Eurozone CPI rose a surprising 10% year-over-year in September, above expectations of 9.7% and up from 9.1% in August.
Eurostat said the increase was driven by a 1.2% increase from a year earlier, doubling the 0.6% increase in August.
Rising gas prices are the main culprit, with the Netherlands seeing an incredible 17.1% increase in gas prices in September.
However, price pressures in the eurozone are expected to rise across the board, and not just in the energy sector, leading markets to expect a stronger response from the ECB in October this year.
(EUR/USD 1-hour chart)
We focus on the 0.9999-line today. If EUR runs steadily below the 0.9999-line, then pay attention to the support strength of the two positions of 0.9909 and 0.9864. If the strength of EUR breaks above the 0.9999-line, then pay attention to the suppression strength of the two positions of 1.0116 and 1.0190.
GBP Intraday Trend Analysis
As the market ruled out an emergency rate hike, the three-month forward rate for the pound has rebounded to levels near those seen prior to the mini-budget announcement.
Longer-term indicators still suggest that the pound’s spread over the dollar will be much higher than previously expected, and this trend in the market has been largely reversed.
The forward rate, or spread between the forward currency and the spot currency, is a measure of the relative exchange rate expectations for different currencies.
This indicator reflects the cost of holding pounds rather than dollars, and vice versa.
Another way to look at this issue is the implied rate of return, but the implied rate of return reflects the same information.
GBP 3-month implied yield is 17 basis points higher than the day before UK Chancellor of the Exchequer Kwarteng’s mini-budget announcement and was 98 basis points higher last week.
(GBP/USD 1-hour chart)
GBP is mainly focused on the 1.1501-line today. If GBP runs below the 1.1501-line, it will pay attention to the suppression strength of the two positions of 1.1357 and 1.1250. If GBP runs above the 1.1501-line, then pay attention to the suppression strength of the two positions of 1.1622 and 1.1696.
2. Precious Metals Market Insight
Gold prices rose more than 1% on Tuesday, 4th October 2022, touching a three-week high, as the dollar and U.S. Treasury yields retreated and investors looked to the Federal Reserve to take a less aggressive approach to raising interest rates.
Spot gold rose 1.5% to $1,723.99 an ounce, the highest since 13th September 2022.
(Gold 1-hour chart)
Gold pays attention to the 1713-line today. If the gold price runs steadily below the 1713-line, then it will pay attention to the support strength of the 1693 and 1686 positions. If the gold price breaks above the 1713-line, then pay attention to the suppression strength of the two positions of the 1720 and 1735.
3. Commodities Market Insight
WTI Crude Oil
Oil prices rose nearly $3 on Tuesday on expectations that the OPEC+ coalition of oil producers will cut output sharply, while a weaker dollar made oil less expensive to buy.
OPEC+ looks set to cut production at Wednesday’s, 5th October 2022, meeting.
The move will squeeze supply in the oil market, which energy company executives and analysts say is already tight due to healthy demand, lack of investment and supply issues.
OPEC+ sources said the alliance is discussing production cuts greater than 1 million barrels per day.
Oil prices extended gains after Bloomberg News reported that OPEC+ is considering cutting production by 2 million barrels per day.
(Crude oil 1-hour chart)
Oil prices focus on the 85.72-line today. If the oil price runs above the 85.72-line, then focus on the suppression strength of the two positions of 88.08 and 89.25. If the oil price runs below the 85.72-line, then pay attention to the support strength of the two positions of 84.02 and 82.41.
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