US TSYS: Labour Data Tonight Last Chance for Rate Cuts

USD/JPY is testing higher as Japan's parliament confirmed that Takaichi will be the next PM. We sit around 151.20/25 in latest dealings (session highs at 151.27), with dips back to 151.00 supported. The result will not have been a surprise to the market, as her election holds since last Friday were close to 100, per Polymarket. 

• Focus will now shift to the policy outlook (with cost of living/fiscal outlook, along with BoJ the early focus point).
• Earlier, we had headlines that Satsuki Katayama will be appointed as the new FinMin in Japan, who argued in any interview earlier this year the yen was undervalued. This only provided a modest bounce in yen. Other Japan officials have also stated there is no desire to excessively weaken the yen.
• This, along with intervention risks, may help cap the upside in the pair (outside of broader USD/yield moves).
• More meaningful resistance is likely in the 152/153 region, while the bull trigger is at 153.27. On the downside, the 50-day EMA is back near 149.00. 

Oil prices have continued trending lower during today’s APAC session and have looked through news that the meeting between the US’ Rubio and his Russian counterpart Lavrov has been put on hold. The market is focussing on supply/demand developments with seaborne crude in transit continuing to rise as both OPEC and non-OPEC increase production.

• WTI (December contract) is down 0.2% to $56.90/bbl off the intraday low of $56.60. It made a high of $57.02 earlier but the break above $57 was very brief. Brent is 0.2% lower at $60.86/bbl after falling to $60.58. It rose to $61.01 early in the session but the break was only a moment.
• While geopolitical developments continue to be monitored, the focus remains on the expected market surplus by year end which is likely to result in inventory building. Crude at sea continues to rise and Rapidan Energy estimates supply growth is three times faster than demand (Bloomberg). US industry-based stock data is released Tuesday and the EIA Wednesday.
• While a Ukraine peace deal is likely to remain elusive, plans for US and Russian officials to meet including Presidents Trump and Putin had again increased hopes that sanctions on Russian fuel may be eased. The US administration is sceptical that sanctions work but the longer Russia avoids a ceasefire the more likely they will be extended.
• Later US October Philly Fed non-manufacturing and September Canadian CPI print. ECB President Lagarde and Board member Lane speak. 

• RES 4: 119.780 High Apr 22 (cont)       
• RES 3: 119.600 High May 7 (cont)  
• RES 2: 119.250 76.4% of the Apr 7 - Aug 15 bear leg (cont) 
• RES 1: 118.970/119.000 High Oct 17 / Round number resistance   
• PRICE: 118.590 @ 05:47 BST Oct 21
• SUP 1: 118.330 Low Oct 13  
• SUP 2: 118.201 20-day EMA  
• SUP 3: 117.880 Low Oct 9   
• SUP 4: 117.710 Low Oct 6 

Bobl futures are trading below last week’s high. A strong rally last week reinforces the uptrend that started Sep 25. Sights are on the 119.00 handle next. A break of this level would open 119.25, a Fibonacci retracement point. Note that the contract is in overbought territory, a pullback would allow this condition to unwind. Initial key support is at the 20-day EMA, at 118.201. A clear break of the 20-day EMA would undermine the bullish theme.