COMMODITIES: Precious Metals Pull Back, Crude Edges Higher

US President Trump posts on Truth Social: @realDonaldTrump "I believe that China purposefully not buying our Soybeans, and causing difficulty for our Soybean Farmers, is an Economically Hostile Act. We are considering terminating business with China having to do with Cooking Oil, and other elements of Trade, as retribution. As an example, we can easily produce Cooking Oil ourselves, we don’t need to purchase it from China."

BOC Deputy Governor Rogers' commentary Tuesday at an event with the Business Council of British Columbia didn't add much to the discussion on October rate cuts, focusing instead largely on structural economic issues.

• "There is no big bang that's going to magically cure productivity...we've got some tough decisions ahead in an environment of extreme uncertainty. We are going to have to have some courage" (as quoted by the Wall Street Journal).
• August building permits data released Tuesday morning were on the weak side, suggesting a renewed drag on structure investment growth after a positive contribution in Q2, though this didn't move markets much. Wednesday's manufacturing/wholesale sales will be the most closely watched data of the week.
• Gov Macklem's scheduled appearance Thursday afternoon could be the key final BOC communication before Governing Council begins deliberations ahead of the October meeting.
• Coming back from the long weekend, BOC cut pricing has basically moved back to where it was before last Friday's much stronger than expected Labour Force Survey for September. That release saw probability of an October cut drop to as low as 20% intraday Friday from 60% prior, but that's moved back to closer to 50% again in part helped by broader global risk off moves triggered by Sino-US trade tensions. That's still at odds with the unanimous Canadian sell-side consensus for a 25bp cut at the meeting.
• There's still only roughly one full 25bp BOC cut priced for the cycle, by January. Current BOC meeting-dated OIS implied cumulative rates: Oct -12bp, Dec -20bp, Jan -25bp, Mar -27bp
   

• RES 4: 0.6726 1.236 proj of the Jun 23 - Jul 24 - Aug 21 price swing
• RES 3: 0.6660/6707 High Sep 18 / 17 and a bull trigger
• RES 2: 0.6629 High Sep 30 & Oct 01 and key short-term resistance
• RES 1: 0.6558 50-day EMA
• PRICE: 0.6489 @ 17:18 BST Oct 14
• SUP 1: 0.6440 Low Oct 14
• SUP 2: 0.6415 Low Aug 21 / 22 and a bear trigger
• SUP 3: 0.6373 Low Jun 23
• SUP 4: 0.6357 Low May 12  

A bearish theme in AUDUSD remains intact and Tuesday's fresh short-term cycle low reinforces current conditions. The recent breach of 0.6521, the Sep 26 low, and 0.6484, the 76.4% retracement of the Aug 21 - Sep 17 bull leg, signals scope for a deeper retracement towards key support at 0.6415, the Aug 21 and 22 low. Initial resistance to watch is 0.6558, the 50-day EMA. Key short-term resistance has been defined at 0.6629, the Sep 30 and Oct 1 high.