FUNDAMENTAL OUTLOOK
US President Donald Trump threatened Turkey with economic obliteration if Ankara does anything “off limits” in a potential incursion into Syria.
“As I have stated strongly before, and just to reiterate, if Turkey does anything that I, in my great and unmatched wisdom, consider to be off limits, I will totally destroy and obliterate the Economy of Turkey (I’ve done before!),” Trump tweeted.
His threats that led to a sell-off in Turkish assets followed a barrage of stern criticism and condemnation from both Chambers of the Congress and from both his rival Democrats and ally Republicans who portrayed his decision as a betrayal to Syrian Kurds allied with Washington in the fight against ISIS.
US House Foreign Affairs Committee Chair Eliot Engel on Monday voiced out alarm over plans by Trump administration’s potential to withdraw Washington out of the Open Skies Treaty. The treaty allows participant nations, including US, Russia, other NATO allies and European countries to operate reconnaissance flights over each others’ skies as a measure of war prevention since the Cold War ended.
The US Commerce Department added on Monday 28 Chinese government and commercial organizations to a blacklist over their role in human rights violations against the Muslim Uighurs. The move coming days before the Sino-US trade talks bars those entities, among them the world’s top video surveillance producers Hikvision and Dahua, from buying US products.
Data by Germany’s Economy Ministry showed on Tuesday that industrial production unexpectedly rose 0.3% versus the forecasts at 0.1% on the month in August. The figure gave a slight hope again an anticipated recession in Eurozone’s largest economy.
Trump signed a final limited trade deal with Japan on Monday. The deal reopens some Japanese markets US farmers had lost access to after President pulled out the US after from the multilateral Trans-Pacific Partnership agreement in 2017. “I think we’re at a stage with Japan where our relationship has never been better than it is right now,” Trump said after the signing.
EURUSD
Despite the better than expected German industrial output figure and the resulting rise the Euro has so far failed to exceed the resistance at the 1.1000 level. During the daily trade we will follow 1.1950 and 1.0930 as support lines. But if the positive mood goes on, then the strong resistance at 1.1000 will be watched. Once the pair price breaks it, it will aim for 1.1030 last seen two weeks ago.
Support: 1.0950–1.0930
Resistance: 1.1000–1.1030
GBPUSD
The UK government is preparing for Brexit negotiations to collapse this week, the Spectator magazine reported late Monday, citing a source from within Prime Minister Boris Johnson’s office. The news added to the pressure on the pound, pushing it down below the recent wide-framed ascending channel. The level 1.2270 at the 50 pct Fibonacci retracement provides support. But if the strong dollar breaks it, we will watch 1.2220 and 1.2200 at the 61.8 Fibonacci for new supports. In the event of a rise, the pair should climb back to 1.2300 and if the price persists there, we will follow 1.2330.
Support: 1.2270- 1.2220-1.2200
Resistance: 1.2300 -1.2330
USDJPY
The Japanese yen attracted investors after a fall in the US dollar against a basket index of currencies. Earlier the dollar had gained over US President Donald Trump’s signing of a limited trade deal with Japan. The pair price is likely to continue its descent amid rising geopolitical risks, including North Korea’s withdrawal from talks with the US. 107.00 and 106.90 at the 61.8 Fibo retracement should be watched for supports. Still below, 106.70 will be important. In the event of a rise, 107.30 and then 107.60 at the upper Fibo line must be followed.
Support: 107.00 -106.90- 106.70
Resistance: 107.30 -107.60
GOLD
Precious metal prices are rising thanks to a weakening in the US dollar index and a lack of confidence regarding chances of a breakthrough in the Sino-US trade talks scheduled to restart later this week. Gold is no aiming for 1500 level. If the price persists there, we will watch 1509 and later 1515 for resistance. In the event of a drawdown, 1593 at the 50 pct Fibonacci retracement, and 1490 will be followed for support.
Support: 1593 -1490
Resistance: 1500- 1509 -1515
BRENT
Oil prices are rallying over deadly protests in the two OPEC members of Iraq and Ecuador that threatened a potential disruption to production and supplies. Russia on the other hand rose to the job of providing supplies if the Saudi output do not meet demands in the aftermath of last month’s attacks. However the bullish sentiments are balanced by an apparent lack of trust in Sino-US trade talks. In the event a fall accelerates, we will watch 66.00 and 65.60 at the 78.6 pct Fibonacci retracement. 65.40 can be aimed then. If the recent days’ rally goes on, 67.00 and 67.40 will be followed.
Support: 66.00 -65.60- 65.40
Resistance: 67.00 -67.40
DAX
Germany’s trade-sensitive Dax 30 index opened low on Tuesday over caution about the Sino-US trade negotiations set to continue later this week. As investors do no hope any substantial outcomes, a sell-off may push the index down to 12 000. If the index persists below, 11 950 and later 11 900 will be followed. In the case of a rebound, 12 100 and 12 160 will ve watched.
Support:12 000-11 950- 11 900
Resistance: 12 100 -12 160
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