GERMAN AUCTION PREVIEW: On offer next week

WTI futures remain in a bear-mode condition and gains are considered corrective. Last week’s sell-off resulted in a move through key support and the bear trigger at $60.85, the Aug 13 low. Clearance of this level strengthens a bearish theme and paves the way for an extension towards $57.50, the May 30 low. Initial firm resistance has been defined at $66.42, the Sep 29 high. Clearance of this level would highlight a reversal. A bull cycle in Gold remains in play and Monday’s fresh cycle high, reinforces current conditions. This maintains the price sequence of higher highs and higher lows. Furthermore, momentum studies highlight a condition known as momentum drag - where momentum studies remain in overbought territory and move sideways - a bullish signal. Sights are on $3987.3 next, a Fibonacci projection. Support to watch lies at $3753.2, the 20-day EMA.

• WTI Crude down $0.11 or -0.18% at $61.6
• Natural Gas up $0.04 or +1.04% at $3.394
• Gold spot down $7.78 or -0.2% at $3951.39
• Copper up $2.4 or +0.48% at $506.05
• Silver down $0.3 or -0.61% at $48.186
• Platinum down $10.18 or -0.63% at $1613.01

Eurostoxx 50 futures remain in a bull-mode condition. Last week’s gains resulted in a breach of key resistance at 5525.00, the Aug 22 high. The break confirms a resumption of the uptrend. The impulsive climb opens the 5700.00 handle next, with potential for a test of 5727.18 further out, a Fibonacci projection. Moving average studies are in a bull-mode position too, highlighting a dominant uptrend. Initial firm support is 5525.00, Aug 22 high. A bull cycle in S&P E-Minis remains intact. The contract traded to a fresh cycle high last week to confirm a resumption of the uptrend and maintain the positive price sequence of higher highs and higher lows. Sights are on 6812.29, a Fibonacci projection. Initial support to watch is at the 20-day EMA, at 6694.17. It has recently been pierced, a clear break of it would signal scope for a deeper pullback, potentially towards the 50-day EMA, at 6575.48.

• Japan's NIKKEI closed higher by 6.12 pts or +0.01% at 47950.88 and the TOPIX ended 1.85 pts higher or +0.06% at 3227.91.
• Across Europe, Germany's DAX trades lower by 31.66 pts or -0.13% at 24350.3, FTSE 100 higher by 9.68 pts or +0.1% at 9488.7, CAC 40 down 4.88 pts or -0.06% at 7966.9 and Euro Stoxx 50 down 4.83 pts or -0.09% at 5623.89.
• Dow Jones mini down 102 pts or -0.22% at 46856, S&P 500 mini down 8.5 pts or -0.13% at 6780.5, NASDAQ mini down 26.25 pts or -0.1% at 25159.

TD Securities now expect the BOJ to hike rates in December rather than October, following Sanae Takaichi’s victory in the LDP leadership election.

• They believe Honda’s interview yesterday “sends a clear signal that Takaichi's administration is not against further hikes but is asking for some time to formulate and implement their policies”. TDS expect Governor Ueda “to send a hawkish signal in October and lay the groundwork for a December hike to avoid surprising the markets”.
• TDS note that Takaichi’s “nomination of Suzuki and Aso to top's LDP positions […] should help alleviate concerns that she will embark on a fiscal spending splurge”.
• We highlighted yesterday that Takaichi also moderated her firmer views on the BoJ during the campaign trail, and stressed the responsible approach to spending her government would adopt.
• Despite these more moderate signals, USDJPY is still biased higher this morning, currently up 0.3% at 150.78 and narrowing the gap to key medium-term resistance at 150.92 (Aug 1 high). A break of this hurdle would confirm a resumption of the bull leg that started Apr 22, exposing the March 28 high at 151.21.