Middle East turmoil consumes global markets

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The November 2022 monthly close back above 1.2000 strengthens this prospect. Any setbacks should now be well supported ahead of 1.2000. Next key resistance comes in at 1.3143.

• R2 1.2425 – 19 September high – Strong
• R1 1.2338 – 11 October high – Medium
• S1 1.2122 – 13 October low – Medium
• S2 1.2106 – 6 October low – Medium

GBPUSD – fundamental overview

The Pound struggled on Tuesday with a soft UK employment report. BOE Dhingra, a noted dove, was on the wires saying recent labor market data showed a softening economy, which was likely to lead to slower wage growth and reduced inflation pressure. Key standouts on Wednesday’s calendar come from China GDP, retail sales, industrial production, and unemployment, UK inflation, an ECB Lagarde speech, Eurozone inflation, US housing starts, building permits, the Fed Beige Book, and a batch of Fed speak.

USDJPY – technical overview

At this stage, it looks like the market is wanting to resume the bigger picture uptrend and head back towards a retest of that multi-year high from October 2022 up at 151.95. Look for any weakness to continue to be well supported on dips.

• R2 150.17 – 3 October/2023 high – Strong
• R1 149.83 –  13 October high – Medium
• S1 148.53 – 29 September low – Medium
• S2 147.31 – 3 October low – Strong

USDJPY – fundamental overview

Yield differentials continue to widen in favor of the US Dollar. The other day, Japanese life insurer Fukoku Mutual Life Insurance Company announced they had increased their holdings of unhedged foreign debt (including US Treasuries) across the fiscal first half through to September 2023. Key standouts on Wednesday’s calendar come from China GDP, retail sales, industrial production, and unemployment, UK inflation, an ECB Lagarde speech, Eurozone inflation, US housing starts, building permits, the Fed Beige Book, and a batch of Fed speak.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6300 would give reason for rethink. Back above 0.6523 will take the immediate pressure off the downside and strengthen case for a bottom.

• R1 0.6501– 29 September high – Strong
• R2 0.6445 – 11 October high – Medium
• S1 0.6300 – Figure – Medium
• S2 0.6285 – 3 October/2023 low – Strong

AUDUSD – fundamental overview

The Australian Dollar is still holding up in the aftermath of Tuesday from the hawkish read of the RBA Minutes which showed the central bank still holding a significant concern for the upside risks to inflation. Key standouts on Wednesday’s calendar come from China GDP, retail sales, industrial production, and unemployment, UK inflation, an ECB Lagarde speech, Eurozone inflation, US housing starts, building permits, the Fed Beige Book, and a batch of Fed speak.

USDCAD – technical overview

Above 1.3000 signals an end to a period of longer-term bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4000 area. Setbacks should be very well supported down into the 1.3000 area.

• R2 1.3786 – 5 October high – Strong
• R1 1.3701 – 12 October high – Medium
• S1 1.3569 – 10 October low – Medium
• S2 1.3552 – 2 October low – Medium

USDCAD – fundamental overview

The Canadian Dollar came under pressure on Tuesday after Canada inflation data came in softer than expected. Canadian headline inflation slowed to 3.8% year over year in September, below the 4% year over year forecast and the 4% year over year print prior. Core was 3.7% year over year for the trim and 3.8% year over year for the median, down 0.2% and 0.3% respectively from August. Key standouts on Wednesday’s calendar come from China GDP, retail sales, industrial production, and unemployment, UK inflation, an ECB Lagarde speech, Eurozone inflation, US housing starts, building permits, the Fed Beige Book, and a batch of Fed speak.

NZDUSD – technical overview

Overall pressure remains on the downside with the market once again stalling out on a run up into the 0.6500 area. Ultimately, a break back above 0.6049 would be required to take the immediate pressure off the downside. A monthly close below 0.5900 would intensify bearish price action.

• R2 0.6049 – 29 September high – Strong
• R1 0.6056 – 11 October high – Medium
• S1 0.5871 – 4 October low – Medium
• S2 0.5859 – 5 September/2023 low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar is doing its best to try and recover after taking in a softer batch of inflation data on Tuesday. Key standouts on Wednesday’s calendar come from China GDP, retail sales, industrial production, and unemployment, UK inflation, an ECB Lagarde speech, Eurozone inflation, US housing starts, building permits, the Fed Beige Book, and a batch of Fed speak.

US SPX 500 – technical overview

Longer-term technical studies are in the process of unwinding from extended readings off record highs. Look for rallies to be well capped in favor of lower tops and lower lows. A monthly close back above 4600 will be required to take the immediate pressure off the downside. Next key support comes in at 4200.

• R2 4467 – 18 September high – Medium
• R1 4398 – 12 October high – Medium
• S1 4267 – 9 October low – Medium
• S2 4201 – 4 October low – Strong

US SPX 500 – fundamental overview

Investors continue to struggle with the reality of a higher for longer Fed policy track in the face of ongoing worry around inflation, while also contending with an escalation in geopolitical risk. Overall, we expect inflation to continue to be a problem in 2023 that results in downside pressure into rallies despite market expectations that would argue otherwise.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs. Setbacks should now be well supported above 1600 on a monthly close basis ahead of the next major upside extension. Next major resistance comes in at 2100, above which opens the next extension towards 2500.

• R2 1953 – 1 September high – Strong
• R1 1933 – 13 October high – Medium
• S1 1868 – 12 October low – Medium
• S2 1810 – 6 October low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about inflation risk and a less stable and upbeat global growth outlook. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.