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Bears Pause For Breath


Trend Needle Still Points South


(Z1) Bearish Risk Remains Present


(Z1) Recovers Off Last Week's Low



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  • A clean break of the September lows prompted a strong rally in the Chinese Yuan on Tuesday. USDCNH (-0.91%) declined to fresh multi-month, narrowing the gap with 6.3525, the late May high. The run higher in CNH/JPY has been even more notable, with the cross topping 17.90 - the highest level since January 2016. The cross has rallied 6.5% off the late September low.
  • In USD/CNY, some analysts noted the significance of the Beijing closing print below 6.40 (official close was 6.3998), which may be an indication that the pullback in the pair has been endorsed on an official basis.
  • AUD and NZD led G10 gains against the greenback, further proof of the enhanced global risk appetite. Spot NZDUSD (+1.20%) cleared the 200-DMA/descending trendline drawn off Feb 2021 high, which coincided at $0.7101 today, and rallied to a fresh four-month high above 0.7170.
  • The dollar index fell around a quarter of a percent, extending its losing streak to five days amid the reduced demand for safe haven currencies.
  • Elsewhere, GBPUSD traded above resistance at 1.3795, extending bullish technical conditions. EURGBP resumed the recent decline to lows of 0.8423, the lowest since February 2020.
  • The cross has recently cleared 0.8450, the Oct 10 low and a key support, reinforcing a bearish theme. This paves the way for an extension lower, opening 0.8392 next, a vol based support. Further out, there is scope too for an extension toward 0.8356, the Feb 26, 2020 low.
  • UK inflation data due tomorrow morning is the focus, with CPI seen slowing to +0.4% M/M from +0.7% prior. This will be the last look at inflation ahead of the November 4th BoE decision.
  • Canadian CPI and crude oil inventories highlight tomorrow's US session data docket.