Forex

The pair rises today after the mixed jobs report, as markets brace for more economic data from the UK over the coming days and the update on the government’s economic plan

The pair collapsed to its worst week since 1998, after the moderation in US CPI inflation, but rebounds today as the monetary policy deferential remains unfavorable

The pair concluded its fourth straight profitable week as expectations around the Fed’s tightening path have eased, but shows indecision today, ahead of key resistance confluence

The British Pound rallied against the greenback yesterday, after the moderation in US CPI inflation, but the Q3 contraction of the UK economy weighs today

The pair had one of its best days of the year on Wednesday as a result of the soft inflation figures from the US and extends its gains today, past key tech levels

USD/JPY has faced pressure following last month’s 32-year highs, testing key technical levels this week, as markets brace for another inflation update from the United States

The pair kicked-off the current week with a strong showing, same way it finished the previous one, but losses steam today, ahead of Thursday’s US inflation update

The USDOLLAR (bottom candlestick chart) pullback that started on Friday seems disconnected from the underlying fundamentals. On Friday, the real rate (top candlestick chart) charted an indecisive doji, whilst the greenback declined markedly. Moreover, the dollar has shown weakness in today's morning session, with minimal movement from the real rate. Over the two sessions, their correlation coefficient declined from 69% to 52%.

NFP Live Trade - 04 November 2022

The ISM manufacturing number came in at 50.2, higher than the 50 that was forecast. As a result, the real rate gapped up on the print (red arrow), and FXCM's USDOLLAR basket followed upwards (green arrow).

Forex markets this week will likely take their directionby the Fed announcement on Wednesday, 2 November. However, given the PCE data on Friday, and the resilience of median inflation, a Fed pivot has long odds, in our opinion. The central bank will deliver 75bps for this meeting, but it is unclear if it will provide 50bps or 75bps in December (48% vs 47% probabilities). FXCM's USDOLLAR basket gapped up on…