Headlines:

• Gold ratchets higher, seeks break of key technical levels
• US president Biden arrives in Israel
• Biden: US will make sure Israel has what it needs to defend itself
• OPEC+ not planning extraordinary meeting after Iran calls for Israel oil embargo – report
• Xi-Putin meeting: Close political coordination is necessary in current difficult times
• Fed’s Harker: Pause on rate hikes should be extended
• ECB’s Visco: Inflation not yet consistent with monetary, price stability
• UK September CPI +6.7% vs +6.6% y/y expected
• Eurozone September final CPI +4.3% vs +4.3% y/y prelim
• US MBA mortgage applications w.e. 13 October -6.9% vs +0.6% prior
• Japan tourism recovers to near pre-Covid levels
• Nomura revises China 2023 GDP growth forecast slightly higher
• Citi raises China 2023 GDP growth forecast to 5.3% from 5.0% previously
• UBS, Morgan Stanley join the chorus in raising China GDP growth forecast for the year

Markets:

• CHF leads, EUR lags on the day
• European equities lower; S&P 500 futures down 0.4%
• US 10-year yields down 3 bps to 4.817%
• Gold up 1.1% to $1,945.52
• WTI crude up 2.7% to $89.02
• Bitcoin down 0.2% to $28,405

The arrival of US president Biden is Israel is not really relieving tensions in the region, at least not yet, as commodities continue to respond to the heightened uncertainty. Gold is shooting higher as it climbs to a four-week high of $1,947 after a solid jump higher since Asia trading.

Oil is the other key beneficiary with WTI crude up nearly 3% on the day to $89, also building on gains since Asia trading.

But outside of the commodities space, the market moves were more measured. Equities are feeling heavy again with US futures down 0.4% while European indices are dragged down as well, not helped by ASML’s poor showing after its earnings report earlier.

That comes despite a moderation in Treasury yields, with 10-year yields nudging back down to 4.817% after hovering around 4.866% at the highs earlier in the session.

In FX, major currencies are looking more muted. The pound caught a mild bid after more signs of stubborn UK inflation, with GBP/USD moving up from 1.2185 to 1.2210 before keeping around 1.2190 levels now.

The dollar in general is steadier across the board as it trades little changed against the rest of the major currencies bloc, as sentiment is still underpinned from higher yields and a stronger US economy for the time being.

This article was written by Justin Low at www.forexlive.com.

• Prior +0.6%
• Market index 166.9 vs 179.3 prior
• Purchase index 129.8 vs 137.5 prior
• Refinance index 347.6 vs 385.8 prior
• 30-year mortgage rate 7.70% vs 7.67% prior

That’s a sharp drop in mortgage applications in the past week as the average rate of the most popular US home loan moves higher once again. Both purchases and refinancing activities declined sharply, exemplifying the ongoing subdued mood in the mortgage market.

This article was written by Justin Low at www.forexlive.com.

The copper market remains
in a tight spot amid uncertainties about global growth, tensions in the Middle
East and improving activity data from China. This is leading to a
rangebound price action within a descending triangle until something big
happens triggering a breakout. Given the resilient US economic data and
improving Chinese figures we might see a rebound in prices in the short term,
but watch out for recessionary signs as tight monetary conditions and higher
energy prices might weigh even more on the global economy going forward.

Copper Technical Analysis –
Daily Timeframe

On the daily chart, we can see that Copper
yesterday broke through the key support zone
around the 3.55 level but bounced back soon after leaving behind a fakeout. The
buyers stepped in more aggressively and took the price into the red 21 moving average. From a
risk management perspective, the sellers will be better off waiting for the
price to come back into the downward trendline around
the 3.75 level where they will have a much better risk to reward setup.

Copper Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the break
through the support diverged with the
MACD, which
is generally a sign of weakening momentum often followed by pullbacks or
reversals. In this case, we might see a reversal back into the previous swing
high around the 3.68 level where we can find the confluence with the
minor downward trendline and the 61.8% Fibonacci retracement
level.

Copper Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see more
closely the fakeout below the support zone and the strong rally afterwards.
From a risk management perspective, the buyers would be better off waiting for
the price to pull back into the 38.2% Fibonacci retracement level before piling
in for another rally into the 3.68 resistance.

Upcoming Events

Tomorrow we will get the latest US Jobless Claims
report and the market will want to see if the miss in Continuing Claims last
week was just a blip or the start of a trend. Later in the day we will also
hear from Fed Chair Powell where the market will be focused on any hint about
the near-term policy outlook. Copper is likely to get under pressure if the Jobless
Claims data misses expectations by a big margin or Fed Chair Powell sounds very
hawkish.

This article was written by FL Contributors at www.forexlive.com.

UBS is revising higher their 2023 GDP growth forecast for China to 5.2% from 4.8% previously. Earlier, Goldman Sachs did go against the current (sort of) by revising lower their forecast estimate to 5.3% (previously 5.4%). But they were one of the few, if not the only one, to not have downgraded China’s prospects in the months before so it balances out.

Update: Now, Morgan Stanley is also chipping in by revising higher their GDP tracking estimate for China this year to 5.1% from 4.8% to 4.9% previously.

This article was written by Justin Low at www.forexlive.com.

Well, it might still be too early to really judge how the Israel-Hamas conflict is going to turn out. So, I would expect OPEC+ to stick with the status quo for a bit longer before making any hasty decisions. Oil is up over 3% on the day to $89.14 currently as commodities are still heavily influenced by developments in the Middle East for now.

This article was written by Justin Low at www.forexlive.com.