Sample Category Title

The European Single Currency depreciated 0.14% against the US Dollar since Friday's session. During Monday morning hours, the rate was resisted by the 55-hour SMA at the 1.1498 mark.

In regards to the near-term future, most likely, the European Single Currency will trade downwards to the monthly S1 at the 1.1482 level. It is expected that the rate will bounce off the monthly S1 support level to keep trading in the pattern at the 1.1480 level during the day.

However, the monthly S1 support may push the rate to break the upper boundary of the medium descending pattern line to trade at the 1.1520 level.

Brent.CMD has been appreciating against the US Dollar since the middle of August after the commodity price bounced off from the lower boundary of an ascending channel at 70.21.

The commodity price opens below the 50-hour simple moving average during Monday's session. From a technical point of view, it is expected that the pair aims at the weekly S1 at 82.17 within this session.

If the support level as mentioned above holds, the price could reverse north and target a resistance line formed by the monthly pivot point at 85.70 during the following trading sessions.

The Dollar index has been appreciating in an ascending channel pattern since the middle of September. The pair bounced off its lower boundary of the channel on September 20 and had since breached a one-month swing high at 95.84. The Dollar.IDX.USD opens above the weekly pivot point at 95.24 during Monday's session. From a theoretical point of view, the next target for the pair will be near a resistance cluster formed by the weekly and the monthly PPs at 95.86. However, if the support level formed by the weekly PP at 95.24 is unable to hold, the pair will continue its downside movement and aim at the 50-hour simple moving average at 94.73 during the following trading sessions.

Sterling tumbles today as Brexit optimism is put into question again. It's reported that Brexit Minister Dominic Raab is not going to Brussels this week for the talk on Irish border. And, Prime Minister Theresa May's office doesn't expect a deal at the European Council next week.

May's spokesman is also quoted saying that the withdrawal deal with EU will not be agreed without securing a "precise future framework" on relationship. The spokesman also emphasized that there's a difference between optimistic talk and getting an agreement. He urged EU to move it position.

Separately, according to a document seen by Reuters, EU insisted that it's own Irish border backstop proposal as "pragmatic" that "built on existing health checks on animals and agricultural goods between mainland Britain and Northern Ireland.

The British pound has fallen below the 1.3100 level against the US dollar, as sterling traders started to book profits early ahead of an important week for Brexit negotiations. Despite optimism over an impending Brexit deal buyers failed to hold price above the GBPUSD pairs 100-day moving average, at 1.3106. Sellers will look for further losses below the 1.3056 level, while buyers need to move price back above the 1.3106 level.

The GBPUSD pair is further bearish while trading below the 1.3056 level, key support is now found at the 1.3000 and 1.2940 levels.

If the GBPUSD pair moves above the 1.3056 level, buyers are likely to target the 1.3106 and 1.3160 resistance levels.

The euro currency is once again trading under the 1.1500 level against the US dollar as the greenback firms broadly in early Monday trading. A strong move below the 1.1463 support level will likely expose the EURUSD pair to further intraday technical selling. Buyers need to move price above the 1.1500 level and close the day above the 1.1553 level to negate short-term bearish pressures.

The EURUSD pair is intraday bearish while trading below the 1.1500 level, key technical support remains at the 1.1463 and 1.1400 levels.

If EURUSD buyers can move price above the 1.1500 level, key intraday resistance is found at the 1.1520 and 1.1553 levels.

AUDUSD is trading bearish this year, ideally unfolding a bigger wave V impulse as part of a big cycle. We see price specifically unraveling blue wave 3 as part of a decline, which is now approaching the lower Elliott wave channel line, from where a temporary wave 4 correction can follow. A rally in three waves from the lows will confirm a completed wave 3 and a wave 4 correction in play with possible resistance near the 0.7290 area.

AUDUSD, Daily

Now on the 4h chart of AUDUSD, we see a completed corrective retracement from the 0.7082 level which we labelled as corrective wave 4) as part of a downtrend. The following decline from the swing high of 0.7315 level, is now seen as wave 5), final leg of blue wave 3 which can extend its drop towards the 0.7000/0.6940 possible support region.

AUDUSD, 4h

Notes/Observations

• Focus remains on Italian 2019 budget and a potential showdown with EU; BTP yields at 4-year high above 3.60%
• South Africa ZAR currency weakens as Fin Min offers his resignation ahead of key sovereign rating review on Friday

Asia:

• China cuts RRR for major banks by 100bps to 14.50% to prevent the country's credit conditions from getting tight. Move points to further policy divergence with the Fed. Impact from US-China trade tensions to become more tangible in coming quarters, with an easing bias in monetary policy complementing expansionary fiscal policy to support China's economy
• PBoC stated that it would continue with prudent and neutral monetary policy
• China Sept Caixin PMI Service: 53.1 v 51.4e - China Sept Foreign Reserves: $3.087T v 3.105Te (14-month low, largest decline since Feb)

Europe:

• EU President Juncker: Expect to reach a deal on Brexit in November if not done in October
• S&P affirmed France sovereign rating at AA; outlook stable Americas - Brazil candidate Bolsonaro (far right) leads Presidential race with 46.4% of the vote vs 28.8% for Haddad (former Sao Paulo Mayor; The race to move to runoff election on Oct 28th. Polls have shown the two candidates are neck-and-neck for the runoff

Macro

• (CH) China: The People's Bank of China cut reserve requirement ratios by 1% from mid Oct, this will release CNY1.2T (US$ 109.2B) of liquidity in the banking system, including CNY450B to be used to repay MLF coming due on October 15. The PBOC's move followed similar easing back April and is part of the bid to keep liquidity ample and make credit more available to the broader community, although the Fed's tightening cycle limits the PBoC's room to actually cut rates.
• (IT) Italy: BTPs again come under pressure as the European Commission rejected the government's budget deficit plans suggesting "Italy's revised budgetary targets appear prima facie to point to a significant deviation from the fiscal path", adding that "this is therefore a source of serious concern", while Italy's government remains defiant. Italy is up for review by Moody's as well as S&P later this month and the new deficit projections coupled with the tensions with Brussels are likely to cast a shadow over ratings with both just two notches above Junk.
• (UK) UK: Reports that the UK and EU are working towards producing a deal by the October 17 summit in Brussels. The British government is pursuing an evolving version the Chequers plan, details of which remain unclear but include what is being touted as an "All-UK" customs union with the EU as a means to circumnavigate the Irish border problem. Any deal will be subject the ratification of the EU 27 states and a parliamentary vote in the UK, where it will by no means have guaranteed passage given the marked differences in the factions of the fragile Conservative-DUP alliance.
• (DE) Germany: August industrial production fell -0.3% m/m against expectations for a mild rebound after a drop in production in the prior two month. Only consumer and energy goods managed a recovery, but capital goods and construction were under pressure. The 3M/3M trend rate fell back to -0.5% from 1.3% in July as confidence numbers continue to highlight downside risks as export demand is pressured by geopolitical trade tensions.

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -0.8% at 373.6, FTSE -0.4% at 7288, DAX -0.9% at 12008, CAC-40 -0.8% at 5316, IBEX-35 -0.8% at 9180, FTSE MIB -2.2% at 19895, SMI -1.0% at 8951, S&P 500 Futures -0.6%]

Market Focal Points/Key Themes:

Equities

• European Indices trade lower across the board, Italian FTSE MIB leads decliners as Italian Budget concerns continue to weigh on markets. Italian BTPs trade almost 2 full points lower as yields jump by over 20bp. On the corporate front Norsk Hydro shares rebound after its Alunorte Facility receives permit to restart production at half capacity. Amino Tech trades sharply lower after a profit warning, whilst French Connection outperform after announcing the company is exploring strategic options.
• Consumer discretionary: French Connection [FCCN.UK] +27% (Strategic options)
• Materials: Norsk Hydro [NHY.NO] +4.4% (Alunorte receives authorization to utilize press filter as first step to resume operations)
• Financials: Lancashire Holdings [LRE.UK] -6.3% (Marine portfolio exposure)
• Technology: Compugroup [COP.DE] -2.6% (Outlook), Amino Technologies [AMO.UK] -32% (profit warnings)

Speakers

• Norway govt released its 2019 Budget Forecasts which saw 2019 GDP growth at 2.7% and planned 2019 budget impulse of 0.0% of trend mainland GDP. Forecasts 2019 structural non-oil budget (NOK): -231.2B
• Italy Dep PM Salvini stated that wanted to stay in the Euro but change EU rules. Exit from Euro was not on the agenda. 2019 budget took small steps and hoped EU Commission reads it before judging it

Currencies

• USD maintained a firm tone against the major and emerging market pairs.
• The EUR remained on Italy as the EU Commission rejected the govt budget deficit proposal which increased the risk of a showdown between Italy and the EU. The Italian 10-year BTP yield at its highest level in 4 years as it approached the 3.50% area
• USD/ZAR was approaching the 15 handle after reports circulated that South Africa Finance Minister Nene asked President Ramphosa to relieve him of his duties. Request said to have come after political parties rejected his apology for previously undisclosed meetings with members of the Gupta family
• USD/IBR was higher and near record levels with the pair retesting the 74 handle in the aftermath of last week RBI surprise hold in rates.
• USD/CNY was higher as the PBoC's RRR cut highlighted the move towards further policy divergence with the Fed

Fixed Income:

• Bund Futures trades at 157.80 up 23 ticks as the 10-year Bund continues to move further away from 0.55% level. A downside break of 157.25 sees 155.69 initially. To the upside 158.50 remains initial resistance.
• Gilt futures trades at 119.80 up 14 ticks following the move in Treasuries. Continued support at 120.50, with a continued move higher targeting 123.93 then 124.00.
• Monday's liquidity report showed Friday's excess liquidity rose from €1.8T to €1.896T. Use of the marginal lending facility stayed rose from €60M to €70M.
• Corporate issuance saw $46B come to the primary market last week

Economic Data:

• (CH) Swiss Sept Unemployment Rate: 2.4% v 2.4%e; Unemployment Rate (Seasonally Adj): 2.5% v 2.5%e
• (DE) Germany Aug Industrial Production M/M: -0.3% v +0.3%e ; Y/Y: -0.1% v -0.1%e
• (NO) Norway Aug Industrial Production M/M: +1.8% v -1.9% prior; Y/Y: +2.3% v -0.8% prior
• (NO) Norway Aug Manufacturing Production M/M: -0.1% v 0.0%e; Y/Y: 5.1% v 1.5% prior
• (FR) Bank of France Sept (Industrial) Sentiment: 105 v 102e
• (SE) Sweden Sept Housing Price Indicator: 22 v 33 prior
• (CZ) Czech Aug Industrial Output Y/Y: 1.9% v 2.9%e, Construction Output Y/Y: 11.9% v 15.8% prior
• (CZ) Czech Aug Retail Sales Y/Y: 2.5% v 5.0%e, Retail Sales (ex Auto) Y/Y: 4.2% v 4.5%e
• (CZ) Czech Sept Unemployment Rate: 3.0% v 3.0%e
• (CH) SNB Total Sight Deposits for Week Ended Oct 5th (CHF): 577.5B v 577.9B prior; Domestic Sight Deposits: 469.4B v 474.8B prior
• (CZ) Czech Sept International Reserves: $144.1B v $144.5B prior
• (TW) Taiwan Sept Trade Balance: $4.3B v $4.6Be; Exports Y/Y: +2.6% v -1.3%e; Imports Y/Y: 13.9% v 6.1%e
• (EU) Euro Zone Oct Sentix Investor Confidence: 11.4 v 11.6e

Fixed Income Issuance

• None seen

Looking Ahead

• 05:30 (US) Fed's Bullard (dove, non-voter): speaking in Singapore
• 05:30 (DE) Germany to sell €3.0B in 6-month Bills
• 06:00 (IL) Israel Aug Unemployment Rate: No est v 4.2% prior
• 06:00 (RO) Romania to sell Bonds
• 06:00 (IL) Israel to sell Bonds
• 06:45 (US) Daily Libor Fixing
• 07:00 (BR) Brazil Sept FGV Inflation IGP-DI M/M: 1.6%e v 0.7% prior; Y/Y: 10.2%e v 9.1% prior
• 07:00 (CL) Chile Sept CPI M/M: 0.4%e v 0.2% prior; Y/Y: 3.2%e v 2.6% prior
• 07:00 (CL) Chile Sept CPI (ex-food/energy) M/M: 0.25e v 0.0% prior; Y/Y: No est v 1.9% prior
• 07:00 (HU) Turkey President Erdogan with Hungary PM Orban
• 07:25 (BR) Brazil Central Bank Weekly Economists Survey
• 07:30 (CL) Chile Sept Trade Balance: $0.0Be v -$0.3B prior; Total Exports: No est v $6.2B prior; Total Imports: No est v $6.5B prior; Copper Exports: No est v $2.7B prior
• 07:30 (CL) Chile Sept International Reserves: No est v $36.8B prior
• 08:00 (IN) India announces details of upcoming bond sale (held on Fridays)
• 08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming auctions
• 08:05 (UK) Baltic Dry Bulk Index
• 08:55 (FR) France Debt Agency (AFT) to sell combined €3.6-4.8B in 3-month, 6-month, 9-month and 12-month BTF Bills
• 09:00 (IL) Israel Central Bank (BOI) Interest Rate Decision: Expected to leave Base Rate unchanged at 0.10%
• 09:00 (IT) Italy Parliamentary Budget Office chief speaks to Lawmakers on Budget
• 09:30 (EU) ECB announces Covered-Bond Purchases
• 09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender
• (IT) Italy Debt Agency (Tesoro) announces BTP for upcoming Oct 11th auction
• 16:00 (US) Weekly Crop Progress Report

Gold prices are under pressure again and the dollar index is still surging. The reason for this is that traders think that the Fed will continue its interest rate hike cycle. The economic data released last week further strengthened the bullish sentiment for the greenback. The dollar index is pretty much tearing apart any resistance lines in its way. As for today, we do not have any particularly important economic data out for release today as the U.S. markets are closed for a national holiday

On a 4-hour time frame, the price of gold is still very much consolidating. This consolidation zone starts from 1214 and this serves as the resistance and the lower line of this consolidation is at $1180. We need to break out of this zone and only that would send a confirmation for a new trend

The major support zone is represented by the horizontal green line which is at 1159 and the resistance zone is shown by the red line which is at 1255

Brent oil extends pullback from new four-year high at $86.73 and broke below initial support at $83.35 (rising 10SMA), receiving negative signal from market expectations that part of Iranian oil export would continue after the US reimposes sanctions in November.

Two big Iranian oil buyers from India already ordered oil in November, which could keep Iranian exports partially afloat.

However, the pullback is so far seen as corrective action on profit-taking from new multi-year highs.

Overall sentiment remains bullish, driven by various factors, among which are the concerns about global supply after supplies from Iran stop and markets participants already speculating about psychological $100 target.

Meanwhile, pullback could extend further, as daily indicators continue to head south.

Rising 20SMA marks next significant support at $81.20, followed by $80.45 (Fibo 38.2% of $70.29/$86.73 ascend), where correction should be ideally contained to keep larger bulls intact.

Only break below former psychological barrier at $80 (reinforced by rising 30SMA) would generate stronger negative signal for deeper correction.

Res: 83.35, 84.30, 85.11, 86.40
Sup: 82.79, 82.00, 81.20, 80.45