DAX 40, AUD/USD under pressure as copper price comes off record high 

Macro update

Government bond yields hit multi-year highs: Japan’s benchmark 10-year yield surged 10 basis points to 3.075%, its highest since August 1996, after a sell-off in US Treasuries pushed the 10-year yield to levels last seen in 2007. Traders continued to position for further central bank tightening amid persistent inflation pressures.

US and China prolong tariff truce: Washington and Beijing agreed to extend their tariff stand-off by two months as President Trump welcomed Xi Jinping to Washington for a three-day summit. However, the extension fell short of the one-year agreement markets had anticipated, leaving investors cautious about the prospect of a broader breakthrough.

Oil pulls back from recent highs: Brent crude fell 0.9% to around $102 a barrel, while West Texas Intermediate slipped 0.8% to about $91, after Iran indicated it remained open to diplomatic efforts to end its conflict with the US. The comments unwound some of the geopolitical risk premium, although the two sides remained far apart.

Chinese and Hong Kong stocks retreat: The blue-chip CSI 300 fell 1.3% and the Hang Seng declined 0.5% by midday amid uncertainty surrounding the Trump-Xi summit, extending the weakness seen on Wall Street overnight as higher oil prices and rising bond yields weighed on sentiment.

Gold remains rangebound: Spot gold was little changed at around $4,291 an ounce, caught between expectations of another Federal Reserve rate hike, which would weigh on the non-yielding metal, and softer oil prices, which helped limit downside pressure.

Bitcoin approaches major options expiry: Bitcoin traded near $84,000 ahead of Friday’s expiry of around $15bn worth of Deribit contracts, with dealer hedging around sizeable call positions at $85,000 and above potentially limiting the cryptocurrency’s near-term gains.

DAX 40 remains under pressure

The DAX 40's descent from its late August 26,618 record high to its 25,173 mid-September low has been followed by a recovery rally which seems to have petered out at last week's 25,800 high with a fall through the March-to-September uptrend line at 25,352 now likely on the cards.

A fall through the current September low at 25,173 may push the June-to-July lows at 24,697-to-24,548 to the fore.

Were a bullish reversal to take the index above its recent high at 25,800, though, the July peak at 25,900 may be revisited.

Short-term outlook: neutral with a bearish undertone while above the 15 September low at 25,173 on a daily chart closing basis; if slipped through, the forecast would become bearish

Medium-term outlook: neutral, a fall through the 15 September low at 25,173 would turn the outlook bearish

DAX 40  daily candlestick chart

AUD/USD drops like a stone

AUD/USD's swift sell-off from its $0.7238 early September high has taken it back to the 200-day simple moving average (SMA) at $0.7020, a six-week low. Around it the cross may find at least temporary support. If not, the 11 June and 3 August lows at $0.6984-to-$0.6979 may be reached.

Minor resistance sits between the 19 August and 16 September lows at $0.7067-to-$0.7075.

Short-term outlook: bearish while below the 15 June $0.7088 high

Medium-term outlook: neutral with a bearish stance while below the 21 September $0.7140 high 

AUD/USD daily candlestick chart

Copper comes off record high

The price of Copper is seen coming off this week's $6.8181 record high with the May-to-June highs at $6.6367-to-$6.6328 currently offering support. Further minor support lies at the late August-to-early September highs at $6.6112-to-$6.6108.

A strong resistance band may be found between the August-to-September highs at $6.6951-to-$6.8181. If bettered, the psychological $7.000 region may be reached next.

Short-term outlook: bullish while above the 15 September low at $6.2363

Medium-term outlook: bullish while above the 29 July low at $6.2206

Copper daily candlestick chart