Houthi Rebels intensify their attacks on Saudi Arabia

The main event of the day is Canada’s employment data for September

MORNING OVERVIEW

The Houthi Rebel’s attacked Riyadh’s capital airport over the weekend, sparking concern about the oil supply chain in the region.

MARKET SNAPSHOT

KEY MARKET THEMES

01 — Houthi Rebels strike Saudi Airport over the weekend

Yemen’s Houthi Rebels claimed responsibility for the attacks on Riyadh’s international airport on Sunday. The attacks on Sunday were the second instance of the Houthi Rebel’s attacks on the weekend as the strike on Saturday from the Houthi Rebels on a civilian airport resulted in 12 casualties. The strikes could result in retaliatory measures from Saudi Arabia and should the oil supply in the region be under threat, it could provide support for oil prices.

Market implication (OIL) : Bullish

02 — EU imposes quotas on hybrid cars from China

The EU according to the FT, struck an “understanding” with China that heads off a full-scale trade conflict, with Brussels set to cap Chinese hybrid car imports through a trade “safeguard,” a measure that doesn’t require proof of market abuse. Once exports hit the agreed ceiling, steep extra tariffs would apply. Three people briefed on the deal said Beijing tacitly accepts the cap and won’t retaliate, though EU member states must still sign off. Nonetheless, the announcement could provide support for European automakers such as Volkswagen which have faced increased competition from their Chinese counterparts.

Market implication (EUR): Bullish

03 — RBA meeting minutes due out tomorrow

The RBA is due to release the minutes of its 29 September meeting tomorrow, when the board lifted the cash rate 25bp to 4.60%. Markets will be watching for how firmly the board signalled further tightening, with the 3 November meeting and the September-quarter CPI in late October the next key tests. Hawkish language on inflation risks could support AUD, while a more balanced tone could weigh on it.

Market implication (AUD) : N/A       

WHAT MATTERS TOMORROW

RBA last meeting minutes to be released

Time GMT+2): 03:30

Expected: N/A
Previous: N/A

Potential market reaction:
N/A

ASSET FOCUS

[Gold / Commodities]

XAU/USD appears to be moving in a downwards fashion. We opt for a bearish outlook  for the bullion’s price. Supporting our case is the RSI indicator below our chart which currently registers a figure close to 40 implying a bearish market sentiment, in addition to the MACD indicator below our chart. For our bearish outlook to continue we would require a break below our 4080 (S1) support level, with the next possible target for the bears being our 3945 (S2) support line. On the other hand, for a bullish outlook we would require a clear break above our 4200 (R1) resistance line with the next possible target for the bulls being our 4350 (R2) resistance level. Lastly, for a sideways bias we would require gold’s price to remain confined between our 4080 (S1) support level and our 4200 (R1) resistance line.

KEY LEVELS

• Resistance (R1): 4200
• Resistance (R2): 4350
• Support (S1): 4080
• Support (S2): 3945

Technical View: Bearish

CROSS-ASSET VIEW

TRADING SPHERE VIEW

Bearish for the EUR

Our base case:
Continued political uncertainty in France, Germany and Spain which are currently seeing a shift in support from the incumbent government to the opposition raises concerns in the Zone.

What would change our view:
Polling data showcasing support for the incumbent Governments

RISKS TO THE VIEW

Snap elections being called

Snap elections being called in France and Germany.

TODAY’S WATCHLIST

01 N/A

DISCLAIMER: This content is for general informational and educational purposes only and should not be considered investment advice or investment recommendation.