Elections were held in Brazil in early October, during which Flávio Bolsonaro, the challenger to incumbent President Lula, performed better. The second round of the presidential election will follow in late October, when it will be decided which of the two will become Brazil’s next president. Currently, Flávio Bolsonaro appears to be the favorite to win, and based on market reactions, investors may already started pricing in this scenario. If Flávio Bolsonaro is elected president, it could pave the way for the fiscal turnaround anticipated by market participants, and relations between Brazil and the United States could also improve, which over time could even lead to lower Brazilian tariffs.
Südzucker: little sweet, little sour earnings
Südzucker, which is one of the world’s largest sugar producers and a leading player in European biofuel production, released its latest interim report, which contained both pleasant and slightly negative surprises. On the one hand, there has been a significant improvement in financial performance on an annual basis, three out of five business segments posted excellent results, and losses in the sugar production division also narrowed thanks to cost-efficiency measures. On the other hand, management raised its annual forecasts only moderately despite strong business performance, which may have disappointed some investors. However, in our view, the outlook for the sugar market remains favorable, so the sugar production segment’s profitability may improve in the coming period. Overall, we are keeping the stock on our Equity Top Pick List.
A few weeks ago, the dollar pulled back from key levels against both the euro and the pound. Exchange rates fell as the dollar strengthened, but it is more likely that we will see a higher low. The forint has begun to weaken, though it may still have some room to rise against its major counterparts. The USDJPY exchange rate continued to correct higher following a strong intervention, but the nature of this move does not suggest new highs. A strong day of yen buying could even lead to a short position in this pair. The EURCHF exchange rate, on the other hand, may be undergoing a structural shift, so looking for long positions could be a good strategy in the coming weeks.
EURUSD
EURUSD
The dollar has regained strength in recent days and is already threatening the uptrend. A close below 1.1593 could open up further downside potential. 1.1475 could serve as a support level that must hold if traders are to look for long positions again later. The natural level at 1.1719 is an important resistance; a break above it would open the door to further upside. In that case, even this year’s high around 1.2085 could come into play. For now, it’s worth waiting for a higher low to form.
The strengthening of the dollar threatens the upward trend here as well. A break below 1.3550 could push the exchange rate down to the 1.3428 level. Above that, resistance lies at the 1.3672 level; a break above this could open up further upside potential, but for now, the likely goal is to form a higher low.
Given the sharp reversal from the 359.4 level and the new swing high reached over the past few weeks, the price could even reach the 375 level. On the downside, the 359.4 level should not be breached; this could be the dividing line between the long and short sides.
Three days ago, the exchange rate broke through the downtrend line, thereby changing the downward pattern; the curve is now beginning to rise. The 312.5 level may now serve as support, and the 328.1 area may also be within reach.
Since the intervention seen in the final days of July, only a correction of the decline has been observed. If it fails to reach a new high and a strong bearish candle reappears below 162.5, that could be enough to trigger short positions. Strong support lies around the 150 level; a significant decline is unlikely until it breaks through the thin green trendline.
The rapid return above the downtrend line indicates that a structural shift may be on the horizon. The next minor pullback should not close below 0.9338, as this support level could serve as the dividing line between long and short positions. There could be more upside potential, so looking for long positions may be the better choice as long as the price remains above the aforementioned level. 0.9521 is an important resistance level—it may still be reached—but in the event of a sustained upward trend, the long-term target price could be around the key natural level of 0.9766.
