"Cut Rates or Wait? Inflation Slowdown Masks Looming Unemployment Crisis"

On Friday (October 11th), according to data released on Thursday, the overall inflation rate in the United States slowed down in September but remained higher than expected, indicating a pause in the recent process of easing price pressures. This could provide a reason for the Federal Reserve to slow down the pace of rate cuts. The U.S. September unadjusted CPI annual rate fell to 2.4% from 2.5% in the previous month, marking the sixth consecutive month of decline and hitting a new low since February 2021, but higher than the market's expected 2.3%. The U.S. September unadjusted core CPI annual rate recorded 3.3%, the highest since June, and higher than the market's expected 3.2%.

However, hidden in the background is a sharp increase in the number of initial jobless claims, with the data increasing by 258,000 people for the week ending October 5th, which appears to be caused by hurricanes. As the FOMC's rhetoric has recently turned positively towards employment, Powell and his colleagues may spend more effort assessing the initial claims data rather than CPI. The U.S. Dollar Index fluctuated to 102.90; non-U.S. currencies rebounded, with the Australian dollar against the U.S. dollar reaching 0.6740, the euro against the U.S. dollar fluctuated near 1.0930, and the offshore renminbi reached 7.08. Spot gold rose to near $2640, and spot silver came to $31.20. Crude oil rebounded to near $75.80.

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Fundamentals: The economic and inflation trends in the Eurozone require predictable and prudent interest rate cuts. If the rate cut is too fast and then has to be raised again, the entire process is much more complicated than cutting rates slowly first and then accelerating the rate cut at some point. Tensions in the Middle East are a reason for cautious rate cuts, and if oil prices continue to rise and the market is conveyed the message of accelerating rate cuts at that time, Europe will bear the risk.

Technical analysis: The euro against the U.S. dollar fluctuated and rebounded at the H4 level, but it is still running below the 48-day bull-bear line. In addition, the MACD dual lines and volume bars crossed above the zero axis. The salary demands proposed by the German public sector unions pose a challenge to the European Central Bank's inflation target and the German government, which is constrained by austerity fiscal rules.

Resistance and support levels:

First resistance level: 1.0990 First support level: 1.0880

Second resistance level: 1.1040 Second support level: 1.0830Fundamentals: The latest data from the UK Office for National Statistics shows that after the actual GDP in the UK remained unchanged month-on-month in June, the actual GDP growth in July continued to stagnate, falling short of the 0.2% growth rate previously expected by economists. The performance of the economic data in July has made investors realize the severe challenges facing the UK economy. Before the Office for National Statistics released the data, economists generally believed that the economic slowdown in June was temporary, caused by political uncertainty factors before the election.

Technical Analysis: The British Pound against the US Dollar rebounded at the H4 level and is operating below the 48-day bull-bear line. In addition, the MACD lines and volume bars are expanding near the zero axis. At present, the monthly economic performance indicates that the UK economy has deviated from the moderate growth trajectory that began at the end of 2023 and will move towards a path of declining growth rate in the second half of 2024.

Resistance and Support Levels:

First Resistance Level: 1.3110 First Support Level: 1.3000

Second Resistance Level: 1.3160 Second Support Level: 1.2950

Fundamentals: As the market reduced bets on the Federal Reserve's interest rate cuts, boosting the US Dollar and US Treasury yields, the largest banks in Japan almost unanimously believe that the Japanese Yen will continue to weaken. The prospect of further depreciation of the Yen is encouraging investors to re-establish bearish positions. Poor US inflation data has made the Yen one of the most easily sold currencies. So far, selling the Yen has been the most popular trade, and carry trades still seem to be applicable for hedge funds shorting the Yen.

Technical Analysis: The US Dollar against the Japanese Yen is hovering at the H4 level and operating above the 48-day bull-bear line. In addition, the MACD volume bars and lines are converging above the zero axis. The Yen has fallen by 4.6% in the past month, which has kept Japanese officials and Yen investors on high alert.Resistance and Support Levels:

First Resistance Level: 149.60 First Support Level: 148.00

Second Resistance Level: 150.50 Second Support Level: 147.20

Fundamentals: Influenced by the rise in U.S. Treasury yields and the possibility of the Federal Reserve gradually lowering interest rates, the Australian dollar has recently shown a frequent downward trend. Moreover, the Australian dollar is facing an increasing number of unfavorable factors, including the repricing of the hawkish Federal Reserve, potential geopolitical escalation, risk aversion before the U.S. election, sharp fluctuations in commodity prices, and now the Reserve Bank of Australia being more dovish than expected. Financial market pricing suggests that the next move by the Reserve Bank of Australia will be to lower interest rates, which is expected to happen early next year.

Technical Analysis: The Australian dollar against the U.S. dollar has rebounded at the H4 level, but it is still operating below the 48-day moving average. Additionally, the MACD lines and volume bars have begun to expand below the zero axis. Surveys indicate that the majority of economists expect the Reserve Bank of Australia to keep interest rates unchanged this year.

Resistance and Support Levels:

First Resistance Level: 0.6790 First Support Level: 0.6700

Second Resistance Level: 0.6830 Second Support Level: 0.6660Fundamentals: On October 10, 2024, the U.S. Consumer Price Index (CPI) data for September showed that the overall inflation level was slightly higher than market expectations, with a year-on-year increase of 2.4%. Although this was a decrease from August's 2.5%, it was still above the economists' forecast of 2.3%. The release of this data caused significant market fluctuations. The CPI report did not bring any major surprises, and employment data showed a trend of weakness, which helped the Federal Reserve's stance on rate cuts to be beneficial for gold.

Technical Analysis: Gold rebounded at the H4 level and returned near the 48-day bull-bear boundary. Additionally, the MACD lines and volume bars expanded below the zero axis. At the same time, Israel's plan to strike Iran intensified concerns about a broader conflict in the Middle East. This factor attracted safe-haven buying and support from bargain hunters, which supported gold prices.

Resistance and Support Levels:

First Resistance Level: 2654.00 First Support Level: 2617.00

Second Resistance Level: 2672.00 Second Support Level: 2600.00

Fundamentals: Gulf states are lobbying Washington to prevent Israel from attacking Iranian oil facilities, as they fear that their own oil facilities may be targeted by Iranian proxies if the conflict escalates. To avoid being drawn into the crossfire, Gulf states including Saudi Arabia, the United Arab Emirates, and Qatar also refuse to allow Israel to fly through their airspace to launch any attacks on Iran, and have communicated this to Washington.Technical Analysis: Crude oil at the H4 level continues to rebound and has returned above the 48-day bull-bear line. Additionally, the MACD lines and volume bars are further converging near the zero axis. Israel has pledged that Iran will pay a price for last week's missile attacks, while Iran has indicated that any retaliation will be met with a response, increasing concerns that Israel may target Iran's oil production facilities.

Resistance and Support Levels:

First Resistance Level: 78.00 First Support Level: 73.00

Second Resistance Level: 80.00 Second Support Level: 71.00