FUNDAMENTAL OUTLOOK

Major European powers, United Kingdom, Germany and France joined United States in blaming Iran on Monday for the mid-September attacks on Saudi Arabia’s oil production plants. The joint statement signed by the leaders of the three European nations at United Nations called on Iran to come to the table for new talks on its nuclear program and regional security.

Tehran has repeatedly made clear that new negotiations with world powers were impossible unless the Trump administration reverses all the sanctions and let Iran sell its oil.
People’s Bank of China (PBOC) governor Yi Gang said on Tuesday that the bank was in no hurry to follow the path of other central banks in going for easing in its monetary policy. However, Yi said, that PBOC had many options to support the slowing growth.
But we are in no hurry to take measures similar to central banks of other countries…such as interest rate cuts or quantitative easing policies,” Yi said.

The cautious tone by the head of the country’s central bank came despite an acute slowdown along with the hard-hitting trade war with the US. Chinese economy hit a 30-year low of 6.2 percent in the second quarter this year.

Bank of Japan Governor Haruhiko Kuroda stated that the central bank would continue to look for means to help economic growth sustainability.

“If the current low-interest rate environment is prolonged further, it will become necessary to pay closer attention to the cost of our policy. As such, the important challenge we continue to face would be to think about what’s necessary to further enhance the sustainability of our policy,” Kuroda told business leaders in Osaka.

Britain’s Labour Party members voted on Monday to hold snap general elections before deciding whether to campaign for remain in or to leave the European Union in a potential second referendum. The stance was brought forward by the party’s leader Jeremy Corbyn.

EURUSD

Bad data from the Eurozone’s largest economy Germany, particularly the manufacturing PMI, continue to push the common currency down. The September Ifo Business Climate Index for Germany and Eurozone are up for release Tuesday. No major change is expected from the previous figure but usual warnings are sure to come from the Ifo report. As the price remains below the 61.8 Fibonacci retracement level, we can designate 1.0980 and later 1.0965 at the 78.6 Fibo line as support lines. 1.0940 is a lower target. Upward targets are 1.1000 above the 61.8 Fibo and 1.1010. 1.1025 is a father one above the 50.0 Fibo.

Support: 1.0980-1.0965-1.0940
Resistance: 1.1000-1.1010-1.1025

GBPUSD

Today, UK’s supreme court is set to rule on whether Prime Minister Boris Johnson’s advice to the Queen to prorogue the House of Commons was unlawful. The decision could cancel the prorogation and give the MPs one more chance to go for legislative prevention of the PM’s Brexit plans. The pound is likely to see fluctuations due to the decision. 1.2400 and 1.2370 near the lower band of the recently-formed ascending channel and later 1.2350 can be followed. In the event of a continuation to the rise, 1.2480 and 1.2500 will be watched. 1.2560 near the 50.0 percent retracement level will be an upward target.

Support: 1.2400 -1.2370- 1.2350
Resistance: 1.2480-1.2500- 1.2560

USDJPY

The week seems to be on path to break a four weeks-long rise in the pair. If the yen’s gains continue, go below and resist the 61.8 percent retracement level we will see further lowering in the pricing. Japanese manufacturing activity shrank, coming at 48.9 versus the forecast 49.5 and the previous 49.3. The fastest slowdown in seven months showed the effect of the trade war between Japan’s two largest partners, US and China. 107.45 at the 61.8 Fibonacci retracement level will be crucial in descent to be followed by 107.30. 107.00 remains a strong support. In the event of strengthening in dollar, 107.70 and later 108.00 can be watched. 

Support: 107.45 -107.30- 107.00
Resistance: 107.70 -108.00

GOLD

Precious metal prices keep close to a three week high at Tuesday’s open over the tumultuous situation in the Middle East as the Europe’s major powers backed the US in blaming Iran for the attacks on Saudi oil facilities. But improvements in the Sino-US trade relations, such as Chinese decision to buy more US soy, ahead of the October negotiations are pressuring the price. 1518 and 1515 act as strong support lines to be followed by 1510. If gold’s rise in the most recent session goes on, 1525 and later 1530 are to be watched.

Support: 1518 -1515 -1510
Resistance: 1525 -1530

BRENT

Oil prices remain largely attentive to the Middle East tensions as world leaders gather in NYC for the UN’s annual general assembly. However weak manufacturing data from Japan and Europe once again draw attention to slowing economies and weighed on the price which has now gotten lower from the oversold area at the RSI indicator. 71.20 and 71.00 slightly above the 50 percent Fibonacci retracement remain important support levels. Still below we will watch 70.70. If the price reverses the losses, then we will follow 71.80 and later 72.00. As the week’s early high 70.30 remains important.

Support: 71.20-71.00-70.70
Resistance: 71.80-72.00- 70.30

DAX

Investors at the German index are cautious due to the global risk factors from the Sino-US trade war and the Middle East tensions. The publication of the Ifo Business Climate Index for Germany in September showed a slight improvement at 94.6 versus the forecast 94.5 and the previous 94.3 figure. However the German Business Expectations disappointed at 90.8 versus the expected 91.8. Upward targets are 12 380 and 12 400. A little above 12 450 can be followed. In the event of a fall, 12 330 and later 12 000 can be followed.

Support: 12 330 – 12 000
Resistance: 12 380- 12 400-12 450

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