securities Times reported, citing analysts. The country’s CNY10 trillion debt-swap plan will ease balance sheet pressure on local governments and financing vehicles, and increase their infrastructure investment capacity. The plan also allows local authorities to clear arrears owed to companies and boost business confidence and profitability, the newspaper said, citing analysts.
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USDCAD TECHS: Winning Streak Extends
- RES 4: 1.3885 2.0% 10-dma envelope
- RES 3: 1.3822 76.4% retracement of the Aug 5 - Sep 25 bear leg
- RES 2: 1.3791 High Aug 7
- RES 1: 1.3784 High Oct 11
- PRICE: 1.3776 @ 15:51 BST Oct 11
- SUP 1: 1.3587 20-day EMA
- SUP 2: 1.3473/3420 Low Oct 2 / Low Sep 25 and the bear trigger
- SUP 3: 1.3413 Low Feb 9
- SUP 4: 1.3358 76.4% retracement of the Dec 27 ‘23 - Aug 5 bull run
USDCAD extended the winning streak of higher highs and higher lows to seven consecutive sessions on Friday - the longest streak of higher highs since August 2023. This confirms an extension of the bull cycle that started Sep 25. The move higher this week has resulted in a break of 1.3647, the Sep 19 high and a key resistance. Clearance of this level signals a possible reversal, which firms through 1.3791, the Aug 7 high. Initial firm support to watch lies at 1.3587, the 20-day EMA.
US OUTLOOK/OPINION: Fed's Waller, Sept Retail Sales Highlight Next Week's Agenda
Two key events to watch next week in the US:
While Monday is a US holiday for cash bond markets, Fed Governor Waller's speech on the economic outlook at 1500ET will garner attention for any updated views on the rate cut outlook. His last public appearance, which came immediately after the September FOMC meeting, was perceived quite dovishly for his seeming openness to another 50bp cut in November were the labor market to worsen or inflation to come in softer than expected.
- Since then, a strong September nonfarm payrolls report and an upside surprise in September CPI have seen markets price out a 50bp cut, and even put a pause into play - any commentary from Waller about potential a November "skip" will be closely eyed.
The Advance Retail Sales report for September (Thursday) is the highlight of the coming week's US data calendar, and will provide a key update on consumer activity at the end of Q3. Consensus expectations are for a pickup in overall sales growth (to 0.3% M/M, vs 0.1% in Aug).
- Countervailing factors include a potential pickup in the single largest retail category - auto sales - after a soft August, while gasoline stations are likely to see another pullback on the back of lower pump prices (all figures are nominal, not price-adjusted).
- The key "control group" will be most closely eyed as an input to the quarterly GDP calculations, and is seen rising 0.4% (vs 0.3% in Aug), with a strong figure potentially weighing against the case for a Fed cut in November.
AUDUSD TECHS: Trades Through The 50-Day EMA
- RES 4: 0.6984 0.764 proj of the Aug 5 - 29 - Sep 11 price swing
- RES 3: 0.6942 High Sep 30 and the bull trigger
- RES 2: 0.6889 High Oct 3
- RES 1: 0.6790 20-day EMA
- PRICE: 0.6748 @ 15:51 BST Oct 11
- SUP 1: 0.6702 Low Oct 10
- SUP 2: 0.6646 38.2% retracement of the Aug 5 - Sep 30 bull leg
- SUP 3: 0.6622 Low Sep 11 and key support
- SUP 4: 0.6576 61.8% retracement of the Aug 5 - Sep 30 bull leg
The latest pullback in AUDUSD highlights a short-term corrective cycle and for now, a bearish theme remains intact. The pair has traded through both the 20- and 50-day EMAs. A clear break of the 50-day average, at 0.6750, would undermine a bullish theme and signal scope for a deeper retracement, towards 0.6622, the Sep 11 low and a key support. Key resistance and the bull trigger has been defined at 0.6942, the Sep 30 high.
