DAX 40 recovers as AUD/USD, copper price bounce off support

Macro update

Fed delivers first rate rise since 2023: The US central bank raised its benchmark rate by 25 basis points in a unanimous but hawkish-leaning decision, with policymakers signalling one more increase this year while providing no guidance for 2027.

Equities stabilise as rate uncertainty fades: Japan’s Nikkei rose 0.3% and European futures pointed to a 0.5% gain, recovering some ground after modest Wall Street losses as investors viewed the Fed’s move as a proactive response to persistent inflation.

Dollar hits seven-week high: The greenback jumped 0.7% overnight to 100.36 against a basket of major currencies, its strongest one-day gain in three months, as rising short-term Treasury yields and expectations of another December rate hike supported the currency.

Yield curve bear-flattens: Two-year Treasury yields briefly climbed to their highest since July 2024 before easing to 4.72%, while the 10-year yield settled around 5% and the 30-year held near 5.35%, retreating from a 19-year high.

Commodities diverge as dollar strengthens: Brent fell below $106 a barrel after dropping 2.7% overnight, weighed down by reports that Saudi crude was being diverted through Oman, while gold advanced around 1% to roughly $4,300 an ounce despite higher interest rates.

Central banks take centre stage in London and Tokyo: The Bank of England is expected to leave rates unchanged on Thursday, although elevated energy prices fuelled expectations of a possible November hike, while the Bank of Japan is widely expected to tighten policy on Friday.

DAX 40 bounces off support

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 has the early September low at 25,728 in its sights. Further potential resistance may be found around the early July 25,900 high.

Support below the 10 September low at 25,361 is seen at Tuesday's 25,173 trough. A fall through this level may engage the 25,000 region.

Short-term outlook: bullish while above the 15 September low at 25,173 on a daily chart closing basis

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 retraces lower

AUD/USD's bull run from its $0.6866 late June low has taken the cross to last week's $0.7238 high  before rapidly slipping by over 2% to Wednesday's $0.7075 near one-month low. It was made marginally above the 19 August trough at $0.7067.

While the $0.7075-to-$0.7067 support zone holds, a recovery towards the early September low at $0.7122 is on the horizon. Only a rise above the 14 September high at $0.7167 would likely re-instate the bull run.

Short-term outlook: bearish while below the 14 September $0.7167 high

Medium-term outlook: neutral with a bullish undertone while above the 19 August $0.7067 low 

AUD/USD daily candlestick chart

Copper bounces off support

The price of Copper has rapidly come off its 9 September $6.7696 high and fell by over 7% in the past week to Wednesday's $6.2363 low. From this low it is currently recovering towards its mid-August low at $6.4482. Another potential upside target is the July peak at $6.4941.

Minor support below the early September $6.3826 low may be spotted around the 18 August $6.3338 trough.

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

Medium-term outlook: neutral with a slight bullish bias while above the 29 July low at $6.2206

Copper daily candlestick chart