AUD/USD: short-term outlook provides for mixed dynamics
The AUD/USD pair is demonstrating a minor downward correction, showing mixed movement in the short-term horizon, being around the level of 0.6420. At the beginning of the week, the pressure on the instrument remains, although the economic context from the US looks neutral.
Meanwhile, the Australian currency gained support after Friday's business activity data from Australia: the services index from Commonwealth Bank rose from 47.8 to 50.5 points in September, while the manufacturing index from S&P Global fell from 49.6 to 48.2 points. The composite business activity index from Commonwealth Bank rose from 48.0 to 50.2 points. Investors' attention was drawn to the quarterly report from the Australian Financial Regulatory Council (CFR). It noted that with a strong slowdown in China's economy, there could be implications for trade between the countries and interest in risky assets, but for the moment the outlook looks stable, even given the marked increase in interest rates.
- Resistance levels: 0.6425, 0.6450, 0.6472, 0.6500.
- Support levels: 0.6400, 0.6379, 0.6356, 0.6325.
USD/CHF: US dollar updated the May high in assets
The USD/CHF pair is showing moderate strengthening, developing a strong bullish vector for the short-term horizon and reaching the late May peaks. The currency instrument is approaching the level of 0.9120, trying to overcome it, while the market is actively searching for new stimuli for the movement.
The market continues to adapt to the rate decisions made by leading banks last week. In particular, the Swiss National Bank, like the Bank of England, kept the rate at 1.75%, contrary to experts' expectations of a possible increase by 25 basis points. In the attached commentary, the bank's executives expressed hope for the continuation of global economic growth, which, in their opinion, stimulates GDP growth. However, they also emphasized the risks that may require the adjustment of the monetary strategy in the future. The Swiss National Bank expects inflation at 2.2% this year, with a forecast for it to remain at that level in 2024, with a further slowdown to 1.9% by 2025.
- Resistance levels: 0.9150, 0.9200, 0.9250, 0.9300.
- Support levels: 0.9100, 0.9077, 0.9050, 0.9025.
The precious metal is on the decline this week, reaching the level of 1910.00. The US dollar is strengthening thanks to the latest hawkish statements of the Federal Reserve System (FRS) representatives, indicating that the process of tightening the financial policy is not over yet and the probability of a rate cut is extremely low.
Yesterday, Neel Kashkari, head of the FRB Minneapolis, stressed that given the current resilience of the US economy to the regulator's decisions, additional rate increases are likely to be needed to stabilize inflation towards the target threshold of 2.0%. According to Austan Goolsby, head of the FRB Chicago, the current inflationary increase is a bigger challenge for the US economy than the slowdown caused by the tightening of monetary policy. Overall, the Fed officials' words hint that despite keeping the rate at 5.50% in September, the fight against inflation is not over. They also prepare the market for a possible rate hike this year. Specialists believe that rates will be kept at an elevated level for an extended period of time. This policy of the Fed favors the dollar against other assets.
- Resistance levels: 1927.85, 1953.12.
- Support levels: 1906.25, 1890.62, 1875.00.
Crude Oil market analysis
Brent crude oil prices are sagging for the second trading week in a row, having retreated around 94.90 due to monetary reasons. The financial market is worried about the strategy of the world's leading banks, such as the U.S. Federal Reserve and the ECB, to maintain high interest rates for a long time, fearing that it will deepen the economic recession and reduce demand for oil from the leading importers of raw materials.
The cost of "black gold" is also negatively affected by the lifting of some restrictions on exports of gasoline and diesel fuel from Russia, originally introduced to ensure stability in the domestic market. In particular, shipments of high-sulfur diesel are now allowed, which reduces the shortage on the market before the onset of winter, causing a downturn in the prices of oil and related products.
- Resistance levels: 93.75, 96.88, 100.00.
- Support levels: 89.70, 87.50, 84.38.