BTP TECHS: (Z5) Trend Structure Bullish

Katayama pushing back a little on the signal markets took from an earlier readout of the meeting between himself and Tsy Secretary Bessent. USDJPY is moving away from session lows as these latest headlines cross, now -0.45% on the session at 152.24 (vs a low of 151.76 overnight).

• "JAPAN FINMIN KATAYAMA: NO SPECIFIC DISCUSSION ON FX IN MEETING WITH BESSENT" RTRS
  "JAPAN FINMIN KATAYAMA: DESIRABLE FOR FX TO MOVE STABLY REFLECTING FUNDAMENTALS" RTRS
  "*KATAYAMA: DON'T THINK TREASURY READOUT ENCOURAGES BOJ RATE HIKE" RTRS
  "JAPAN FINMIN KATAYAMA: BESSENT LIKELY WASN'T URGING BOJ TO RAISE INTEREST RATE" RTRS

A reminder that the earlier readout said that "Bessent highlighted the “important role of sound monetary policy formulation and communication in anchoring inflation expectations and preventing excess exchange rate volatility, as conditions are substantially different twelve years after the introduction of Abenomics,” (via BBG).

The BRC-NIQ Shop Price Monitor, release overnight, showed the first slowdown in the Y/Y pace of growth of the year, with overall shop price inflation falling to 1.0%Y/Y in October, from 1.4%Y/Y in September. And it helps to validate some of the food price falls seen in the official ONS CPI release - particularly on the ambient side.

• Looking into the details, food price inflation slowed to 3.7%Y/Y in October, a 0.5ppt slowdown after two months at 4.2% in September and August. This was the first slowdown in food price inflation of 2025, but it is hard to know whether this will have any knock on impact to the official ONS food price inflation series - given that already fell from 5.1%Y/Y in August to 4.5%Y/Y in September. It does, however, seem to support that food price inflation may already have peaked, and may therefore give more confidence to MPC members ahead of the November policy decision.
• Looking into the details, there was still an increase in fresh food inflation, which ticked up to 4.2%Y/Y (from 4.1% in both August and September) to the highest Y/Y print since January 2024. Ambient food inflation, meanwhile fell to 2.9%Y/Y in October. This is the lowest level since February and had reached a peak of 5.1%Y/Y in July (it was 4.2%Y/Y in September). The press release notes that "Easing global sugar prices helped to bring down prices of chocolate and confectionary."
• Non-food price inflation fell 0.4%Y/Y in October, after a fall of 0.1%Y/Y in September and fall of 0.8%Y/Y in August. The press release notes that "discounts came early to electricals and health & beauty, as retailers started promotions ahead of Black Friday month."
• The release covers the period 1-7 October 2025 (earlier in the month than the ONS collects data for its official CPI print).

• RES 4: 123.14 1.764 proj of the Sep 3 - 11 - 25 price swing
• RES 3: 122.81 1.618 proj of the Sep 3 - 11 - 25 price swing
• RES 2: 122.53 1.500 proj of the Sep 3 - 11 - 25 price swing
• RES 1: 121.94 High Oct 17 / 24 and the bull trigger  
• PRICE: 121.36 @ Close Oct 27
• SUP 1: 120.74 High Aug 5 and a recent breakout level          
• SUP 2: 120.39 50-day EMA 
• SUP 3: 119.48 Low Oct 7 
• SUP 4: 119.07 Low Sep 25t

Bullish trend conditions in BTP futures remain intact and the latest pullback is - for now - considered corrective. Recent gains resulted in a break of key resistance at 120.74, the Aug 5 high and a bull trigger. The breach also highlights a range breakout. The bull trigger is 121.94, the Oct 17 / 24 high.  Initial firm support to watch is 120.74, the Aug 5 high. Note that the contract is overbought, a deeper pullback would allow this condition to unwind.