JAPAN: Nikkei(NHZ5) - Consolidates Above 50000, Look For Support Towards 49500

• RES 3: 95.982 - 76.4% retracement Sep’24 - Nov’24 downleg
• RES 2: 95.960 - High Apr 7 (cont.)
• RES 1: 95.900 - High Oct 17
• PRICE: 95.825 @ 15:47 GMT Oct 28
• SUP 1: 95.510 - Low Sep 3  
• SUP 2: 95.415/95.300 - Low May 15 / Low Jan 14 
• SUP 3: 95.275 - Low Nov 14  (cont) and a key support

Aussie 10-yr futures rallied further Friday, building on gains earlier in the week posted off the poor Australian jobs data. This further signals that the recent move lower is a correction. Near-term resistance has been cleared into 95.780, the Sep 12 high. The clear break of this level signals scope for a continuation higher and opens 95.960, the 76.4% retracement level for the Sep’24 - Nov’24 downleg. On the downside, key short-term support to watch has been defined at 95.510, the Sep 3 low. 

• RES 3: 97.796 - 1.618 proj of the Sep 3 - 12 - 15 price swing
• RES 2: 96.780 - High Jun 26 (cont)
• RES 1: 96.700 - High Sep 12  
• PRICE: 96.530 @ 15:45 GMT Oct 28
• SUP 1: 96.280 - Low May 15 (cont.)  
• SUP 2: 95.900 - Low Jan 14 (cont.)
• SUP 3: 95.760 - Low 14 Nov ‘24

Aussie 3-yr futures briefly bounced on the US CPI print keeping focus higher despite the break of support last week. Short-term resistance at 96.615, the Sep 12 high, has been broken, with 96.780 is the next upside target. Clearance of this level puts markets at fresh multi-month highs. 96.280 marks next major support - but markets are some way off this mark now.

Oil continued normalising on Tuesday following the 24 October high driven by news of increased US/EU sanctions on Russia. The fall in the Dallas Fed services index pressured prices. The market is refocusing on supply/demand fundamentals with OPEC’s monthly meeting on Sunday and another output increase probable while the IEA revised the expected 2026 market surplus higher in its October report. This is likely to provide a headwind to oil prices for some time.

• WTI fell 1.8% to $60.18/bbl after breaching $60 a number of times but breaks below were brief. It reached a low of $59.76, just above support at $59.64, 23 October low. It is now 2.9% lower in October and almost 4% off Friday’s high.
• Brent was down 1.8% to $64.47/bbl to be 2.4% lower this month. It touched $64.00 after the Dallas Fed data and then settled around $64.50. It held above initial support at $63.86, while the bear trigger is at $60.07. The expiry of contracts around $65 could add to market volatility, according to Bloomberg.
• OPEC increased its output target 137kbd at the last 2 meetings and another one is likely at the 2 November meeting as the group continues to unwind its previous 1.66mbd reduction.
• According to data from Vortexa there are currently 1.4bn barrels of seaborne oil, which the market is concerned will add to inventories. This is the highest since 2016 (Bloomberg).
• Bloomberg reported that US oil inventories fell a larger than expected 4mn barrels last week, after declining the previous week, according to people familiar with the API data, which may support crude when it resumes trading. Gasoline and distillate were both lower down 6.3mn and 4.4mn respectively. The official EIA data is out on Wednesday.