The US dollar remains supported and trades near fresh highs against the basket of major currencies on Tuesday. Upbeat US Manufacturing PMI data, released on Monday, boosted the greenback, which already received support from reduced risk aversion as concerns over troubled Deutsche Bank eased for now.
The Euro is in red for the second day and slid below 1.1200 handle on Tuesday, threatening key near-term supports at 1.1167/52 zone.
British pound remains the top loser among the major currencies and trades near post-Brexit 31-year low at 1.2795, after British PM set a deadline to start UK’s formal departure process from the EU. Setting the deadline clarifies the divorce process that supported stocks, but at the same time increase fears of ‘hard-Brexit’ that intensifies pressure on British pound.
Fresh bullish acceleration of the dollar broke above strong technical resistances against Japanese yen that signals further strength. The pair hit fresh two-week high at 102.37 in early European session on Tuesday.
Reserve Bank of Australia left interest rates at 1.5% on Tuesday as it weighs the effect of past easing and the biggest-ever boom in apartment building helps underpin economic activity and jobs growth.
Australian central bank made no surprise with decision, as no change after cuts in August and May decision was widely expected.
Australian dollar hit session low at 0.7657, immediately after central bank’s release, which is again under pressure after brief correction.
Strong dollar kept Gold price under strong pressure, as renewed risk sentiment prompted investors to leave gold position in favor of riskier assets. The yellow metal hit nearly two week lows on Tuesday, after strong technical support at $1312 was lost. Fresh weakness approaches gold’s key supports at $1306/02, loss of which would trigger further weakness.
Oil prices pulled from fresh highs on Tuesday, as rise in Iranian oil exports adds to global oversupply, but remain supported overall, following OPEC plans to cut production later this year.
WTI oil pulled back from Monday’s fresh recovery high at $48.99, but holds for now above $48 support.
Brent crude oil eased to $49 zone after attack at psychological $50 barrier stalled on approach. Technicals remain bullish and favor fresh attempts through $50 in the near-term.
Asian shares pushed higher after sluggish start on Tuesday, with Japanese markets leading the way after an upbeat U.S. manufacturing survey bolstered the dollar.
Japan’s Nikkei 25 was up 0.8% for the session; MSCI gained 0.2%, while Australia was up 0.1%. Markets in China are closed this week for a holiday.
German markets reopened on Tuesday after a holiday, with Dax opening lower on existing fears about the stability of Deutsche Bank.
On the other side, FTSE 100 continued cheer from Asian and rallied to fresh multi-month high at 7000 zone.
French CAC40 and Italian shares followed positive sentiment and opened higher on Tuesday.

Highlights of the day

Europe
UK Construction PMI for September is in focus. Expectation shows that UK construction activity is expected to continue to contract in September, as forecast for September stands at 49.1 vs 49.2 in August.
The data come after yesterday’s update of the Manufacturing PMI for September that surprised on the upside, rising to a 10-month high and beating expectations for a modest decline.
In case of an upside surprise on Construction PMI today, doubts about BOE’s prospects for another rate cut will rise. Data is due at 08:30 GMT.

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Important levels

GBPUSD
Cable eventually broke below post Brexit low and critical support at 1.2795, hitting fresh lows, last traded in 1985. Rising fears of hard Brexit keep the pound under strong pressure. Next good supports lay at 1.2500 zone, with extension towards 1.2000/ 1.1800 are, not ruled out on further bearish acceleration.
Former strong support at 1.2795, now acts as initial resistance, followed by 1.2973 and 1.3000.
EURUSD
The pair came under strong pressure and accelerated lower on Tuesday. Break below initial 1.1200 support zone triggered fresh fall that cracked next strong support at 1.1167, below which will expose key short-term supports at 1.1122.
Former supports at 1.1200/1.1215 zone, now act as good resistances, followed by 1.1223 and 1.1242.
USDJPY
Fresh bullish acceleration took out key technical resistances at 101.85 / 102.05 and 102.17, opening way for further upside. Near-term focus shifts towards next resistances at 102.68 and pivotal 103.22 barrier, above which will attract 104.00 zone.
Former strong resistances in 101.85/102.17 zone, now act as supports, followed by next support levels at 101.54 and 101.26., Market Analysis