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Daily Pivots: (S1) 150.76; (P) 151.46; (R1) 152.10; More...

Intraday bias in GBP/JPY in is turned neutral as it retreated ahead of 152.54 resistance. Some more sideway trading could still be seen. On the upside, firm break of 152.54 will suggest that whole correction from 156.05 has completed, and turn near term outlook bullish for retesting this high. On the downside, however, sustained break of 149.03 key support will carry larger bearish implication and target 143.78 fibonacci level.

In the bigger picture, rise from 123.94 is seen as the third leg of the pattern from 122.75 (2016 low). As long as 149.03 support holds, such rise would still resume at a later stage. However, sustained break of 149.03 support will indicate rejection by 156.59 (2018 high). Fall from 156.05 would at least be correcting the whole rise from 123.94 (2020 low). Deeper fall would be seen back 38.2% retracement of 123.94 to 156.05 at 143.78 first.

Daily Pivots: (S1) 128.25; (P) 128.88; (R1) 129.41; More....

Intraday bias in EUR/JPY remains neutral at this point. On the downside, firm break of 127.91 support there will resume the whole decline from 134.11 to 127.07 resistance turned support next. On the upside, though, break of 130.45 resistance will now argue that whole correction from 134.11 has completed and turn near term outlook bullish for retesting this high.

In the bigger picture, rise from 114.42 is seen as a medium term rising leg inside a long term sideway pattern. As long as 127.07 resistance turned support holds, further rise is still expected to retest 137.49 (2018 high). However, firm break of 127.07 will argue that the medium term trend has reversed, deeper fall would be seen to 61.8% retracement of 114.42 to 134.11 at 121.94.

Daily Pivots: (S1) 0.8492; (P) 0.8510; (R1) 0.8524; More...

EUR/GBP's break of 0.8499 support suggests that corrective rebound form 0.8488 has completed with three waves up to 0.8656 already. With 0.8668 resistance intact, near term outlook stays bearish. Intraday bias is back on the downside for retesting 0.8448 low first. Firm break there will resume larger down trend from 0.9499, towards 0.8276 key support. On the upside, above 0.8543 minor resistance will turn intraday bias neutral first. But risk will stay on the downside as long as 0.8656 resistance holds.

In the bigger picture, price actions from 0.9499 (2020 high) are still seen as developing into a corrective pattern. Deeper fall could be seen as long as 0.8668 resistance holds, towards long term support at 0.8276. However, firm break of 0.8668 resistance would argue that a medium term bottom was already formed. Stronger rise would be seen to 0.8861 support turned resistance to confirm completion of the corrective pattern.

Daily Pivots: (S1) 1.5850; (P) 1.5922; (R1) 1.5962; More...

EUR/AUD's fall from 1.6434 resumed and hit as low as 1.5853 so far. The break of 1.5898 structural support argues that larger rise from 1.5250 has completed at 1.6434 already. Intraday bias is now on the downside for 100% projection of 1.6434 to 1.5907 from 1.6232 at 1.5705 next. On the upside, above 1.6000 minor resistance will turn intraday bias neutral first. But near term outlook will now remain mildly bearish as long as 1.6232 resistance holds, in case of recovery.

In the bigger picture, rise from 1.5250 medium term bottom is seen as a correction to the down trend from 1.9799 (2020 high) only. With 38.2% retracement of 1.9799 to 1.5250 at 1.6988 intact, such down trend is expected to resume at a later stage. Firm break of 1.5250 will target 61.8% retracement of 1.1602 (2012 low) to 1.9799 at 1.4733. In any case, sustained break of 1.6988 fibonacci level is needed to indicate long term reversal.

Daily Pivots: (S1) 1.0693; (P) 1.0733; (R1) 1.0757; More....

Intraday bias in EUR/CHF stays on the downside as fall from 1.0936 is in progress for retesting 1.0694 low. Sustained break there will resume whole down trend from 1.1149. Next target is 61.8% projection of 1.1149 to 1.0694 from 1.0936 at 1.0655. On the upside, above 1.0770 minor resistance will turn intraday bias neutral first. But risk will stay on the downside as long as 1.0811 support turned resistance holds.

In the bigger picture, the rejection by 55 week EMA maintains medium term bearishness. Fall from 1.1149 (2021 high) is currently seen as the second leg of the patter from 1.0505 (2020 low) first. Hence, in case of deeper fall, we'd look for strong support from 1.0505 to bring rebound. However, sustained break of 1.0505 will resume the long term down trend from 1.2004 (2018 high). Also, medium term outlook will now be neutral at best as long as 1.0936 resistance holds.

Overall markets continue to be rather mixed for now. Commodity currencies rally in Asian session, as led by Aussie, following rebound in the stock markets. On the other hand, Dollar is turning softer again, together with Yen. Euro's weakness is the more persistent development this week, in particular against other European majors. Trading today might remain non-committal, as the markets are looking forward to tomorrow's non-farm payroll report.

Technically, EUR/AUD's break of 1.5898 support now suggests that choppy rebound from 1.5250 has completed at 1.6434. Near term outlook is turned bearish for retesting 1.5250 low. EUR/GBP's breach of 0.8499 support is a bearish signal and sustained trading below there will pave the way back to 0.8448 low. EUR/CHF would be a focus in the next few days and break of 1.0694 support will resume the whole down trend from 1.1149. If that happens, Euro's decline could accelerate elsewhere.

In Asia, at the time of writing, Nikkei is up 0.81%. Hong Kong HSI is up 2.41%. Singapore Strait Times is up 0.92%. Japan 10-year JGB yield is down -0.0058 at 0.079. China is still on holiday. Overnight, DOW rose 0.30%. S&P 500 rose 0.41%. NASDAQ rose 0.47%.10-year yield dropped -0.005 to 1.524.

Australia AiG services ticked up to 45.7 in Sep, mild upturn expected in Oct

Australia AiG Performance of Services Index rose slightly by 0.1 pts to 45.7 in September, marking a second month in contraction. Looking at some details, sales rose 1.4 to 41.4. Employment dropped -1.4 to 52.0. New orders dropped -7.6 to 39.8. Supplier deliveries rose 3.0 to 47.0. Finished stocks rose 15.8 to 53.5. Input prices dropped -.7.0 to 64.5. Selling prices dropped -1.4 to 53.9.

Ai Group Chief Executive, Innes Willox, said: "Restrictions associated with the delta outbreaks in south eastern Australia were the major contributor to the continued contraction of the Australian services sector in September... While predictions are highly conditional, we are expecting a mild upturn in October followed by further gains as restrictions are eased in line with higher levels of vaccination."

BoJ Kuroda expects economy to recover as pandemic impact subsides

BoJ Governor Haruhiko Kuroda said Japan's economy is expected to recover ahead as the impact of the pandemic gradually subsides. BoJ is closely watching the coronavirus impact. He pledged again that it "won't hesitate to ease policy further if necessary".

Kuroda also said that core CPI is expected to linger around 0% for the near term, but it would "pick up pace gradually". Also, the financial system remains stable and financial conditions are accommodative overall.

Looking ahead

Swiss unemployment and foreign currency reserves, Germany industrial production, France trade balance will be released in European session. ECB will also release monetary policy meeting accounts. Later in the day, US will release jobless claims while Canada will release Ivey PMI.

EUR/CHF Daily Outlook

Daily Pivots: (S1) 1.0693; (P) 1.0733; (R1) 1.0757; More....

Intraday bias in EUR/CHF stays on the downside as fall from 1.0936 is in progress for retesting 1.0694 low. Sustained break there will resume whole down trend from 1.1149. Next target is 61.8% projection of 1.1149 to 1.0694 from 1.0936 at 1.0655. On the upside, above 1.0770 minor resistance will turn intraday bias neutral first. But risk will stay on the downside as long as 1.0811 support turned resistance holds.

In the bigger picture, the rejection by 55 week EMA maintains medium term bearishness. Fall from 1.1149 (2021 high) is currently seen as the second leg of the patter from 1.0505 (2020 low) first. Hence, in case of deeper fall, we'd look for strong support from 1.0505 to bring rebound. However, sustained break of 1.0505 will resume the long term down trend from 1.2004 (2018 high). Also, medium term outlook will now be neutral at best as long as 1.0936 resistance holds.

Economic Indicators Update

BoJ Governor Haruhiko Kuroda said Japan's economy is expected to recover ahead as the impact of the pandemic gradually subsides. BoJ is closely watching the coronavirus impact. He pledged again that it "won't hesitate to ease policy further if necessary".

Kuroda also said that core CPI is expected to linger around 0% for the near term, but it would "pick up pace gradually". Also, the financial system remains stable and financial conditions are accommodative overall.

Australia AiG Performance of Services Index rose slightly by 0.1 pts to 45.7 in September, marking a second month in contraction. Looking at some details, sales rose 1.4 to 41.4. Employment dropped -1.4 to 52.0. New orders dropped -7.6 to 39.8. Supplier deliveries rose 3.0 to 47.0. Finished stocks rose 15.8 to 53.5. Input prices dropped -.7.0 to 64.5. Selling prices dropped -1.4 to 53.9.

Ai Group Chief Executive, Innes Willox, said: "Restrictions associated with the delta outbreaks in south eastern Australia were the major contributor to the continued contraction of the Australian services sector in September... While predictions are highly conditional, we are expecting a mild upturn in October followed by further gains as restrictions are eased in line with higher levels of vaccination."

Full release here.

STOCKS

Dow is likely to remain within 34750-33750 range while Dax needs to rise above 15000 to head higher else could be bearish for the near term. Nikkei can rise to 28000 and higher while Nifty and Sensex needs to hold above 17600 and 59000 to keep bullish possibilities intact.

Dow (34416.99, +102.32, +0.30%) continues to fluctuate within 33750-34750 and unless a break on either side is seen, it is difficult to predict further movement from here. The mentioned range may continue to hold for now.

DAX (14973.33, -221.16, -1.46%) fell sharply to test 14818 before closing higher. While below 15000, view is bearish. If 14800 holds and produces a rise back to 15000+ levels, we may avoid to see further lows in the near term. Watch price action near current levels.

Nikkei (27990.32, +461.45, +1.68%) has risen today after falling sharply for four consecutive days. The support at 27000 has held very well and we can now see a test of 28000 initially and 28500-29000 eventually in the near to medium term.

Shanghai (3568.17, +31.87, +0.90%) markets are closed till 7th Oct. While above 3550, view is bullish. We need to wait and watch to see where it opens after the long break.

Nifty (17646, -176.30, -0.99%) came down sharply from levels above 17800 seen yesterday. 17600 is important immediate support for today which needs to hold to push the index higher towards 17800 again in the near term. Failure to bounce from 17600 would open up chances of a fall towards 17400.

Sensex (59189.73, -555.15, -0.93%) came down after testing a high of 59942.As mentioned yesterday, the 59000 level is a crucial support. While above 59000, view remains bullish to see 60000 and 61000 eventually. If any decline below 59000 is seen then the next level to watch will be 58000.

COMMODITIES

Brent and WTI have fallen as US gasoline stocks have increased for the fifth time in this week. Brent and WTI can test $85 and $80 again while above $77-80 and $74-75 respectively. Gold and Silver are trading in a range. Copper can consolidate between 4.10\4.25 for some time.

Brent (80.59) has fallen sharply from 82.69 and has room to fall to 77 on the downside before any fresh rise is again seen eventually. We do not negate our earlier mentioned view of testing 85/86 on the upside.

WTI (76.69) has fallen after testing 79.35. While below resistance near 80 mentioned yesterday, a fall to 75-74 can be seen before another bounce sets in. Immediate view is bearish but we cannot negate another rise on the upside.

Gold (1758.30) is ranged within 1780/60-1740/20 region and may continue so for a few more sessions with possible rise to the upper end of the mentioned range.

Silver (22.57) has risen within the 21.50-23 range and may continue to hold for the near term.

Copper (4.1840) has risen from levels seen yesterday. But Copper needs to break above 4.20/25 to head higher to 4.35/40 else a fall back to 4.10/00 cannot be negated in the near term.

FOREX

Dollar Index has risen well above 94 and could eventually head higher in the coming week. Euro has risen from yesterday’s low but we do not negate a fall back towards 1.15-1.1495 while below 1.1650. Aussie, Pound, EURJPY all look ranged within 0.7320-0.7220/00, 1.3650-1.35 and 128-130.50 respectively. USDJPY can trade within 112-110.60 with possible extension to 112.50. USDINR has high correlation with Brent and as Brent has fallen sharply from levels below 83 to current level of 80.60, Rupee may strengthen towards 74.80/60 today.

Dollar Index (94.243) has risen well above 94 and as mentioned yesterday, the index can slowly rise towards 94.50-94.75 on the upside. Immediate view is bullish while above 93.75.

Euro (1.1554) fell to 1.1529 yesterday before bouncing back from there. We need to see if the bounce sustains to rise back towards 1.16 and higher or declines back to test .15-1.1495 in the near term. Bias is to see further decline over the coming sessions.

EURJPY (128.80) fell below 129 to test 128.33 yesterday before bouncing from there. Overall the broad 128-130.50 region may hold for the near term. Unless a break on either side of this range is seen, it is difficult to get clarity on further direction.

Dollar-Yen (111.47) is holding below 112 and while below that, we may expect a range trade of 112-110.60 to hold for now. Broad range of 112-110.60 may hold with possible extension to 112.50 on the upside.

Aussie (0.7281) is holding below 0.73 and could trade within 0.7320-0.7220/00 region for sometime.

Pound (1.3580) fell sharply to 1.3548 yesterday before bouncing from there. Overall range of 1.3650-1.35 may hold for the near term within the broader range of 1.37-1.34.

USDCNY (6.4466) will open tomorrow after a long break. Support is seen at 6.44 which may hold to produce a bounce towards 6.47/48.

USDINR (74.98) came off sharply after the onshore closing of the markets at 3:30pm IST as Brent Crude fell from its highs. Currently Brent has high correlation with USDINR and a fall or rise in Brent may impact USDINR to fall or rise respectively. Brent has dipped from immediate resistance just below 83 to current levels of 80.61 and this could take the USDINR down today towards 74.80/60. In the broader time frame we do not negate a rise back to 75+ levels in the next 1-2 weeks as we do not negate a rise to $85/86 on Brent which looks a possible test for October. Watch price action near current levels.

INTEREST RATES

The US Treasury Yields sustain higher and have room to move up further and test their crucial long-term resistances. We expect the resistances to hold and see a fresh fall in the going forward. An eye on the crude oil prices will be needed to see if it supports a pull-back in the yields or not. The German yields are inching up to test their long-term resistances as expected. The resistances are likely to hold and trigger a fresh fall in the coming days. The 5Yr and 10Yr GoI can rise in the near-term to test their key resistances and then see a fresh fall.

The US 2Yr (0.31%), 5Yr (1%), 10Yr (1.54%) and the 30Yr (2.09%) %) remains higher at levels seen in the early Asian trades yesterday. The 10Yr touched a high of 1.57% and has come-off slightly. The 30Yr on the other hand sustains higher. As mentioned yesterday, 1.6% (10Yr) and 2.1-2.2% (30Yr) are crucial resistances which we expect to hold and trigger a fresh fall to keep the long-term downtrend intact. A strong rise past these resistances is necessarily needed to gain fresh bullish momentum and move up further.

The German 2Yr (-0.71), 5Yr (-0.55%), 10Yr (-0.18%) and 30Yr (0.30%) yields continue to move up in line with our expectation. Our near-term bullish view of seeing a test of -0.1% (10Yr) and 0.35% (30Yr) remains intact. We expect the yields to reverse lower thereafter and keep the long-term downtrend intact.

The Indian 10Yr GoI (6.2764%) retains its momentum and keeps alive the chances of testing 6.3%-6.32% on the upside. As mentioned yesterday, 6.32% is a strong resistance which can cap the upside from here and drag the 10Yr GoI down to 6.2% and even lower over the medium-term. The price action at 6.32% will need a close watch.

The 5Yr GoI (5.7112%) remained stable around 5.72% yesterday. A sustained rise past 5.72% can take the yield up to 5.75%-5.76% on the upside before a reversal is seen. 5.68%-5.66% is an important support zone which will have to be broken to turn outlook negative.

Or more downside to come?

The last four months have seen the euro fall quite considerably against the dollar, down more than 6% in that time.

Rising US yields in recent months have contributed to the rally in the dollar, as has risk aversion in recent weeks, but how much more can we expect?

In many ways, that depends on how much policymakers are willing to tolerate, both in terms of inflation and the taper tantrum we’re seeing unfold.

The oscillators suggest momentum is waning. But for how long? Say we see a correction at 1.15 – 50 fib of pandemic highs to lows – how long until the dollar is back in favour?

That’s hard to know, but 1.1650 and 1.18 both look like very interesting resistance levels. A move above the latter takes the pair back above the 55/89-day SMA band. Then suddenly 1.19 and 1.20 are back in focus.

A move below and 1.14 and 1.13 (61.8 fib) are in focus and things start to get really interesting.