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For the 24 hours to 23:00 GMT, the AUD declined 0.29% against the USD and closed at 0.7937.

On the data front, in China, Australia’s largest trading partner, the leading economic index advanced 1.1% on a monthly basis in August. The index had climbed 0.9% in the previous month.

LME Copper prices rose 0.2% or $11.0/MT to $6416.0/MT. Aluminium prices declined 0.4% or $9.0/MT to $2128.0/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7945, with the AUD trading 0.1% higher against the USD from yesterday’s close.

The pair is expected to find support at 0.7922, and a fall through could take it to the next support level of 0.7899. The pair is expected to find its first resistance at 0.7969, and a rise through could take it to the next resistance level of 0.7993.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the EUR declined 0.6% against the USD and closed at 1.1856, following comments from the European Central Bank (ECB) Chief, Mario Draghi, as well as outcome of Germany's general election.

Yesterday, the ECB President, in a speech in Brussels, expressed confidence that inflation will gradually achieve the central bank's target, but argued that “ample” accommodation from the central bank was still needed to bring inflation to the target in a sustainable way. Draghi also highlighted risks emerging from volatile Euro to the medium-term inflation outlook.

On the data front, Germany's Ifo business climate index unexpectedly eased to a level of 115.2 in September, defying market expectations of a rise to a level of 116.0, amid concerns over recent strength in the Euro and uncertainty linked to the general elections. In the previous month, the index had registered a level of 115.9. Further, the nation's Ifo business expectations index recorded an unexpected drop to a level of 107.4 in September, confounding market expectations for an advance to a level of 108.0 and after recording a reading of 107.9 in the previous month. Additionally, the nation's Ifo current assessment index surprisingly dropped to a level of 123.6 in September, compared to a level of 124.6 in the prior month.

In economic news, the US Chicago Fed national activity index dropped more-than-anticipated to a level of -0.31 in August, compared to a revised reading of 0.03 in the previous month, while markets were expecting the index to fall to a level of -0.25. On the other hand, the nation's Dallas Fed manufacturing business index recorded an unexpected rise to a level of 21.3 in September, defying market consensus for a drop to a level of 11.5 and following a reading of 17.0 in the prior month.

In the Asian session, at GMT0300, the pair is trading at 1.1858, with the EUR trading slightly higher against the USD from yesterday's close.

The pair is expected to find support at 1.1814, and a fall through could take it to the next support level of 1.1771. The pair is expected to find its first resistance at 1.1919, and a rise through could take it to the next resistance level of 1.1981.

Amid a lack of major macroeconomic releases in the Euro-zone today, investors will focus on a speech by the Federal Reserve Chair, Janet Yellen, scheduled later in the day. Market participants would also eye the US consumer confidence index for September and new home sales data for August, scheduled to release later in the day.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the GBP declined 0.32% against the USD and closed at 1.3482.

In the Asian session, at GMT0300, the pair is trading at 1.3480, with the GBP trading marginally lower against the USD from yesterday's close.

The pair is expected to find support at 1.3417, and a fall through could take it to the next support level of 1.3354. The pair is expected to find its first resistance at 1.3557, and a rise through could take it to the next resistance level of 1.3634.

Going ahead, investors would look forward to UK's BBA mortgage approvals data for August, slated to release in a few hours.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD declined 0.53% against the JPY and closed at 111.74.

On the data front, Japan’s final leading economic index dropped less than initially estimated to a level of 105.2 in July. The index had recorded a level of 105.9 in the previous month, while the preliminary figures had recorded a fall to a level of 105.0. Further, the nation’s final coincident index dropped to a level of 115.7 in July, compared to a flash print indicating a fall to a level of 115.6. In the previous month, the coincident index had registered a reading of 117.1.

In the Asian session, at GMT0300, the pair is trading at 111.63, with the USD trading 0.1% lower against the JPY from yesterday’s close.

The Japanese Yen gained ground against the USD, as fresh threats from North Korea overnight boosted demand for the safe-haven currency.

Separately, minutes of the Bank of Japan’s (BoJ) July meeting showed that policymakers expressed confidence over achieving the central bank’s inflation target and reiterated the need to stick with their current policy framework despite the recent weakness in consumer inflation.

The pair is expected to find support at 111.29, and a fall through could take it to the next support level of 110.96. The pair is expected to find its first resistance at 112.15, and a rise through could take it to the next resistance level of 112.68.

Going ahead, traders await the release of Japan’s small business confidence index for September, slated to release tomorrow.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.46% against the CHF and closed at 0.9663.

In economic news, Switzerland’s total sight deposits rose to a level of CHF476.2 billion in the week ended 22 September, from CHF472.6 billion in the previous week.

In the Asian session, at GMT0300, the pair is trading at 0.9663, with the USD trading flat against the CHF from yesterday’s close.

The pair is expected to find support at 0.9622, and a fall through could take it to the next support level of 0.9581. The pair is expected to find its first resistance at 0.9725, and a rise through could take it to the next resistance level of 0.9787.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD rose 0.28% against the CAD and closed at 1.2367.

In the Asian session, at GMT0300, the pair is trading at 1.2368, with the USD trading a tad higher against the CAD from yesterday’s close.

The pair is expected to find support at 1.2325, and a fall through could take it to the next support level of 1.2281. The pair is expected to find its first resistance at 1.24, and a rise through could take it to the next resistance level of 1.2431.

In absence of any macroeconomic releases in Canada today, investors will look forward to global macroeconomic events for further direction.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

All Eyes on What Is Trump Going to Do. U.S. dollar slipped against havens after North Korea's foreign minister said in a statement at the U.N. that U.S. President Donald Trump's tweets over the weekend were tantamount to a declaration of war and that Pyongyang reserved the right to take countermeasures, including shooting down U.S. bombers even if they are not in its air space. The greenback was previously buoyed, helped by weakness in the euro following the outcome of the German general election. Later in the session, the data calendar heats up in the United States with the release of the CaseShiller house price index, new home sales, Conference Board consumer confidence index and Richmond Fed manufacturing index. On the US Fed front, chair Janet Yellen will also speak later in a day.

Euro Struggles Near Four-Week Lows vs Dollar. The euro fell 0.89 percent to $1.1835 after German elections showed that support for Chancellor Angela Merkel's conservative party fell to its lowest since 1949 and got additional pressure from ECB President Mario Draghi speech on Monday, where he singled out currency volatility as a source of uncertainty that required monitoring.

Investors Fled to Safe Assets After Combative Comments from North Korea. The yen and franc have been the main beneficiaries of the risk-off flows so far, with the former shrugging off uncertainty from the snap elections and the latter no longer as worried about SNB intervention as it used to be. The Japanese yen strengthened 0.24 percent at 111.73 per dollar and the Swiss franc gained about 0.3 percent overnight touching its four-day high versus the greenback.

The Kiwi Seemed Most Vulnerable Due to Election and Risk-off Flows. The kiwi lost 1.1 percent as it reeled from the political uncertainty in New Zealand and the return in risk-off vibes. New Zealand election left the ruling National Party short of the necessary votes to rule without forming a coalition. Traders are also likely pricing in downbeat expectations for the RBNZ statement later this week.

Aussie Weakened, Weighed Down by Renewed Political Concerns. The Australian dollar lost ground, reflecting an escalation in tensions between North Korea and the United States. In response to the accusation that the US had declared war on North Korea, White House press secretary Sarah Sanders said on Monday that it was “absurd”. While plenty of words have been exchanged between the two sides in recent months, this latest spat appears to be a further escalation in rhetoric, ensuring that riskier assets, including the Australian dollar, came under pressure during the session. Although the Aussie lost ground against the yen and US dollar, it rallied against the euro and New Zealand dollar following inconclusive election results in both nations last weekend.

Canadian Dollar Weakens as Investors Position Ahead of Poloz Speech. The Canadian dollar weakened on Monday against a broadly stronger U.S. dollar as investors positioned themselves ahead of a busy week that includes a speech by BoC Governor Stephen Poloz on Wednesday and a slew of speeches by U.S. Fed officials.

Gold Inches Lower as U.S. Dollar Steadies. Gold edged lower early Tuesday on a firmer U.S. dollar, but held not far off levels touched in the previous session when it rose more than 1 percent on geopolitical tensions over the Korean peninsula.

Oil Price Hits All Year High $58 Per Barrel. Brent oil futures touched a more-than-2-year high after major producers said the crude market was on track to rebalance and Turkey threatened to cut oil flows from Iraq's Kurdistan region toward its ports. “If this boycott call proves successful, a good 500,000 fewer barrels of crude oil per day would reach the market,” Commerzbank said in a note. U.S. crude rose 2.96 percent to $52.16 per barrel and Brent was last at $58.63, up 3.92 percent on the day.

Watch Out Today for:

16:45 pm GMT: USD Fed's Yellen Speech

Currency pair EUR/USD

The EUR/USD closed with a bearish daily candle yesterday, which could indicate potential further bearish pressure today. However, despite the break of the support trend lines (dotted green), price is still at the bottom (green) of the sideways range and any bullish or bearish continuation will depend on how price responds at the support trend line (green).

The EUR/USD could be in a wave 4 (brown) correction and the Fibonacci levels of wave 4 v 3 could act as resistance. A break above the 50% Fib of wave 4 vs 3 makes a wave 4 unlikely whereas a break below support (blue) could indicate a continuation of wave C (purple).

Currency pair GBP/USD

The GBP/USD is also in a sideways range (red/green lines) within a larger uptrend. Price is now testing the bottom (green) and support trend line of the correction.

The GBP/USD has many resistance layers above it and could complete an ABC (grey) correction. A break of resistance (orange/red) could indicate the continuation of the uptrend whereas a break below support could indicate a larger wave C (grey) correction.

Currency pair USD/JPY

The USD/JPY has broken the support trend line (dotted green) of the uptrend channel, which could indicate a larger correction via a wave 2 (light green) or wave B (green).

The USD/JPY is building a larger ABC (blue) correction as it breaks below various support trend lines (dotted green).

Global Markets:

• Asian stock markets: Nikkei down 0.41 %, Shanghai Composite rose 0.07 %, Hang Seng dropped 0.01 %, ASX 200 fell 0.11 %
• Commodities: Gold at $1316.11 (+0.34 %), Silver at $17.26 (+0.68 %), WTI Oil at $52.28 (+0.11 %), Brent Oil at $58.69 (+0.44 %)
• Rates: US 10-year yield at 2.21, UK 10-year yield at 1.32, German 10-year yield at 0.39

News & Data:

• (EUR) German Ifo Business Climate 115.2 vs 116.0 expected
• (EUR) German Current Assessment 123.6 vs 124.8 expected
• (EUR) German Business Expectations 107.4 vs 107.9 expected
• (CNY) CB Leading Index m/m 1.1 % vs 1.0 % previous
• (NZD) Trade Balance -1235 M vs -825 M expected
• (JPY) SPPI y/y 0.8 % vs 0.7 % expected
• (NZD) ANZ Business Confidence 0.0 vs 18.3 expected
• Wall St. falls on North Korea warnings, tech selloff- RTRS
• Oil extends gains; Turkey threatens to cut oil flow- RTRS

Markets Update:

Equity markets across the Asia-Pacific region were lower on Tuesday, against the backdrop of fresh threats from North Korea, and as investors awaited fresh signals about the U.S. monetary policy outlook. North Korea’s foreign minister warned overnight that his country can shoot down U.S. warplanes injected a note of caution to markets

USDJPY after bottoming under 111.50 in the US session, traded towards 111.80 early on Tuesday before losing back its gains to down under 111.60. Following a 0.2 percent gain on Monday, the Yen has further added 0.2 percent against the US Dollar early in today’s Asian session. It is a known fact that The yen tends to benefit during times of risk aversion due to Japan’s net creditor status and the expectation that Japanese investors would repatriate assets when facing a crisis.

AUDUSD is currently seen trading around 0.7940, the Aussie dollar had dropped to lows of 0.7923 early in the Asian session, but managed to recover its losses shortly climbing 25 odd pips. Meanwhile, the New Zealand dollar is seen trading at 0.8960 as the kiwi lost 0.3 percent against the US Dollar, this is in continuation to the 0.9 percent slide seen on Monday

EURUSD was seen trading higher early on Tuesday after tumbling on Monday following a severely diminished election victory for German Chancellor Angela Merkel. The Euro is currently priced at 1.1859 against the US Dollar gaining close to 0.1 percent. The dollar index, which tracks the dollar against a basket of currencies dropped 0.1 percent and is currently valued at 92.57

Upcoming Events:

• 06:00 GMT – (EUR) German Import Prices m/m
• 08:30 GMT – (GBP) High Street Lending
• 14:00 GMT – (USD) CB Consumer Confidence
• 14:00 GMT – (USD) New Home Sales
• 14:30 GMT – (USD) FOMC Member Brainard Speaks
• 16:45 GMT – (USD) Fed Chair Yellen Speaks

AUDJPY Short Term Elliott Wave view suggests that the rally to 90.31 ended Intermediate wave (W). Intermediate wave (X) pullback remains in progress as a double three Elliott Wave structure. Down from 90.31, Minor wave (W) ended at 88.44 and Minor wave (X) ended at 89.68. Near term, while bounces stay below 90.31, expect pair to extend lower towards 87.36 – 87.8 area to complete Intermediate wave (X). Afterwards, pair should resume the rally to a new high or at least bounce in 3 waves. We don’t like selling the proposed pullback.

AUDJPY 1 Hour Elliottwave Chart

Double three ( 7 swings) is the most important pattern in Elliott wave’s new theory. It is also probably the most common pattern in the market these days. Double three is also known as a 7-swing structure. It is a very reliable pattern that gives traders a good opportunity to trade with a well-defined level of risk and target areas. The image below shows what Elliott Wave Double Three looks like. It has labels (W), (X), (Y) and an internal structure of 3-3-3. This means that all 3 legs has corrective sequences. Each (W) and (Y) is formed by 3 wave oscillations and has a structure of A, B, C or W, X, Y of smaller degrees.