September’s US CPI rates could affect three markets

September’s US CPI Rates could shake the markets

Market focus today is expected to be on the release of the US CPI rates for September. The rates are expected to accelerate both at a headline and a core level for the past month in an indication of a boost in inflationary pressures in the US economy. Should the actual rates show an even faster-than-expected acceleration, we may see the USD being supported, as the market’s already hawkish expectations for the Fed could be further enhanced. Conversely, possibly slower-than-expected CPI rates, could weigh on the USD as market worries for the Fed’s monetary policy tightening plans may ease. The release could have ripple effects beyond the FX market, and higher than expected CPI rates could weigh on gold’s price and US equities, while slower than expected rates could lift US equities and gold.

Australia’s September Employment data

In the FX market, we continue to keep a close eye on the Aussie. In tomorrow’s Asian session, we get Australia’s employment data for September and the prognosis is for the employment change figure to drop and the unemployment rate to remain unchanged. Should the actual rates and figures show an even looser Australian market than expected, we may see the Aussie being on the retreat, while the picture of a tighter-than-expected Australian employment market could lift AUD.

Big banks earnings reports to be continued

The release of earnings reports by large US banks continues today with Bank of America, Morgan Stanley and BlackRock, all set to release their reports before the opening of the market. Possibly better-than-expected EPS and revenue figures accompanied by a robust forward guidance could support their share prices, but also lift the market sentiment somewhat.

Other highlights for today

Today we get Sweden’s CPI rates for September, and late in the American session the US weekly crude oil inventories figure. On a monetary level we note that a high number of policymakers from various central banks are scheduled to speak yet we note BoC Governor Macklem. In tomorrow’s Asian session, we highlight the release of Australia’s September employment data, while on a monetary level we note that BoJ Board member Koeda are scheduled to speak.

Charts to keep an eye out

AUD/USD edged higher after bouncing on the 0.6960 (S1) support line. We note that the downward trendline had been allready been broken signalling an interruption of the pair’s downward motion, yet upward motion remains to soft for a bullish outlook given also that the RSI indicator, despite rising is still below the reading of 50. Hence for the time being we maintain a bias for a sideways motion of the pair. For a bullish outlook to materialise, we would require AUD/USD to rise aiming for the 0.7085 (R1) resistance line. Should the bears regain the initiative over the pair’s direction, we may see AUD/USD breaking the 0.6960 (S1) support line clearly and start aiming for the 0.6830 (S2) support level.

S&P 500 remained stable near record high levels, well between the 7875 (R1) resistance line and the 7750 (S1) support level. We maintain a bias for the index’s sideways motion to continue between the prementioned levels for the time being. Yet we note that the RSI indicator remains above 50, implying possibly a bullish predisposition. Hence we issue a warning for any bullish tendencies. Should the bulls take control over the index’s direction, S&P 500’s price action could break the 7875 (R1) resistance line and start actively aiming for the 8000 (R2) resistance level. Should the bears take charge over S&P 500’s price action we may see it breaking the 7750 (S1) support line and start aiming for the 7620 (S2) level.

AUD/USD daily chart

• Support: 0.6960 (S1), 0.6830 (S2), 0.6665 (S3).
• Resistance: 0.7085 (R1), 0.7280 (R2), 0.7455 (R3). 

US 500 cash daily chart

• Support: 7750 (S1), 7620 (S2), 7490 (S3).
• Resistance: 7875 (R1), 8000 (R2), 8125 (R3).