Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from cold Hamburg and welcome to our Daily FX Report. U.S. forces airdropped 50 tons of ammunition to Syria rebel groups on Sunday which should help the rebels battling Islamic State militants. Beside that Putin confirmed that Russian airstrikes in Syria are meant to bolster Assad’s regime. Furthermore Turkey’s government said that Islamic State was the prime suspect in suicide bombings, but opponents vented anger at Erdogan at funerals, universities and courthouses.
Anyway, we wish you a successful trading day!
Market Review – Fundamental Perspective
Yesterday the Dow Jones index of shares climbed 0.3 percent and the Standard & Poor’s 500 index also rose by 0.1 percent. U.S. stocks held at their highest level in seven weeks in light holiday trading. Yesterday gold increased to its highest level since early July as expectations that the Federal Reserve will postpone an expected U.S. interest rate rose beyond the end of the year pressured the USD to three-week low versus a basket of major currencies. Spot gold touched 1.169 USD an ounce before slightly tumbling again. In July gold had dropped to 5 1⁄2 year low.
The USD maintained losses versus most of its major peers, with currencies of resource-rich nations extending gains although FED officials continued to back the case for higher interest rates this year. New Zealands currency registered the largest advance versus the USD among 15 major currencies, gaining 0.69 percent to 0.6713 USD, which is the strongest level since July. The AUD also extended its longest streak of strengthening since March 2009 and traded at 0.7358 USD. The EUR was up 0.1 percent at 1.1364 USD and the USD/JPY declined 0.2 percent to 120.02. The EUR/JPY tumbled to 136.30. Oil decreased the most in six weeks after OPEC reported its steepest output in three years.
Last week the chairman of euro zone finance ministers said that Greece must complete the first review of agreed reforms, including the governance of its financial sector, before European creditors can pump in more money to recapitalize Greek banks. Dijsselbloem believed Athens was serious about implementing the agreed changes. Time is short because an additional 15 billion euros for the recapitalization of its banks is available only until November 15.
Daily Technical Analysis
AUD/USD (4 Hours)
For the past two weeks the currency pair was trading inside a bullish trend channel but failed recently to cross the strong resistance level around 0.7379. Based on the Stochastic further losses inside the channel towards the lower line is more than likely.
Support & Resistance (4 Hours)
| Support Levels around | Resistance Levels around |
| 0.71616 | 0.73795 |
| 0.69965 | N/A |
| 0.69371 | N/A |
EUR/JPY (4 Hours)
On September 23 the bearish trend of the EUR/JPY came to an end at the support line around 133.24. Since then the pair was able to appreciate in a so-called Andrews’ Fork and touched a four week high where it rebounded. Now with the decreasing Demarker a consolidation of the pair is possible.
Support & Resistance (4 Hours)
| Support Levels around | Resistance Levels around |
| 135.541 | 136.949 |
| 133.919 | N/A |
| 133.241 | N/A |
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Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.