• The cross saw a strong recovery from support at the 117.55/52 August 12 and September 12 lows.
  • A pick-up in global risk appetite kicked in at the start of the week is supporting a rise on the cross.

EUR/JPY is pressured below trendline resistance but holding its own while a pick-up in global risk appetite kicked in at the start of the week, supporting a rise on the cross. The pair is trading between 117.54 and 118.14 in early Asia suffering a touch, -0.30% a the time of writing.

The cross saw a strong recovery from support at the 117.55/52 August 12 and September 12 lows. "Rallies will find resistance offered by the downtrend at 119.32 and this resistance is reinforced by 120.05, the 38.2% retracement. Very near term the intraday Elliott wave counts are neutral to positive and we may see a small rebound," analysts at Commerzbank argued.

EUR/JPY levels

  • WTI stays below nearly eight-week-old rising trend-line.
  • Easing geopolitical tension, demand-supply concerns weigh on the energy prices.
  • Headlines Manufacturing PMIs, API data will be followed for fresh impulse.

While price negative headlines form the Middle East and Russia diverted market attention off China data during week-start trading, WTI stays modestly changed near $54.50 amid early Asian morning on Tuesday.

Not only mixed economics from China but Saudi Arabia’s refrain from harsh steps towards Iran and the following response of Tehran also seems to have helped drag the oil benchmark to the 13-day low on Monday. Adding to the weakness were concerns about increasing output supply as Saudi Aramco conveyed full recovery from the drones attack that has roots from Iran. Elsewhere, Russian Energy Minister Alexander Novak shows readiness to consider starting new oil projects in Iraqi Kurdistan.

It should also be noted that the Washington Post’s news concerning the return of global investors to Saudi Arabia also indicates a future increase in oil output and could have weighed on the sentiment.

Westpac follows market footsteps while blaming geopolitics for the recent decline in oil prices as it says, “Political tensions have also eased, with Saudi Arabia and its allies taking a more cautious approach to the situation. This has seen crude oil prices come off sharply since the days after the attack. In fact, Brent crude is trading only USD0.60/bbls higher than the day before the Houthi rebels launched a drone attack on Saudi’s oil facilities.”

Investors now await details of manufacturing purchasing managers’ index (PMI) from the Euro-zone, the United States (US) and the United Kingdom (UK) for fresh details whereas weekly release of the US Crude Oil Stock by the American Petroleum Institute (API) could as well entertain energy traders. Further to note is that the Chinese markets are off for a week, which in turn could limit the US-China trade headlines.

Technical Analysis

Unless rising back beyond an ascending trend-line since August 07, at $55.10 now, WTI is less likely to revisit the 50-day exponential moving average (EMA) level near $56.50. As a result, late-August low nearing $53.00 seems to be on the bears’ radar for now.

  • AUD/NZD is trading on the front foot despite the prospects of an RBA rate cut.
  • Markets are experiencing continued anxiety over the outcome of the US-China trade talks next week.

AUD/NZD is trading on the front foot despite the prospects of the Reserve Bank of Australia cutting interest rates at today's meeting. The NZD is under pressures considering the calls for the Reserve Bank of New Zealand to slash rates yet again before the year is out.

Analysts at Westpac noted that the market pricing for RBNZ is for 19bp of easing on 13 November, with a terminal rate of 0.59%. For now, there will be a focus on data in the lead up to November's meeting and indeed, the commodity sector will continue to be vulnerable with respect to trade talks and the global economic backdrop. – Indeed, markets are experiencing continued anxiety over the outcome of the US-China trade talks next week, as well as political uncertainty over the impeachment inquiry in the US.

A 25 basis point cut is likely

Meanwhile, the RBA is up next where a 25 basis point cut is likely. "With the RBA now playing catch-up to achieve its year-end ’19 and 2020 GDP forecasts that are premised on a cut by Nov, and signs that wages growth has stalled, the RBA need not wait to cut," analysts at Westpac explained.

AUD/NZD levels