LOOK AHEAD: US Week Ahead: FOMC Decision Dominates, Post Shutdown Data Catch-Up
- Next week’s US calendar is dominated by the FOMC decision on Wednesday, with a third consecutive 25bp cut almost fully priced.
- Expect it to be a contentious meeting however, with many arguing for a pause not least whilst they’re still relatively in the dark on key official data releases following the government shutdown.
- Fed Chair Powell opted for a surprisingly hawkish tone at the late October press conference, highlighting a deeply divided committee on prospects for another cut in December.
- The “fog” had appeared to win out until NY Fed’s Williams, a senior permanent voter, gave unusually explicit guidance on still seeing room “for a further adjustment in the near term”. With no pushback from FOMC members or media briefings, it appears this message has approval from the core of the FOMC which should be enough to see a rate cut this month. The likely catalyst was the further increase in the unemployment rate to 4.44% back in September, although subsequent tracking suggests stabilization and jobless claims data don’t show any signs of deterioration.
- We’ll be looking for the number of hawkish dissents (we’d be surprised if anyone joins Miran dissenting for a 50bp cut) and expect a greater number to object to a cut in the 2025 dot plot, whilst the distribution of dots for 2026 should be in greater focus.
- As for the economic projections, we expect upward revisions to GDP growth but downward revisions to near-term core PCE inflation with tariff passthrough proving less severe than previously feared.
Aside from the Fed, we also receive two months worth of JOLTS data along with other delayed releases as the shutdown data backlog is slowly caught up.
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USDCAD TECHS: Tests The Channel Top
- RES 4: 1.4274 High Apr 9
- RES 3: 1.4200 Round number resistance
- RES 2: 1.4167 50.0% retracement of the Feb 3 - Jun 16 bear leg
- RES 1: 1.4136/40 Channel top drawn from Jul 23 low / Intraday high
- PRICE: 1.4129 @ 16:20 GMT Nov 5
- SUP 1: 1.3998 20-day EMA
- SUP 2: 1.3935 50-day EMA
- SUP 3: 1.3888 Low Oct 29 and a key support
- SUP 4: 1.3859 Bull channel base drawn from the Jul 23 low
A bull cycle in USDCAD remains intact. This week’s extension highlights a clear reversal of the corrective bear leg between Oct 14 - 29. The pair has breached 1.4080, the Oct 16 high to confirm a resumption of the uptrend.. Sights are on 1.4136 (pierced), the top of a bull channel drawn from the Jul 23 low. A clear break of this hurdle would open 1.4167, A Fibonacci retracement. First support lies at 1.3998, the 20-day EMA.
AUD: AUD/USD - Moves Back Above 0.6500 As Risk Recovers
The AUD/USD had a range overnight of 0.6474-0.6513, Asia is trading around 0.6505. Was that it ? The dip buyers look once again to be in control and what looked like the start of a correction for risk has quickly petered out. The AUD/USD finds itself back in the middle of its now familiar range, having chopped sideways between 0.6350-0.6650 since April this year. A lot rides on how risk trades from here, should this correction build and have a meaningful retracement then the USD should again come to the fore, but if that was the extent of the correction and we start building toward a year end rally for risk assets then the AUD can again start to outperform. The pivot for the AUD is around 0.6550, above there and we start to turn toward the top of the range again.
- Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6490(AUD487m), 0.6550(AUD 479m), 0.6600(AUD567m). Upcoming Close Strikes : 0.6450(AUD544m Nov 11), 0.6500(AUD1.02b Nov 7), 0.6600(AUD682m Nov 7)- BBG
- Data/Event: Trade Balance
Fig 1: AUD/USD spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
AUDUSD TECHS: Pullback Exposes Key Short-Term Support
- RES 4: 0.6707 High Sep 17 and a bull trigger
- RES 3: 0.6666 2.0% 10-dma Envelope
- RES 2: 0.6644 76.4% retracement of the Sep-Oct bear leg
- RES 1: 0.6542/0.6618 50-day EMA / High Oct 29
- PRICE: 0.6497 @ 16:18 GMT Nov 5
- SUP 1: 0.6459 Intraday low
- SUP 2: 0.6440 Low Oct 14 and key support
- SUP 3: 0.6415 Low Aug 21 / 22 and a bear trigger
- SUP 4: 0.6373 Low Jun 23
A softer short-term tone in AUDUSD remains intact for now and this week’s move lower reinforces this theme. The pair has also traded through the 50-day EMA - a bearish development that undermines a recent bullish theme. A continuation lower would signal scope for an extension towards the first key support at 0.6440, the Oct 14 low. Key resistance and a short-term bull trigger is at 0.6618, the Oct 29 high. First resistance is at 0.6542, the 50-day EMA.
