Weekly Market Recap (02-06 October)

<p><strong><u>Monday</u></strong>:</p>

<p>The Chinese PMIs
over the weekend were all in expansion with NBS PMIs beating expectations and
Caixin ones missing them:</p>

<ul><li>NBS
Manufacturing PMI 50.2 vs. 50.0 expected and 49.7 prior.</li><li>NBS
Services PMI 51.7 vs. 51.5 expected and 51.0 prior.</li><li>Caixin
Manufacturing PMI 50.6 vs. 51.2 expected and 51.0 prior.</li><li>Caixin
Services PMI 50.2 vs. 51.8 prior. </li></ul>

<figure data-media-><img src="https://images.forexlive.com/images/China%20Caixin%20Manufacturing%20PMI_id_b6de5538-c042-413d-8a62-28b2c92bc575_size900.jpg" alt="China Caixin Manufacturing PMI" width="997" height="486" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/China%20Caixin%20Manufacturing%20PMI_id_b6de5538-c042-413d-8a62-28b2c92bc575_size900.jpg" /><figcaption><div>China Caixin Manufacturing PMI</div></figcaption></figure><p>BoJ Governor Ueda
spoke over the weekend and just reaffirmed that there’s still a long distance
to go before exiting loose monetary policy:</p>

<ul type="disc"><li><strong>The objective of the
Bank's monetary policy is achieving price stability</strong>, which is its
mission as stipulated by law. Considerations of the Bank's finances, etc.
do not prevent it from implementing necessary policies.</li><li>A central bank's
ability to conduct monetary policy is <strong>not impaired by a temporary
decrease in its profits and capital</strong>, provided that it conducts
appropriate monetary policy.</li></ul>

<br><figure data-media-><img src="https://images.forexlive.com/images/BoJ%20Governor%20Ueda_id_9ed722a8-b1cf-48d3-b29b-74cb4d015356_original.jpg" alt="BoJ Governor Ueda" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/BoJ%20Governor%20Ueda_id_9ed722a8-b1cf-48d3-b29b-74cb4d015356_original.jpg" /><figcaption><div>BoJ Governor Ueda</div></figcaption></figure><p>The BoJ released
the Summary of Opinions of its latest September monetary policy meeting which
doesn’t contain anything new:</p>

<ul type="disc"><li>One member said
inflation likely to slow ahead.</li><li>One member said
inflation exceeding 2% but this is largely due to firms passing on higher
import costs.</li><li>Inflation likely to
keep rising next fiscal year due to expected rises in transportation,
public service fees.</li><li>One member said
seeing signs that positive cycle rising wages and inflation may be kicking
off.</li><li>One member said
there is chance next year's wage growth may exceed that of this year.</li><li>One member said
given recent FX, oil price moves, there is chance inflation may not slow
much and overshoot expectations.</li><li>One member said no
need to make additional tweaks to YCC as long-term rates moving fairly
stably.</li><li>One member said end
to YCC, negative rate must be tied to success of achieving 2% inflation
target.</li><li>One member said to
sustainably hit price goal, wage gains must become sustained and lead to
inflation driven by service prices.</li><li>One member said
there is still some distance but Japan nearing achievement of price
target, so latter half of current fiscal year will be crucial phase in
determining next year's price outlook, other factors.</li><li>One member said
cannot determine now timing of policy tweak as that will depend largely on
economic, price conditions at the time.</li><li>One member said BoJ's
communication, guidance must be made in a way that does not constrain too
much its freedom on timing, order of policy move.</li><li>One member said it
is important to prepare for exit from risk-management perspective as we
could have clarity around January – March next year on whether 2%
inflation target can be met in sustained, stable fashion.</li><li>One member said
side-effect of YCC remains even after steps in July to make it more
flexible.</li><li>One member said even
if BOJ ends negative rate policy, monetary conditions will remain
accommodative as long as real interest rates are negative.</li></ul>

<p>The Switzerland
Manufacturing PMI beat expectations by a notable margin although it remains in
contraction:</p>

<ul><li>Manufacturing
PMI 44.9 vs. 40.5 expected and 39.9 prior.</li></ul><figure data-media-><img src="https://images.forexlive.com/images/Switzerland%20Manufacturing%20PMI_id_d65302ab-18b0-4fef-b223-5546f0711f6e_size900.jpg" alt="Switzerland Manufacturing PMI" width="1007" height="473" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/Switzerland%20Manufacturing%20PMI_id_d65302ab-18b0-4fef-b223-5546f0711f6e_size900.jpg" /><figcaption><div>Switzerland Manufacturing PMI</div></figcaption></figure><p>The Eurozone
Unemployment Rate matched expectations as it remains at record low levels:</p>

<ul><li>Unemployment
Rate 6.4% vs. 6.4% expected and 6.5% prior (revised from 6.4%).</li></ul>

<br><figure data-media-><img src="https://images.forexlive.com/images/Eurozone%20Unemployment%20Rate_id_7a915737-2664-41d2-ad4d-28ed14c3bb80_size900.jpg" alt="Eurozone Unemployment Rate" width="970" height="472" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/Eurozone%20Unemployment%20Rate_id_7a915737-2664-41d2-ad4d-28ed14c3bb80_size900.jpg" /><figcaption><div>Eurozone Unemployment Rate</div></figcaption></figure>

<p>The Canadian
S&P Global Manufacturing PMI fell further into contraction:</p>

<ul><li>Manufacturing
PMI 47.5 vs. 48.0 prior.</li></ul>

<br><figure data-media-><img src="https://images.forexlive.com/images/Canada%20Manufacturing%20PMI_id_de767492-1bb3-4ae2-bfc9-645babefbcb7_size900.jpg" alt="Canada Manufacturing PMI" width="996" height="472" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/Canada%20Manufacturing%20PMI_id_de767492-1bb3-4ae2-bfc9-645babefbcb7_size900.jpg" /><figcaption><div>Canada Manufacturing PMI</div></figcaption></figure><p>The US ISM
Manufacturing PMI beat expectations by a notable margin:</p>

<ul><li>Manufacturing
PMI 49.0 vs. 47.8 expected and 47.6 prior.</li><li>Prices
paid 43.8 vs. 48.6 expected and 48.4 prior.</li><li>Employment
51.2 vs. 48.3 expected and 48.5 prior.</li><li>New orders 49.2 vs. 46.8 prior.</li><li>Inventories 45.8 vs. 44.0 prior.</li><li>Production 52.5 vs. 50.0 prior.</li></ul>

<br><figure data-media-><img src="https://images.forexlive.com/images/US%20ISM%20Manufacturing%20PMI_id_8110ea5b-f08a-4c91-a5b8-12f53a510a72_size900.jpg" alt="US ISM Manufacturing PMI" width="1001" height="471" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/US%20ISM%20Manufacturing%20PMI_id_8110ea5b-f08a-4c91-a5b8-12f53a510a72_size900.jpg" /><figcaption><div>US ISM Manufacturing PMI</div></figcaption></figure>

<p>Fed’s Bowman (hawk
– voter) is calling for another rate hike before pausing, which is in line with
the FOMC’s dot plot:</p>

<ul type="disc"><li><strong>It will likely be
appropriate to raise rates further and hold them at restrictive level for
some time</strong>.</li><li>Inflation remains too high.</li><li>Sees risk that high
energy prices could reverse some of the recent progress on lowering
inflation.</li><li>Frequency and scope
of recent data revisions complicates task of projecting how economy will
evolve.</li><li>Expects progress to
be slow on inflation given the current level of monetary policy restraint.</li><li>Remains willing to
support rate increase at a future meeting if data indicates progress on
inflation has stalled or is too slow to return it to 2% <strong>in a timely way</strong>.</li><li>Regulators seem to
be engaging in 'heavy-handed' supervision of banks.</li></ul>

<figure data-media-><img src="https://images.forexlive.com/images/Fed%27s%20Bowman_id_09728424-17ba-4ac5-9d09-98961a50ddd4_size900.jpg" alt="Fed's Bowman" width="1920" height="1280" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/Fed%27s%20Bowman_id_09728424-17ba-4ac5-9d09-98961a50ddd4_size900.jpg" /><figcaption><div>Fed's Bowman</div></figcaption></figure><p>BoE’s Mann (hawk
-voter) sound like she’s in favour of further tightening: </p>

<ul type="disc"><li>I see more resilient
domestic demand in the UK economy.</li><li>I'm a hawk.</li><li><strong>Says her inflation
forecast is at the upper end of estimates</strong>.</li></ul>

<p>Fed’s Harker
(neutral – voter) spoke alongside Fed Chair Powell (neutral – voter) in a
roundtable discussion and they both just stated that they are working to
achieve price stability and maximum employment (which is their mandate)</p>

<figure data-media-><img src="https://images.forexlive.com/images/Fed%27s%20Harker_id_35d4a0bb-b3fd-4a2a-9dc9-7937af541916_size900.jpg" alt="Fed's Harker" width="860" height="573" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/Fed%27s%20Harker_id_35d4a0bb-b3fd-4a2a-9dc9-7937af541916_size900.jpg" /><figcaption><div>Fed's Harker</div></figcaption></figure><p>Fed’s Barr
(neutral – voter) is on the “higher for longer” camp and expects growth and
labour market to soften over the next year:</p>

<ul type="disc"><li><strong>Fed is at a point
where we can proceed carefully on monetary policy</strong>.</li><li>Most important
question is not whether an additional rate hike is needed this year.</li><li><strong>Most important
question is how long we will need to hold rates at a sufficiently
restrictive level</strong>. I expect
it'll take some time.</li><li>Full effects of past
tightening are yet to come in the months ahead.</li><li>There has been a lot
of progress on inflation.</li><li>Economic activity
has been considerably more resilient than expected.</li><li>Sees higher
probability than previously for a soft landing.</li><li>Labor market is
tight, but supply and demand are coming into better balance.</li><li><strong>Baseline projections
is for below potential GDP growth over next year and further softening of
labour market</strong>.</li><li>Monetary policy is a
blunt tool. Likely not appropriate to address specific financial stability
threats.</li><li>Supervisors expect
banks to be ready and willing to use discount window.</li><li>There seems to be
the right kind of slowing in housing.</li><li>Goods and housing
services inflation is on the right path, downward.</li><li><strong>The amount of credit
tightening we are seeing is less than what I feared in March</strong>.</li></ul>

<p><strong><u>Tuesday</u></strong>:</p>

<p>Fed’s Mester (hawk – non voter) supports one more rate
hike this year:</p>

<ul type="disc"><li>Monetary policy path
depends on how economy performs.</li><li><strong>Fed will likely need
to hike rates one more time this year</strong>.</li><li>Economy on ‘good
path’ amid ongoing rebalancing of supply and demand.</li><li>Job market strong
but slowing, coming into better balance.</li><li>Inflation ‘too high’
but sees welcome signs of progress lowering price pressures.</li><li>Fed will need to
keep rates high to ensure return to 2% inflation.</li><li>Economy has grown
more strongly than expected.</li><li>Risks to inflation
tilted toward upside.</li><li>Credit conditions
have tightened in line with monetary policy.</li><li>Sees some signs wage
pressures are easing.</li><li>Fed will keep rates
restrictive to get inflation down.</li><li><strong>Higher rates are
needed to make sure the disinflation process continues</strong>.</li><li>A.I. technology will
change a lot in the economy.</li><li>Student loan restart
won't bring immediate change in consumer spending.</li><li>Doesn't see dollar
getting dethroned, dollar is very strong currency.</li><li><strong>Likely to favour
hike at the next meeting if the current economic situation holds</strong>.</li><li><strong>Long-term yield rise
will affect monetary policy outlook</strong>.</li><li>Fed likely at or
near peak for interest rate target.</li><li><strong>Higher long-term
rates will moderate growth.</strong></li><li>Yields up on a
number of factors, including changed outlook on growth.</li><li>Doesn't see a rate
cut happening any time soon.</li><li>Expects to hit 2%
inflation by end of 2025.</li></ul>

<figure data-media-><img src="https://images.forexlive.com/images/Fed%27s%20Mester_id_97d080b7-c4b3-48ab-a43c-bb0645a1db93_size900.jpg" alt="Fed's Mester" width="1919" height="1280" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/Fed%27s%20Mester_id_97d080b7-c4b3-48ab-a43c-bb0645a1db93_size900.jpg" /><figcaption><div>Fed's Mester</div></figcaption></figure><p>The RBA left the cash rate unchanged at 4.10% as
expected:</p>

<ul type="disc"><li>Some further
tightening of monetary policy may be required.</li><li>Board remains
resolute in its determination to return inflation to the target.</li><li><strong>Recent data are
consistent with inflation returning to the target range over the forecast
horizon</strong>.</li><li>Higher interest
rates are working to establish a more sustainable balance between supply
and demand in the economy.</li><li>Inflation in
Australia has passed its peak but is still too high and will remain so for
some time yet.</li><li>Timely indicators on
inflation suggest that goods price inflation has eased further, but the
prices of many <strong>services are continuing to rise briskly</strong>.</li><li>Central forecast is
for CPI inflation to continue to decline and to be back within the 2–3 per
cent target range in late 2025.</li><li><strong>There are
significant uncertainties around the outlook</strong>.</li><li>Returning inflation
to target <strong>within a reasonable timeframe</strong> remains the Board’s
priority.</li><li>Inflation is coming
down, the labour market remains strong, and the economy is operating at a
high level of capacity utilisation.</li></ul>

<p>ECB’s Simkus (hawk – voter) leans towards keeping
rates higher for longer:</p>

<ul type="disc"><li>Inflation is on its
way down.</li><li><strong>Rates need to stay
restrictive to tame prices</strong>.</li><li>Prompt monetary
policy response has been effective.</li></ul>

<figure data-media-><img src="https://images.forexlive.com/images/ECB%27s%20Simkus_id_2771254f-e2da-437c-b6dd-76547a355e9e_original.jpg" alt="ECB's Simkus" width="800" height="533" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/ECB%27s%20Simkus_id_2771254f-e2da-437c-b6dd-76547a355e9e_original.jpg" /><figcaption><div>ECB's Simkus</div></figcaption></figure><p>ECB’s Lane (dove – voter) acknowledges that the
progress towards the 2% target will be harder from now on and that the central
bank will need to keep rates at restrictive level for as long as needed:</p>

<ul type="disc"><li><strong>Progress to 2%
inflation won't be as quick as to 4%.</strong></li><li>Food inflation is
still quite high now.</li><li><strong>The key is to
maintain rates at this level for as long as needed</strong>.</li><li>It is still a
substantial issue.</li><li>Services inflation
now a big contributor.</li></ul>

<p>The Switzerland CPI missed expectations with inflation
being comfortably withing the SNB’s 0-2% target range on both the headline and
core measure:</p>

<ul type="disc"><li>CPI Y/Y 1.7% vs. 1.8%
expected and 1.6% prior.</li><li><strong>Core CPI Y/Y 1.3% vs.
1.5% prior.</strong></li></ul>

<figure data-media-><img src="https://images.forexlive.com/images/Switzerland%20Core%20CPI%20YoY_id_89c08028-3b67-4ca1-a4a7-9d1b0e0d8a6c_size900.jpg" alt="Switzerland Core CPI YoY" width="982" height="467" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/Switzerland%20Core%20CPI%20YoY_id_89c08028-3b67-4ca1-a4a7-9d1b0e0d8a6c_size900.jpg" /><figcaption><div>Switzerland Core CPI YoY</div></figcaption></figure><p>BoC’s Vincent leans on
the hawkish side as core inflation in Canada has proved to be stickier than
expected:</p>

<ul><li><strong>Firms continue to expect
price changes to remain larger and more frequent</strong>.</li><li>Still have a ways to go
before pricing behaviour returns to normal.</li><li>If firms' recent pricing
behaviour settles into a new normal, it could complicate return to low, stable
and predictable inflation.</li><li>More frequent and large
price increases by firms are intimately linked to stronger than expected
inflation.</li><li><strong>Downward path of inflation
has been slower than anticipated, inflation proved to be stickier than many
expected</strong>.</li><li>It is clear we are not out of the woods yet on inflation and unusual
amount of uncertainty continues to cloud our view.</li></ul>

<br><figure data-media-><img src="https://images.forexlive.com/images/BoC%27s%20Vincent_id_64584eaf-a96e-4fde-87a9-b19f946c3971_size900.jpg" alt="BoC's Vincent" width="900" height="563" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/BoC%27s%20Vincent_id_64584eaf-a96e-4fde-87a9-b19f946c3971_size900.jpg" /><figcaption><div>BoC's Vincent</div></figcaption></figure>

<p>Fed’s Bostic (dove – non
voter) is on the “higher for longer” camp:</p>

<ul type="disc"><li>Fed still has a way
to go to get inflation back to target.</li><li><strong>Fed is in
restrictive territory and that is helping inflation fall</strong>.</li><li><strong>I would be open to a
robust review of 2% after it has been reached</strong>.</li><li><strong>Higher long-end
rates matter if they slow growth too much, no sign yet</strong>.</li><li>Higher long-term
rates not impacting business beyond what would happen in a normal
tightening cycle.</li><li>Says he sees the
next move as a single quarter-point rate cut late next year.</li><li>Sees inflation
approaching 2% target by end of 2025.</li><li>Still 'work to do'
but confident underlying price trends are slowing.</li><li>Share of goods with
faster price increases has declined; businesses agree slowing trend likely
to continue.</li><li>'Signs of balance'
also coming to labour market, with slower jobs growth.</li><li>Businesses say it's
getting easier to hire and wage growth likely to slow.</li><li>Energy prices and
geopolitics pose upside risks to inflation.</li><li>Assessing need for
below-trend GDP growth to cure inflation depends on other trends like
productivity.</li></ul>

<figure data-media-><img src="https://images.forexlive.com/images/Fed%27s%20Bostic_id_6ccbdd01-6566-4169-8883-cc7a3df93e08_original.jpg" alt="Fed's Bostic" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/Fed%27s%20Bostic_id_6ccbdd01-6566-4169-8883-cc7a3df93e08_original.jpg" /><figcaption><div>Fed's Bostic</div></figcaption></figure><p>The US Job Openings beat
expectations by a big margin in another sign that the labour market might be
softening but it remains pretty tight:</p>

<ul><li>Job Openings 9.610M vs.
8.800M expected and 8.827M prior.</li><li>Hires 5.8% vs.
3.7% prior.</li><li>Separations rate
3.6% vs. 3.6% prior.</li><li>Quits 2.3% vs.
2.3% prior.</li></ul>

<br><figure data-media-><img src="https://images.forexlive.com/images/US%20Job%20Openings_id_b7e1127f-8342-4104-bf63-359af7063d34_size900.jpg" alt="US Job Openings" width="975" height="470" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/US%20Job%20Openings_id_b7e1127f-8342-4104-bf63-359af7063d34_size900.jpg" /><figcaption><div>US Job Openings</div></figcaption></figure><p>Japan has likely intervened in the
FX market as the USD/JPY exchange rate crossed the key 150.00 level. Senior
Japan officials had no comment when asked about it, but it’s pretty evident by
just looking at the price chart.</p>

<br><figure data-media-><img src="https://images.forexlive.com/images/USDJPY%201%20hour%20chart_id_a90fdf04-a11e-465b-b4f0-9705035e932e_size900.jpg" alt="USDJPY 1 hour chart" width="1350" height="712" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/USDJPY%201%20hour%20chart_id_a90fdf04-a11e-465b-b4f0-9705035e932e_size900.jpg" /><figcaption><div>USDJPY 1 hour chart</div></figcaption></figure><p><strong><u>Wednesday</u></strong>:</p>

<p>The RBNZ left the cash
rate unchanged at 5.50% as expected:</p>

<ul type="disc"><li>Demand growth in the
economy continues to ease.</li><li><strong>Committee agreed
that the OCR needs to stay at a restrictive level</strong>.</li><li>Interest rates are
constraining economic activity and reducing inflationary pressure as
required.</li><li>While GDP growth in
the June quarter was stronger than anticipated, the growth outlook remains
subdued.</li><li><strong>With monetary
conditions remaining restrictive, spending growth is expected to decline
further</strong>.</li><li>Near-term risk that
activity and inflation do not slow as much as needed.</li><li><strong>Prolonged period of
subdued activity is required to reduce inflationary pressure</strong>.</li></ul>

<p>The Eurozone August
retail sales missed expectations by a big margin:</p>

<ul><li>Retail Sales M/M -1.2%
vs. -0.3% expected and -0.1% prior (revised from -0.2%).</li><li>Retail Sales Y/Y -2.1%
vs. -1.2% expected and -1.0% prior.</li></ul><figure data-media-><img src="https://images.forexlive.com/images/Eurozone%20Retail%20Sales%20YoY_id_9ac384f8-6dc1-46c2-a91f-8e598051dfb1_size900.jpg" alt="Eurozone Retail Sales YoY" width="985" height="467" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/Eurozone%20Retail%20Sales%20YoY_id_9ac384f8-6dc1-46c2-a91f-8e598051dfb1_size900.jpg" /><figcaption><div>Eurozone Retail Sales YoY</div></figcaption></figure><p>ECB’s Centeno (dove –
voter) calls for the end of the tightening cycle given the current economic
conditions:</p>

<ul><li>Inflation is falling
faster than when it was rising.</li><li><strong>We can expect that the
interest rate cycle has been completed by now and with present conditions</strong>.</li></ul>

<br><figure data-media-><img src="https://images.forexlive.com/images/ECB%27s%20Centeno_id_9c10e650-4853-431e-8e3b-77633bb41f87_size900.jpeg" alt="ECB's Centeno" width="1240" height="827" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/ECB%27s%20Centeno_id_9c10e650-4853-431e-8e3b-77633bb41f87_size900.jpeg" /><figcaption><div>ECB's Centeno</div></figcaption></figure>

<p>ECB’s de Guindos (dove –
voter) maintains a more cautious outlook:</p>

<ul type="disc"><li>We will continue to
follow a data-dependent approach.</li><li><strong>Economic activity
likely to remain subdued in the coming months</strong>.</li><li>Labour market remains resilient.</li><li><strong>Underlying price
pressures remain strong</strong>.</li></ul>

<br><figure data-media-><img src="https://images.forexlive.com/images/ECB%27s%20de%20Guindos_id_b4ac0104-02de-46a9-9691-aa85a9324b3c_size900.jpg" alt="ECB's de Guindos" width="1800" height="1014" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/ECB%27s%20de%20Guindos_id_b4ac0104-02de-46a9-9691-aa85a9324b3c_size900.jpg" /><figcaption><div>ECB's de Guindos</div></figcaption></figure>

<p>The US ADP for September
missed expectations by a big margin coming in at 89K vs. 153K expected and 180K
prior (revised from 177K):</p>

<ul type="disc"><li>small (less than 50
employees) 95K vs. 18K prior.</li><li>medium firms (500 –
499) 72K vs. 79K prior.</li><li><strong>large (greater than
499 employees) -83K vs. 83K prior</strong>.</li></ul>

<p>Changes in pay:</p>

<ul type="disc"><li>Job stayers 5.9% vs. 5.9% prior.</li><li>Job changers 9.0% vs. 9.5% prior.</li></ul>

<figure data-media-><img src="https://images.forexlive.com/images/US%20ADP_id_30d26744-5ef5-4fa7-8de5-dec2f999a271_size900.jpg" alt="US ADP" width="982" height="476" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/US%20ADP_id_30d26744-5ef5-4fa7-8de5-dec2f999a271_size900.jpg" /><figcaption><div>US ADP</div></figcaption></figure><p>The US ISM Services PMI
came in line with expectations at 53.6 vs. 54.5 prior:</p>

<ul type="disc"><li>employment index 53.4 vs. 54.7 prior.</li><li><strong>new orders index
51.8 vs. 57.5 prior</strong>.</li><li>prices paid index
58.9 vs. 58.9 prior.</li><li>new export orders
63.7 vs. 62.1 prior.</li><li>imports 50.6 vs. 52.3
prior.</li><li>backlog of orders
48.6 vs. 41.8 prior.</li><li>inventories 54.2 vs. 57.7 prior.</li><li>supplier deliveries 50.4 vs. 48.5
prior.</li><li>inventory sentiment
54.8 vs. 61.5 prior.</li></ul>

<br><figure data-media-><img src="https://images.forexlive.com/images/US%20ISM%20Services%20PMI_id_d68ac607-1e28-4766-aeaf-5f945dbf442f_size900.jpg" alt="US ISM Services PMI" width="1000" height="480" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/US%20ISM%20Services%20PMI_id_d68ac607-1e28-4766-aeaf-5f945dbf442f_size900.jpg" /><figcaption><div>US ISM Services PMI</div></figcaption></figure>

<p><strong><u>Thursday</u></strong>:</p>

<p>ECB’s Kazimir (hawk –
voter) joins the higher for longer camp:</p>

<ul type="disc"><li><strong>I believe that the
last rate hike was the final one</strong>.</li><li>A December rate hike
is not a scenario I'd like.</li><li>We are on the
trajectory of declining inflation.</li></ul>

<figure data-media-><img src="https://images.forexlive.com/images/ECB%27s%20Kazimir_id_e213eb03-81d4-44e9-b983-bb1f7fb4798c_original.jpg" alt="ECB's Kazimir" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/ECB%27s%20Kazimir_id_e213eb03-81d4-44e9-b983-bb1f7fb4798c_original.jpg" /><figcaption><div>ECB's Kazimir</div></figcaption></figure><p>BoE’s Broadbent (neutral
– voter) didn’t offer much as he’s uncertain on the future rates trajectory:</p>

<ul type="disc"><li>It is an open
question on whether there will be more rate hikes.</li><li>There are clear
signs that rate hikes are having an impact.</li><li>But perhaps it may
be that the effect is weaker than in the past or still delayed.</li><li>Sees UK inflation
reaching target in 2 years' time.</li></ul>

<br><figure data-media-><img src="https://images.forexlive.com/images/BoE%27s%20Broadbent_id_7efdddd3-7058-4bcf-9710-4a4599565d38_original.jpg" alt="BoE's Broadbent" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/BoE%27s%20Broadbent_id_7efdddd3-7058-4bcf-9710-4a4599565d38_original.jpg" /><figcaption><div>BoE's Broadbent</div></figcaption></figure>

<p>ECB’s Lane (dove – voter)
acknowledged that credit dynamics have been weak, which should weigh on
economic growth and inflation:</p>

<ul><li><strong>Credit dynamic really has
been quite weak</strong>.</li><li>It is below what we would
have expected last year.</li></ul><figure data-media-><img src="https://images.forexlive.com/images/ECB%27s%20Lane_id_7f1827e4-e2b4-447f-89bb-b0959b7a289a_original.jpg" alt="ECB's Lane" width="799" height="533" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/ECB%27s%20Lane_id_7f1827e4-e2b4-447f-89bb-b0959b7a289a_original.jpg" /><figcaption><div>ECB's Lane</div></figcaption></figure><p>The US September
Challenger Job Cuts came in at 47.46K vs. 75.15K prior. </p>

<br><figure data-media-><img src="https://images.forexlive.com/images/US%20Challenger%20Job%20Cuts_id_1202fd0a-74ff-43d7-921f-f1f7db7f8468_size900.jpg" alt="US Challenger Job Cuts" width="985" height="468" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/US%20Challenger%20Job%20Cuts_id_1202fd0a-74ff-43d7-921f-f1f7db7f8468_size900.jpg" /><figcaption><div>US Challenger Job Cuts</div></figcaption></figure>

<p>The US Jobless Claims
beat expectations once again:</p>

<ul><li>Initial Claims 207K vs.
210K expected and 205K prior (revised from 204K).</li><li>Continuing Claims 1664K
vs. 1675K expected and 1665K prior (revised from 1670K).</li></ul><figure data-media-><img src="https://images.forexlive.com/images/US%20Initial%20Claims_id_7c107a04-8db9-47c9-9d1e-e55581993898_size900.jpg" alt="US Initial Claims" width="995" height="471" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/US%20Initial%20Claims_id_7c107a04-8db9-47c9-9d1e-e55581993898_size900.jpg" /><figcaption><div>US Initial Claims</div></figcaption></figure><p>ECB’s Villeroy (neutral –
voter) is just another member in the higher for longer camp as the ECB has
probably ended its tightening cycle:</p>

<ul type="disc"><li>Increase in bond
yields may be excessive but it is helping to tighten financial conditions.</li><li><strong>I don't think an additional
rate hike is justified now</strong>.</li></ul>

<br><figure data-media-><img src="https://images.forexlive.com/images/ECB%27s%20Villeroy_id_fc7e233e-1297-4e25-8bc7-bfbd3bc05d78_original.jpg" alt="ECB's Villeroy" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/ECB%27s%20Villeroy_id_fc7e233e-1297-4e25-8bc7-bfbd3bc05d78_original.jpg" /><figcaption><div>ECB's Villeroy</div></figcaption></figure>

<p>Fed’s Daly (neutral – non
voter) is comfortable with the recent rise in Treasury yields as it tightens
financial conditions on the Fed’s behalf: </p>

<ul type="disc"><li>Monetary policy is restrictive.</li><li>Progress isn't
victory, must remain resolute.</li><li>To ensure we fully
achieve goals, we need to finish the work.</li><li>We need vigilance
and agility.</li><li>The economy still
has considerable momentum.</li><li>We are a long way
from 2% inflation and a long way from sustainable employment.</li><li>Even with recent
slowing in the labour market, job growth remains well above what needed to
keep pace with growth.</li><li>It's possible the
slowing so far it will translate into steady march towards goal.</li><li>There are real risks
in inflation projection.</li><li>Will need to see
progress on a super – core inflation to be confident we are on path to 2%.</li><li>If we continue to
see labour market and inflation falling, we can hold rates steady.</li><li><strong>If financial
conditions remain tight, that reduces need for more action from Fed</strong>.</li><li><strong>But if falling
inflation stalls or financial conditions loosen, will need to raise rates
further</strong>.</li><li>Need to keep an open
mind, have optionality on rates.</li><li><strong>With rising bond
yields, the need to do additional tightening by Fed is not there.</strong></li></ul>

<p>Fed’s Barkin (neutral –
non voter) is comfortable with the recent rise in Treasury yields as well:</p>

<ul type="disc"><li>Yields have come up
amid fiscal issuance and strong data.</li><li>A 2% is a very
reasonable inflation target.</li><li><strong>Does not see the
logic of throwing out target before hitting it</strong>.</li><li><strong>Rates feel high now,
but they are not over the long term</strong>.</li></ul>

<figure data-media-><img src="https://images.forexlive.com/images/Fed%27s%20Barkin_id_0209ea2b-ef0f-4ba8-8d49-733309ab0901_size900.jpg" alt="Fed's Barkin" width="900" height="602" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/Fed%27s%20Barkin_id_0209ea2b-ef0f-4ba8-8d49-733309ab0901_size900.jpg" /><figcaption><div>Fed's Barkin</div></figcaption></figure><p><strong><u>Friday</u></strong>:</p>

<p>The Japanese wage growth
missed expectations which is not what the BoJ wants to see in order to scale
back its easing measures:</p>

<ul><li>Average Cash Earnings Y/Y
1.1% vs. 1.5% expected and 1.1% prior.</li><li>Inflation-adjusted Real
Wages Y/Y -2.7% vs. -2.5% prior. This is the 17<sup>th</sup> consecutive
decline.</li></ul>

<br><figure data-media-><img src="https://images.forexlive.com/images/Japan%20Average%20Cash%20Earnings%20YoY_id_fbff2e97-5d4a-4be3-9807-c5944ca86b66_size900.jpg" alt="Japan Average Cash Earnings YoY" width="850" height="401" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/Japan%20Average%20Cash%20Earnings%20YoY_id_fbff2e97-5d4a-4be3-9807-c5944ca86b66_size900.jpg" /><figcaption><div>Japan Average Cash Earnings YoY</div></figcaption></figure>

<p>ECB’s Schnabel (hawk –
voter) acknowledged the risks to the inflation outlook and the need to be
cautious:</p>

<ul><li>Overall, the recent news
on inflation is encouraging.</li><li>Core inflation has proven
more stubborn.</li><li>We cannot take it for
granted that inflation will only move downwards from now on, because we could
have new supply side shocks.</li><li><strong>We cannot say that we are
at the peak or for how long rates will need to be kept at restrictive levels</strong>.</li><li>I still see upside risks
to inflation.</li><li>Cites wages as upside
risk.</li></ul>

<figure data-media-><img src="https://images.forexlive.com/images/ECB%27s%20Schnabel_id_64203898-864e-4d44-ae57-6c39c36f9ed6_size900.jpg" alt="ECB's Schnabel" width="900" height="600" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/ECB%27s%20Schnabel_id_64203898-864e-4d44-ae57-6c39c36f9ed6_size900.jpg" /><figcaption><div>ECB's Schnabel</div></figcaption></figure><p>The US NFP report beat
expectations by a big margin:</p>

<ul><li><strong>Nonfarm Payrolls 336K vs. 170K expected and 227K prior (revised from 187K).</strong></li><li><strong>Unemployment rate 3.8% vs. 3.7% expected and 3.8% prior.</strong></li><li><strong>Participation rate 62.8% vs. 62.8% prior.</strong></li><li>Private payrolls 263K vs.
160K expected and 177K prior (revised from 179K).</li><li>Manufacturing payrolls
17K vs. 5K expected and 11K prior (revised from 16K).</li><li>Government payrolls 73K
vs. 50K prior (revised from 8K).</li><li>U6 Unemployment rate 7.0%
vs. 7.1% prior. </li><li><strong>Average weekly hours 34.4 vs. 34.4 expected and 34.4 prior.</strong></li><li><strong>Average hourly earnings M/M 0.2% vs. 0.3% expected and 0.2% prior.</strong></li><li><strong>Average hourly earnings Y/Y 4.2% vs. 4.3% expected and 4.3% prior.</strong></li></ul><figure data-media-><img src="https://images.forexlive.com/images/US%20Unemployment%20Rate_id_ce057c32-dd41-460a-98bd-a80481e2be2f_size900.jpg" alt="US Unemployment Rate" width="982" height="468" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/US%20Unemployment%20Rate_id_ce057c32-dd41-460a-98bd-a80481e2be2f_size900.jpg" /><figcaption><div>US Unemployment Rate</div></figcaption></figure><p>The Canadian Jobs report
beat expectations as well:</p>

<ul><li>Employment change 63.8K vs.
20.0K expected and 39.9K prior.</li><li>Unemployment rate 5.5%
vs. 5.6% expected and 5.5% prior.</li><li>Full-time employment
15.8K vs. 32.2K prior.</li><li>Part-time employment
47.9K vs. 7.8k prior.</li><li>Participation rate 65.6%
vs. 65.5% prior.</li><li><strong>Average hourly wages permanent employees 5.3% vs. 5.2% prior.</strong></li></ul><figure data-media-><img src="https://images.forexlive.com/images/Canada%20Unemployment%20Rate_id_73505214-e262-44b4-816d-47bb683589ba_size900.jpg" alt="Canada Unemployment Rate" width="982" height="467" wrapper-="wrapper-" data-src="https://images.forexlive.com/images/Canada%20Unemployment%20Rate_id_73505214-e262-44b4-816d-47bb683589ba_size900.jpg" /><figcaption><div>Canada Unemployment Rate</div></figcaption></figure>
<p><strong>The highlights for next
week will be:</strong></p>

<ul><li>Tuesday: US NFIB Small
Business Optimism Index.</li><li>Wednesday: US PPI, FOMC
Minutes.</li><li>Thursday: Japan PPI, UK
GDP, US CPI, US Jobless Claims, NZ Manufacturing PMI.</li><li>Friday: China CPI, China
Trade data, Eurozone Industrial Production, US University of Michigan Consumer
Sentiment. </li></ul>

<p>That’s all folks. Have a
great weekend!</p>

This article was written by Giuseppe Dellamotta at www.forexlive.com.

Weekly Market Recap (02-06 October)

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US September non-farm payrolls +336K vs +170K expected

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