DAX 40 drops, AUD/USD loses momentum as copper price nears record 

Macro update

Global markets slide as Middle East war pushes oil above $100: The biggest wave of attacks on shipping since the six-month conflict began kept Brent crude above $100, unsettling investors ahead of US inflation data later in the day. Asia-Pacific shares excluding Japan fell 0.7%, while Japan’s Nikkei was down 0.8% at the midday break.

Brent extends its run above the psychological threshold: Crude held near $101.11 a barrel after breaking above $100 for the first time since July, having climbed almost 30% from early-August lows as hopes of a lasting US-Iran ceasefire faded. Iran said it had struck 10 ships near the Strait of Hormuz after the US sank five Iranian tankers.

US Treasury yields hover near their highest since 2023: The benchmark 10-year yield held around 4.84% after a $6bn government buyback of longer-dated debt disappointed investors, while oil-fuelled inflation concerns kept pressure on bonds. Fed funds futures continued to price around a 60% chance of a September rate hike.

ECB expected to raise rates for a second time this year: Economists expect a quarter-point increase to 2.50% as the central bank seeks to contain an energy-driven rise in inflation, which has now moved above 3%. Policymakers meeting in Berlin are likely to signal a willingness to tighten further if the outlook deteriorates.

Yen rally hinges on a hawkish BOJ next week: The yen strengthened to ¥153.28 per dollar, bringing its September gains to 4%, as traders bet on faster rate hikes and increased repatriation of Japanese capital. BOJ board member Kazuyuki Masu warned that policymakers may need to act quickly if inflation accelerates.

Gold edges higher as softer dollar offsets rising yields: Spot gold gained 0.3% to $4,414.28 an ounce, supported by fiscal concerns after total US debt surpassed $40 trillion for the first time last month. Investors are now awaiting US producer price data on Thursday and consumer inflation figures on Friday.

DAX 40 slips through support

The DAX 40's descent from its late August 26,618 record high has now not only fallen through its March-to-September uptrend line at 25,836 but also slipped and closed below its early September low at 25,728, taking it all the way towards the significant support consisting of the January, February and May highs at 25,508-to-25,406. This we expect to offer at least initial support.

Below it lies minor support at the 25,303 late July low and the 22 July high at 25,271.

Downside pressure should be maintained while no bullish reversal takes the index back above Wednesday's high at 25,910.

Short-term outlook: bearish while below the 9 September high at 25,910 on a daily chart closing basis

Medium-term outlook: neutralised, a fall through the 22 July high at 25,271 would turn the view bearish

DAX 40  daily candlestick chart

AUD/USD rally loses upside momentum

AUD/USD's bull run from its $0.6866 late June low has taken the cross to this week's $0.7238 high, a rise above which may lead to the May peak at $0.7277 being reached.

A potential short-term correction may retest the May peak at $0.7200 which is expected to offer support with the next lower March peak at $0.7187.

Short-term outlook: bullish while above the 3 September $0.7159 low

Medium-term outlook: bullish while above the 2 September $0.7122 low 

AUD/USD daily candlestick chart

Copper nears record high

The Copper price continues its swift ascent and is fast approaching its early August $6.8056 record high, a rise above which may lead to the psychological $7.0000 region being reached.

Minor support below the 26 August $6.7401 high may be spotted around the $6.6951 mid-August peak and more significant support between the May-to-June highs and the 12 August high at $6.6608-to-$6.6328.

Short-term outlook: bullish while above the 8 September low at $6.6179

Medium-term outlook: bullish while above the 18 August low at $6.3338

Copper daily candlestick chart