AUD/USD slides over flight to safety The Australian dollar slips as commodities fall amid recession fears. The latest CPI showed annual inflation easing slightly in August, which may convince policymakers that they are on the right track. However, another 50bp interest rate hike by the RBA this week could be sidelined by the market’s pessimism. Nervous traders may continue to hoard the safe-haven dollar amid selling of risk assets. Prolonged weakness in the Chinese yuan, as Australia’s biggest trading partner undergoes an economic slowdown could weigh on commodity prices and the Aussie proxy. 0.6260 is the next support and 0.6660 the first resistance ahead. NZD/USD falls over risk aversion The New Zealand dollar weakens as the risk-off mode prevails. The RBNZ is set to deliver its eighth straight rate hike with another 50bps. Governor Adrian Orr said the tightening cycle is ‘well advanced’ but not over yet. Low unemployment rate and high inflation would still give the central bank leeway to push for tighter conditions. The market expects a further 50bp rate raise in November, taking the official cash rate to 4%. Though pronounced weakness in the kiwi may exacerbate inflation, which may turn into a downbeat spiral. The pair may find a short relief over March 2020’s low (0.5500). 0.5950 is the resistance in case of a bounce. XAU/USD slumps as dollar bounces higher Bullion struggles as the dollar index climbs to a fresh two-decade high. Greater rate hike expectations may maintain a firm support to the greenback at the expense of gold. Renewed hawkish calls from Fed officials make the peak in US interest rates of anyone’s guess. The previously much-speculated 4% seems to be outdated. Policymakers are betting on the low unemployment rate to keep the monetary policy restrictive. A median estimate of all 19 Fed bankers shows interest rates rising to 4.4% by the end of this year. The precious metal would be heading to April 2020’s low at 1570 and 1700 is the closest resistance. S&P 500 tumbles over global hard landing The S&P 500 falls as Fed officials remain vocal about tighter monetary policy. The market is bracing for another 75bp hike at the FOMC in November. There are definitely few good headlines to soothe investors. Property crisis in China and escalation on the Russia-Ukraine front only amplify worries of a concerted global hard landing. Resilience in the US job market may not be investors’ best friend but rather convince the Fed to carry on. With mega caps like Amazon and Apple under pressure, equities may bear the brunt of widespread risk aversion. The index is heading to a two-year low at 3280 and 3800 is a fresh resistance.

Stock markets are bouncing back on Friday, although I don't think anyone is getting excited by the moves which pale in comparison to the losses that preceded them. This looks like nothing more than a dead cat bounce after a steep decline over the last couple of weeks as investors have been forced to once again accept that interest rates are going to rise further and faster than hoped. Double-digit eurozone inflation Inflation in the eurozone hit 10% in September ahead of schedule, with markets expecting a jump to 9.7% from 9.1% in August. In normal circumstances that may have triggered a reaction but these are anything but normal. Markets are still pricing in a more than 70% chance of a 75 basis point rate hike from the ECB next month with an outside chance of 1%. The euro is slightly lower following the release which also showed core inflation rising a little higher than expected to 4.8%. Sterling recovers as the UK is revised out of a potential recession We're seeing the third day of gains for the pound which has now recovered the bulk of the losses sustained after the "mini-budget" a week ago. This is not a sign of investors coming around the new Chancellor's unfunded tax-cutting, but rather a reflection of the work done since to calm the market reaction. That includes the emergency intervention from the BoE, talk of measures to balance the cost of the tax cuts, reported discussions with the OBR and rumoured unrest within the Tory party. We'll have to see what that amounts to and sterling could certainly react negatively again to inaction or the wrong action. GDP data this morning brought some good news, although as far as positive updates go, this is surely towards the more insignificant end. The UK is not in recession after the second quarter GDP was revised up from -0.1% to +0.2%. While all positive revisions are welcome, the technical recession wasn't really significant in the first place. The important thing was that the UK is struggling to grow and facing a probable deeper recession down the road and today's revision doesn't change that. ​ Disappointing Chinese surveys China's PMIs highlighted the widening gulf between the performance of state-owned firms versus their private competition. It goes without saying that being backed by the state in uncertain times like this carries certain advantages and that has been evident for some time. Private firms have been more sensitive to Covid restrictions and have therefore been heavily hampered this year. Still, even with those state-backed benefits, the headline PMI was far from encouraging rising to 50.1 and barely in growth territory. With the non-manufacturing PMI also slipping from 52.6 to 50.6, it's clear that the economy still faces enormous headwinds and the global economy stalling around it will only add to them. BoJ ramps up bond purchases amid higher yields The Bank of Japan ramped up bond purchases overnight as it continues to defend its yield curve control thresholds in volatile market conditions. Rising global yields have forced the central bank to repeatedly purchase JGBs in order to maintain its target. There has been a growing expectation that the BoJ could tweak its 0% target or widen the band it allows fluctuations between in order to ease the pressure on the currency but that's not been forthcoming, with the MoF instead intervening in the markets for the first time since 1998. The intervention doom loop continues. RBI rate hike and credit line The Reserve Bank of India hiked the repo rate by 50bps to 5.9% on Friday, in what will likely be one of its final tightening measures in the fight against inflation. The decision was widely expected and followed shortly after by guidance to state-run refiners to reduce dollar buying in spot markets through the use of a $9 billion credit line. The strength of the dollar is posing a risk to countries around the world, as we've seen very clearly in recent weeks as mentioned above, and measures like this will seek to alleviate those pressures. Much more will be needed to make any significant difference though. Oil edges higher into the weekend Oil prices are rising again as we head into the weekend, with the focus now on the OPEC+ next week. There's been plenty of rumours about how the alliance will respond to the deteriorating economic outlook and lower prices. A sizeable cut now looks on the cards, the question is whether it will be large enough to offset the demand destruction caused by the impending economic downturn. Not to mention how any cut would work considering the shortfall in output targets throughout this year. Brent continues to trade around the March to August lows having traded below here over the last week amid...

Turkish inflation is expected to increase to 83.5% in September due to significant price hikes in electricity and natural gas fees. In Hungary, we see the manufacturing PMI jumping to 58.2, as order books remain filled and supply chain issues have gradually recovered. Turkey: Annual inflation to increase further In September, we expect annual inflation to increase to 83.5% (3.1% on monthly basis) from 80.2% a month ago, given significant administrative price hikes in electricity and natural gas fees. Pricing pressures will likely remain broad-based on the back of a largely supportive policy framework along with a less supportive global backdrop leading to currency weakness. Hungary: Retail Sales to slow, industrial production to jump The calendar for Hungary contains some activity data from August. We see retail sales slowing as prices rise quickly and households are increasingly conscious about their spending. On the other hand, industrial production will jump as the month of August this year contained two more working days than in the last year, boosting the unadjusted growth figure. When it comes to the September outlook for industry, the manufacturing PMI will give us some clues and we expect this to suggest expansion as orders books remain filled and supply chain issues have become less severe. Key events in EMEA next week Source: Refinitiv, ING Read the original analysis: Key events in EMEA next week 

EUR/USD - 0.9704 Despite resumption of downtrend to a fresh 20-year trough of 0.9537 (Europe) yesterday, subsequent rally due to selloff in usd in tandem with US yields to 0.9750 in New York signals a temporary low is made, intra-day retreat may head to 0.9640/50, below, 0.9600. On the upside, only a daily close above 0.9750 would risk stronger retracement towards 0.9775 but 0.9810/13 should cap upside. Data to be released on Thursday Italy producer prices, EU business climate, economic sentiment, industrial sentiment, services sentiment, consumer confidence, Germany CPI. U.S. GDP, PCE prices, initial jobless claims, continuing jobless claims, Canada GDP and average weekly earnings.  

Clifford Bennett from ACY Securities joined ausbiz TV to discuss the current state of currencies and what the forecasts are telling us. Clifford states that ‘it has been very easy to this point but we need to get back on our toes’ as we approach volatile levels in currencies. Individual central banks, governments, and some form of joint statement suggesting currencies need to stabilise is approaching. If you missed Clifford’s forecasts last year they were EUR .97, AUD 65, GBP 1.05, and this year highlighting .88, .58, 1.00 and .95 respectively. On to the US economy, it’s looking like a clear direction towards a recession with massive evidence indicating it may be an inescapable depression. Clifford links this to the governments and central banks not recognising the problems in the economy and therefore not taking any action to avert it. Clifford’s call is that there will be quite a significant economic catastrophe in the US and Europe. Domestically, we are not immune from this either and a recession is likely in Australia and Clifford remains bearish on equities. Listen here for all the details with Clifford.

EUR/USD - 0.9598 Euro's weakness to 0.9570 in New York yesterday following a rebound from Monday's fresh 2-decade low of 0.9559 to 0.9701 suggests re-test of 0.9559 would be seen after range trading, break extends downtrend to 0.9520 but loss of momentum may limit weakness to 0.9485. On the upside, only a daily close above 0.9652 would prolong choppy sideways swings and risk 0.9670, break, 0.9701. Data to be released on Wednesday: U.K. BRC shop price index, Australia retail sales, Japan coincident index, leading index, Germany Gfk consumer confidence, France consumer confidence, Italy business confidence, consumer confidence, industrial sales. U.S. MBA mortgage application, goods trade balance, wholesale inventories and pending home sales.