DAX 40 trades in record highs, AUD/USD loses momentum as copper price rises

Macro update

Oil and gold rise amid heightened geopolitical tensions: Renewed attacks on shipping in the Middle East and a North Korean missile launch boosted demand for safe-haven assets, with Brent crude rising to $89.15 a barrel and spot gold gaining over 0.5% to around $4,400 an ounce.

US inflation data takes centre stage: Investors are awaiting July CPI figures, with annual inflation expected to ease to 3.4% from 3.5%, potentially providing further clues on whether the Federal Reserve could bring forward a rate increase to as soon as next month.

Yen weakens despite recent intervention: The Japanese currency is trading back around ¥159.38 per dollar, giving back nearly half of its gains following rare coordinated intervention by Japan and the US, while the dollar index edged higher to 99.87.

Japanese bond yields reach fresh milestones: Growing expectations of an early Bank of Japan rate hike pushed the five-year government bond yield to a record 2.12%, while the two-year yield climbed to a 31-year high of 1.645%.

South Korean stocks surge as technology shares rally: The KOSPI jumped 4%, leading a broader advance across Asia-Pacific markets as technology stocks strengthened, while Japan's Nikkei gained 0.8% after reopening following a public holiday.

Fed rate-hike outlook remains finely balanced: Money markets are pricing roughly a 50% probability of a September rate increase, while Boston Fed President Susan Collins indicated that she would support higher rates if inflation remains elevated.

DAX 40 trades in record highs

The DAX 40's advance is ongoing with a rise above Tuesday's 26,504 record high putting the 27,000 region on the cards. Immediate upside pressure should be maintained while the 6 August low at 26,082 underpins. Below it lies further support around the July peak at 25,900.

Short-term outlook: bullish while above the 6 August low at 26,082

Medium-term outlook: bullish while above the 26 June low at 24,548

DAX 40  daily candlestick chart

AUD/USD loses upside momentum

AUD/USD's recovery rally from its $0.6866 late June low, at the time made marginally above its 200-day simple moving average (SMA), propelled it to $0.7078, close to its mid-June high at $0.7088, before giving back some of its recent gains.

While the cross remains above Thursday and Friday's lows at $0.7023, upside pressure is expected to be maintained. Immediate support above this level sits at Tuesday's $0.7040 low.

A rise above the $0.7078-to-$0.7088 resistance zone - marginally below which lies the 50% retracement of the May-to-June decline - may lead to the 61.8% Fibonacci retracement at $0.7121 to be reached.

Short-term outlook: bullish while above $0.7023

Medium-term outlook: neutral with a bullish bias while below the $0.7088 mid-June peak but above the 30 March $0.6834 low 

AUD/USD daily candlestick chart

Copper price resumes its ascent

The Copper price continues to recover from last week's sharp fall to $6.5166 but needs to overcome its May-to-June highs at $6.6328-to-$6.6367 as well as Tuesday's $6.6480 high in order to revisit its current August record peak at $6.8056.

Significant support sits between Friday's low at $6.5166 and the mid-June high at $6.5164. Currently unexpected failure there may lead to the July high at $6.4941 being revisited.

Short-term outlook: Bullish while above $6.5164

Medium-term outlook: bullish while trading above the 3 August $6.3923 low

Copper daily candlestick chart