Sample Category Title

Daily Pivots: (S1) 0.7226; (P) 0.7271; (R1) 0.7306; More...

Intraday bias in AUD/USD remains neutral for consolidation above 0.7219 temporary low. On the downside, below 0.7219 will resume the fall from 0.7477 to retest 0.7105 low. Firm break there will resume whole decline from 0.8006 for 0.6991 support next. On the upside, above 0.7320 minor resistance will turn bias back to the upside for 0.7477 resistance instead.

In the bigger picture, with 0.6991 cluster support (38.2% retracement of 0.5506 to 0.8006 at 0.7051) intact, we're seeing price action from 0.8006 as a correction only. That is, up trend from 0.5506 low would resume after the correction completes. In that case, main focus will be 0.8135 key resistance (2018 high). Sustained break there will carry larger bullish implications. However, sustained break of 0.6991 will argue that the whole medium term trend has indeed reversed.

General trend

• Hang Seng has pared rise [Financials trade generally higher; COVID restrictions weigh on Casino names ].
• Property index has weighed on the Shanghai Composite.
• Nikkei 225 has pared gain [Automakers gain after recent rise in USD/JPY; Banks gain; Travel-related cos. also rise; Marine Transportation firms decline after prior rise].
• S&P ASX 200 has been supported by Energy, Resources, Financial and Travel-related cos.
• Fitch updated cash adjustments for China property developers, cited new disclosures.
• PBOC continues to only conduct 14-day OMOs ahead of upcoming holiday [Reminder: Shanghai markets will be closed for holiday from Oct 1-7 (Fri-Thurs); HK will be closed on Oct 1st].
• German elections see SPD with a very slim majority, now the bartering for a coalition starts, Merkel to remain until it is resolved. some speculation that it could last to New Year.

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened 0.0%.
• (AU) Australia PM Morrison has not committed to phasing out the use of fossil fuels – press.
• API.AU Received unsolicited offer from Sigma Healthcare, A$0.35//shr cash and 2.05 shares per API share; value of A$1.57/shr.
• (AU) Reserve Bank of Australia (RBA) Offers to buy A$1.60B in Govt bonds v A$1.60B prior.

Japan

• Nikkei 225 opened +0.1%.
• (JP) Election of the next PM of Japan likely go to a run-off as neither of the two main candidates (Kono and Kishida) look able to secure an outright majority in the first round of voting (taking place on Wed) – press.
• (JP) Japan said to be planning to lift emergency measures in all areas at the end of the month – press.
• (JP) Japan said to begin trial of easing coronavirus restrictions related to sporting events - Press.

Korea

• Kospi opened -0.1%.
• (KR) South Korea and US hold regular defense talks amid North Korea sending conciliatory signs - press.
• (KR) South Korea FSC Chairman Koh: Prolonged low interest rates and asset bubble cannot last much longer, To take strong preemptive measures against household debt.

China/Hong Kong

• Hang Seng opened -0.3%; Shanghai Composite opened +0.4%.
• 1918.HK Said to be seeking policy support from government of Shaoxing, Zhejiang; due to property sales being week in the region.
• (CN) China PBOC sets Yuan reference rate: 6.4695 v 6.4599 prior.
• (CN) China PBOC Open Market Operation (OMO): injects CNY100B in 14-day reverse repos v CNY120B prior; Net inject CNY100B v Net inject CNY60B prior.
• China Evergrande Electric Vehicle Unit. 0708.HK Cancels plans to issue A-shares.
• 2378.HK Prices offering at HK$143.80/shr v HK$172/shr indicated for HK$18.5B (prior HK$22.5B).
• 3333.HK Reportedly Chinese cities seize Evergrande presales to block potential funds misuse – FT.
• (CN) Macau tightens Covid restrictions ahead of Golden Week celebration in early Oct, cancelling ferry service and will hold 3 days of mass COVID testing.
• Guangdong, China has asked people to turn off lights they don't need and use their air conditioning less as energy crisis spreads from the factories to homes - press.
• (CN) China PBOC auctioned CNY70B in Ministry of Finance Deposits on Sun (Sept 26th) [as expected], interest rate 3.55%.
• (CN) China State Planner NDRC: Declares all crypto related activities and transactions illegal; To strictly prohibit financial support for new cryptocurrency mining projects (Friday after the close).

Other

• (SG) Singapore Fin Min Wong: 6-7% GDP Growth is still achievable for 2021, if economy grows on track, should live within our means, but won't hesitate to use past reserve if needed.
• (PH) Philippines Central Bank (BSP) Gov Diokno: Stimulative fiscal policy crucial to reviving demand.

North America

• TSLA Shanghai factory expected to produce 300K vehicles from Jan-Sept even with chip shortage – press.
• EDU Said to be planning to layoff 40,000 employees by the end of 2021, will gradually close its teaching sites - press citing founder.
• (US) Speaker Pelosi sets Thursday (Sept 30th) to vote on $1.0T infrastructure bill (Prior vote was scheduled for Monday).
• XLRN Said to be in advanced talks to be acquired for ~$180/shr in $11B deal – press.

Europe

• (DE) Germany Election Final Update: Social Democrats (SPD) Scholz 25.7%; CDU/CSU Laschet 24.1%; Greens Baerbock 14.8% - Federal Returning Officer.
• BP.UK Updates on shortage of deliver drivers in UK: 30% of UK fuel stations have nearly no gas to supply, 1.2K locations are running out of the 2 main fuel types.
• ZO1.DE EQT launches voluntary public takeover offer at €470/shr (update Sept 25).

Levels as of 01:15ET

• Hang Seng +0.2%; Shanghai Composite -1.3%; Kospi +0.1%; Nikkei225 -0.0%; ASX 200 +0.6%.
• Equity Futures: S&P500 +0.4%; Nasdaq100 +0.3%, Dax +0.3%; FTSE100 +0.5%.
• EUR 1.1727-1.1716; JPY 110.81-110.54; AUD 0.7316-0.7236; NZD 0.7034-0.7005.
• Commodity Futures: Gold +0.4% at $1,759/oz; Crude Oil +1.4% at $74.97/brl; Copper -0.3% at $4.29/lb.

The US dollar index rose slightly in the overnight session as investors remained wary about the ongoing gridlock in Washington. In the past few weeks, divisions have emerged between moderates and progressive Democrats about how to fund the $1.5 trillion infrastructure package and the anti-poverty bill. Also, there is an ongoing risk of a government shutdown since Democrats hold a slim majority in the Senate. Should that happen, the biggest risk will be that the Treasury will run out of money needed to pay its debt. At the same time, there are concerns about the collapse of Evergrande after the company failed to pay its interest payout.

Cryptocurrency prices rebounded during the weekend as investors reflected on the decision by the People’s Bank of China (PBOC) to ban all transactions. The announcement, which happened on Friday, led to a major sell-off in cryptocurrencies. Bitcoin rose above $43,000 in the overnight session while the total market capitalization of all cryptocurrencies rose to more than $1.9 trillion. Analysts believe that the new announcement by Chinese authorities will not have a major implication on Bitcoin because the government had already banned the coins before.

The euro rose against other currencies like the US dollar, sterling and Swiss franc as the market waited for the outcome of the German election. As of this morning, the winner was not yet made public although Armin Laschet of CDU/CSU and Olaf Scholtz of the Social Democrats claimed to have won the election. According to ARD, a broadcaster, put SPD in the lead with a 25.8% share. Therefore, there is a likelihood that it will take several days before the official results are announced.

GBPUSD

The GBPUSD pair retreated in early trading ahead of the latest US durable goods order numbers. It is trading at 1.3665, which was lower than last week’s high of 1.3750. On the hourly chart, the pair declined below the 25-day and 15-day moving averages while the Relative Strength Index (RSI) and MACD declined. Therefore, the pair’s path of least resistance will be to the downside. The key level to watch will be 1.3620.

AUDUSD

The AUDUSD pair remained under pressure after relatively weak China industrial profits numbers. The pair declined to 0.7260, which was slightly below the key resistance at 0.7315. It is slightly below the key 25-day moving average while the MACD and the Relative Strength Index (RSI) are at a neutral level. Therefore, the pair will likely remain in the current range ahead of the upcoming US durable goods order numbers.

EURUSD

The EURUSD pair rose after the latest German election. It is trading at 1.720, which is slightly above last week’s low of 1.1683. On the four-hour chart, the pair is still inside the descending channel shown in green. It is also below the short and longer moving averages and slightly above the middle line of the Bollinger Bands. The MACD and the Relative Strength Index (RSI) are also rising. The pair will likely show some volatility as investors reflect on the outcome of the election.

STOCKS

Dow trades higher while Dax can bounce sharply after falling for a few sessions towards its near term support. Nifty and Sensex may pause a bit to see a corrective decline before again attempting to rise further. Nikkei trades higher just now and could fall from 30500/700. Shanghai on the other hand can fall towards 3575-3550 before again bouncing from there.

Dow (34798, +33.18, +0.095%) rose slightly and continues to trade in the green. While the rise continues, we expect a test of 35250 soon.

DAX (15531.75, -112.22, -0.72%) has scope to test 15700-15800 resistance while above 15500 and unless that is broken we may look for some recovery soon. Else a fall below 15500 can indicate bearishness towards 15400-15300 again in the near term.

Nikkei (30358.62, +109.81, +0.36%) has risen today. While above 30000 we expect the index to test the level of 30500-30700 before we see a corrective fall from there.

Shanghai (3587.05, -26.98, -0.72%) has fallen a bit today and could continue to fall to re-test support zone of 3575-3550 before again bouncing back from there in the medium to long term.

Nifty (17853.20, +30.25, +0.17%) surged up to test 17947 and has come down from there last week. The view is to see a corrective fall towards 17600 before we see a fresh rally towards 18000-18200 again.

Sensex (60048.47, +163.11, +0.27%) has risen sharply and closed above 60000 on Friday. A small corrective fall towards 58500-59000 can be seen now before a possible resumption of the upmove.

COMMODITIES

Globally major commodities trade higher today. Crude prices have surged well but we are cautious near current levels where crucial resistances are seen. Watch if Brent faces decline from crucial resistance at $80 and WTI at $76/77 else a major break out could be in place. Gold has moved up from 1740 but we do not negate a possible fall back to 1725-1700. Silver is bullish towards 23.0-23.50 while above 22.0-22.50. Copper is bullish while above 4 towards 4.40

Brent (79.15) has risen well and heads to test the crucial resistance at $80. We continue to expect $80 to hold and produce a decline in the next 1-2 sessions.

WTI (75.03) has risen above our expected $75 and has scope to test $76-77 before coming off from there. Watch immediate resistance near $76/77.

Gold (1759.30) rose a bit from levels near 1740. We continue to look at support near $1700-1725 to hold and produce a bounce towards 1800/1810 on the upside. Immediate view is to see sideways movement within a narrow range.

Silver (22.65) has scope to rise towards 23-23.50 on the upside. Immediate view is bullish while above 22.00-22.50.

Copper (4.2975) has been rising well from support at 4.00 and while that holds, view is bullish towards 4.30/40 in the near term.

FOREX

Currencies saw less volatility over the last 3-months and could gain volatility in October. While direction is not clear, we wait to go with the market flow. We have to see if Dollar Index rises above 93.50 or falls back, whether Euro rises above 1.1750 or falls lower below 1.1665. USDJPY has immediate resistance at 110.80 which unless breaks can cap and limit the upside. USDCNY has resistance near 6.47/48. USDINR may break above 73.80 to test 74 or higher. Aussie and Pound look ranged.

Dollar Index (93.249) has resistance near 93.50/40 which if holds can bring the index down towards 93.00-92.75 before a bounce is seen again in the medium term. Watch price action near 93.50/40.

Euro (1.1719) holds above 1.1665-1.17 for now and we need to see if it manages to rise above 1.1750 and head towards 1.18 or higher in the near term. Failure to rise above 1.1750 will be bearish for the exchange rate in the near to medium term taking it eventually down towards 1.1650/.1600.

EURJPY (129.66) is rising towards 130.50 and while that holds, we may have to look for another decline towards 129-128 in the medium term. Watch price action near 130-130.50 in the near term.

Dollar-Yen (110.61) has risen well and could test 110.75/80. A break above that would be bullish for a rise towards 111.50/60. Else while below 110.80, a dip to 110.40/20 could be likely. Watch price action near 110.80.

Aussie (0.7286) has resistance near 0.7377 and needs to break above that in order to turn bullish and rise further towards 0.74 or higher. While below 0.7377, Aussie can come off towards 0.71.

Pound (1.3670) has fallen sharply from 1.3750 last week and while that holds, a fall towards 1.36 is in place for the sessions to come. Immediate view is bearish while below 1.37.

USDCNY (6.4565) has come down while resistance near 6.47/48 holds. A break above the mentioned resistance if seen can take the pair higher towards 6.50/51 else a fall towards6.45/44 is possible.

USDINR (73.70) has immediate resistance at 73.80 and higher at 74 while supports are visible near 73.60 and 73.40. A broad range of 73.40/60-73.80/74.00 may hold for now. That said, the RBI might want USDINR to close above 74 ending Sep 30th. If that be so, we might expect a rise over the next few sessions. Watch price action on a break above 73.80.

INTEREST RATES

The rise in the US Treasury yields seems to be gaining strength. However, crucial resistances are coming up on the 10Yr and 30Yr which if broken can pave way for an extended rise and prove our view of seeing a fall-back wrong. We will have to wait and watch. The German yields have broken above their resistances which we had expected to hold. A further rise is possible in the coming days. The 10Yr and 5Yr GoI have risen sharply on Friday and have to move further up from here before seeing a reversal.

The US 2Yr (0.27%), 5Yr (0.94%), 10Yr (1.45%) and the 30Yr (1.98%) Treasury yields have risen further on Friday across tenors. The 10Yr is heading towards 1.5% and the 30Yr to 2% as expected. These levels of 1.5% (10Yr) and 2% (30Yr) are crucial resistance which we expect to hold and trigger a reversal towards 1.4%-1.3% (10Yr) and 1.9%-1.8% (30Yr) again. A strong rise past these hurdles will pave way for a further rise and prove our view of falling back wrong. The price action in the coming days will need a close watch.

The German 2Yr (-0.70), 5Yr (-0.57%), 10Yr (-0.23%) and 30Yr (0.26%) yields have moved further up on Friday. The break above 0.20% (30Yr) is sustaining well and there could be room to test 0.30%-0.35% on the upside now. Our view of seeing a reversal from 0.2% has gone wrong. The 10Yr on the other hand can rise to -0.1% on a decisive break above -0.2%.

The Indian 10Yr GoI (6.1810%)and the 5Yr GoI (5.6520%) have risen sharply on Friday. The 10Yr has risen past 6.16% and can now test 6.2%. It will have to be seen if it reverses lower from there or not. The 5Yr on the other hand has risen above 5.64% contrary to our expectation to see a reversal from there. It can now test 5.69%-5.7% before seeing a reversal.

Daily Pivots: (S1) 1.2621; (P) 1.2676; (R1) 1.2711; More...

USD/CAD's break of 1.2635 minor support suggests that rebound from 1.2492 has completed. Fall from 1.2891 is seen as the third leg of the pattern from 1.2947. Intraday bias is back on the downside for 1.2492 support and possibly below. On the upside, above 1.2729 minor resistance will turn bias back to the upside for 1.2891/2947 resistance zone instead. Overall, with 1.2421 support intact, rise from 1.2005 should still be in progress for another rally through 1.2947 at a later stage.

In the bigger picture, fall from 1.4667 is seen as the third leg of the corrective pattern from 1.4689 (2016 high). It should have completed after hitting 1.2061 (2017 low) and 50% retracement of 0.9406 to 1.4689 at 1.2048. Sustained break of 38.2% retracement of 1.4667 to 1.2005 at 1.3022 will pave the way to 61.8% retracement at 1.3650 and above. Overall, medium term outlook remains neutral at worst with 1.2048/61 support zone intact.

Canadian Dollar leads commodity currencies higher in Asian session, with help from extended rally in oil price. Overall sentiment is mixed though and Yen is trying to pare back some of last week's losses. Some weakness in seen in both European majors and Dollar but movements in respective pairs are limited. Euro is also stuck in range, mixed, shrugging off the results of elections in Germany.

Technically, the developments in both stocks and treasury yields would be watched initially this week. Firstly, a question is whether the late strong rebound in US stocks could extend and even resume larger record runs. Secondly, US 10-year yield might be able to stay firm above 1.4 handle, which in turn set the stage for that 1.765 high later in the year. Accompanying that, we'll keep an eye on whether USD/JPY could break through 110.79 resistance decisively, which would pave the way for a retest on 111.65 high.

In Asia, at the time of writing, Nikkei is down -0.02%. Hong Kong HSI is up 0.28%. China Shanghai SSE is down -1.30%. Singapore Strait Times is up 1.14%. 10-year JGB yield is up 0.0013 at 0.056.

CAD/JPY eyeing 87.87 resistance as WTI breaches 75 handle

WTI crude oil extends near term rally in Asians session and breaches 75 handle. Oil price has been lifted since late August, on improving demand as well as supply tightness. On the one hand, demand is set to picking up with easing of pandemic restrictions, and more importantly, border restrictions. Additionally, surging gas prices are also driving oil higher. On the other hand, OPEC+ seems to be lagging behind the demand rebound, due to under-investment during the pandemic as well as maintenance delays. The question is whether WTI could power through 76.38 high made back in July, and that remains to be seen.

Riding on last week's rally in oil prices and resilient risk appetite, CAD/JPY is also extending the rebound from 84.88. 87.87 resistance is now an immediate focus. Sustained break there will argue that whole correction from 91.16 has completed at 84.65 already. Break of 88.44 resistance will affirm this case and pave the way to retest 91.16 high. More importantly, with 38.2% retracement of 73.80 to 91.16 at 84.52 well defended, the medium term up trend from 73.80 could be ready to resume in this bullish scenario.

Gold resiliently defending 1740 fibonacci support

Gold's rebound attempt last week once again faltered after rejection by 4 hour 55 EMA. Yet, it's still resiliently holding on to 61.8% retracement of 1682.60 to 1833.79 at 1740.35. The price structure of the fall from 1833.79 is slightly favoring the case that it's just a corrective move.

Firm break of 1787.02 will argue that such pull back has completed and bring stronger rise back to retest 1833.79/97 structural resistance zone. Such development would be in line with the case that whole correction from 2074.84 has completed after drawing support from long term fibonacci level of 38.2% retracement of 1046.27 to 2074.84 at 1681.92. However, sustained trading below 1740.35 would put focus back to this 1681.92 key fibonacci support level.

Economic data back to spotlights

Economic data will come back to spotlights this week. In particular, from the US, durable goods orders, consumer confidence, personal income and spending, and ISM manufacturing will be the major focuses. From Europe, Eurozone CPI, UK GDP and Swiss KOF will be featured. From Asia, main focuses will be on China PMIs and Japan Tankan surveys. BoJ will also release meeting minutes and summary of opinions. Here are some highlights for the week:

• Monday: Japan corporate services prices; Eurozone M3 money supply; US durable goods orders.
• Tuesday: BoJ minutes; Germany Gfk consumer climate; US goods trade balance, wholesales inventories, house price index, consumer confidence.
• Wednesday: Germany import prices; Swiss Credit Suisse economic expectations; UK M4 money supply, mortgage approvals; Canada IPPI, RMPI; US pending home sales.
• Thursday: Japan industrial production, retail sales, housing starts; China PMIs, Caixin PMI manufacturing; Australia building approvals, private sector credit; UK GDP, current account; Germany CPI flash, unemployment; Swiss KOF economic barometer; Eurozone unemployment rate; US GDP final, jobless claims, Chicago PMI.
• Friday: Australia AiG manufacturing; Japan unemployment rate, Tankan survey, BoJ summary of opinions, PMI manufacturing final, consumer confidence; Germany retail sales; Swiss PMI manufacturing; Eurozone PMIs final, CPI flash; UK PMI manufacturing final; Canada GDP, manufacturing; US personal income and spending, ISM manufacturing, construction spending.

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.2621; (P) 1.2676; (R1) 1.2711; More...

USD/CAD's break of 1.2635 minor support suggests that rebound from 1.2492 has completed. Fall from 1.2891 is seen as the third leg of the pattern from 1.2947. Intraday bias is back on the downside for 1.2492 support and possibly below. On the upside, above 1.2729 minor resistance will turn bias back to the upside for 1.2891/2947 resistance zone instead. Overall, with 1.2421 support intact, rise from 1.2005 should still be in progress for another rally through 1.2947 at a later stage.

In the bigger picture, fall from 1.4667 is seen as the third leg of the corrective pattern from 1.4689 (2016 high). It should have completed after hitting 1.2061 (2017 low) and 50% retracement of 0.9406 to 1.4689 at 1.2048. Sustained break of 38.2% retracement of 1.4667 to 1.2005 at 1.3022 will pave the way to 61.8% retracement at 1.3650 and above. Overall, medium term outlook remains neutral at worst with 1.2048/61 support zone intact.

Economic Indicators Update

Gold's rebound attempt last week once again faltered after rejection by 4 hour 55 EMA. Yet, it's still resiliently holding on to 61.8% retracement of 1682.60 to 1833.79 at 1740.35. The price structure of the fall from 1833.79 is slightly favoring the case that it's just a corrective move.

Firm break of 1787.02 will argue that such pull back has completed and bring stronger rise back to retest 1833.79/97 structural resistance zone. Such development would be in line with the case that whole correction from 2074.84 has completed after drawing support from long term fibonacci level of 38.2% retracement of 1046.27 to 2074.84 at 1681.92. However, sustained trading below 1740.35 would put focus back to this 1681.92 key fibonacci support level.

WTI crude oil extends near term rally in Asians session and breaches 75 handle. Oil price has been lifted since late August, on improving demand as well as supply tightness. On the one hand, demand is set to picking up with easing of pandemic restrictions, and more importantly, border restrictions. Additionally, surging gas prices are also driving oil higher. On the other hand, OPEC+ seems to be lagging behind the demand rebound, due to under-investment during the pandemic as well as maintenance delays. The question is whether WTI could power through 76.38 high made back in July, and that remains to be seen.

Riding on last week's rally in oil prices and resilient risk appetite, CAD/JPY is also extending the rebound from 84.88. 87.87 resistance is now an immediate focus. Sustained break there will argue that whole correction from 91.16 has completed at 84.65 already. Break of 88.44 resistance will affirm this case and pave the way to retest 91.16 high. More importantly, with 38.2% retracement of 73.80 to 91.16 at 84.52 well defended, the medium term up trend from 73.80 could be ready to resume in this bullish scenario.

Key Highlights

• EUR/USD started an upside correction from the 1.1680 region.
• A major bearish trend line is forming with resistance near 1.1755 on the 4-hours chart.
• GBP/USD is facing an uphill task near 1.3750 and 1.3800.
• Gold price remains at a risk of more downsides below $1,740.

EUR/USD Technical Analysis

The Euro extended its decline below the 1.1700 zone against the US Dollar. EUR/USD traded as low as 1.1683 before it started an upside correction.

Looking at the 4-hours chart, the pair recovered above the 1.1720 resistance level. There was a break above the 50% Fib retracement level of the recent decline from the 1.1788 high to 1.1683 low.

However, the bears seem to be protecting the 1.1750 resistance zone. It is near the 61.8% Fib retracement level of the recent decline from the 1.1788 high to 1.1683 low. There is also a major bearish trend line forming with resistance near 1.1755 on the same chart.

The main resistance is forming near the 1.1800 zone, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).

A close above 1.1800 could start a steady increase. If not, there is a risk of more losses below 1.1700. An immediate support is near the 1.1680, below which the pair could dive towards 1.1620.

Looking at GBP/USD, the pair attempted a strong recovery from 1.3600, but it faced a major resistance near the 1.3750 region.

Economic Releases

• US Durable Goods Orders for August 2021 – Forecast +0.6% versus -0.1% previous.
• US Nondefense Capital Goods Orders ex Aircraft for August 2021 – Forecast +0.1% versus 0% previous.

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