Currency Updates:
AUD/USD After the post-China PMI inspired gains faded in Asia, Europe made sure they were completely erased as the pair slipped towards 0.9430 before bouncing near 0.9445 into NY’s open. NY applied bearish pressure on the pair as the USD was generally bid and the EUR crosses firmed. EUR/AUD bounced off hourly support near 1.4250 and ascended towards 1.4310/15 to aid in further losses for AUD/USD. The pair slid early in NY and accelerated a bit upon breaking below 0.9430 after US claims data came in better than f/c to send US bond yield higher. A low of 0.9410 was hit. A meager bounce towards 0.9430 was repelled after the IMF lowered global growth forecasts which made particular note of China slowing. Late in the day the pair sat just above the day’s low. Recent longs may have some concerns. The TL off the Oct high capped another rally and the daily RSI diverged on today’s high. A retest of key s-t support near 0.9320/30 cannot be ruled out.
EUR/USD Europe lifted EUR across the board after EZ PMIs came in better than forecast. EUR/USD was lifted from below 1.3440 to a 1.3485 high before slipping back near 1.3470 into NY’s open. Better than f/c US weekly claims data put the USD and US yields on firm footings. EUR/USD dipped to 1.3458 but further losses weren’t in the cards. Short squeezes in EUR/GBP (0.7889-0.7939) and EUR/AUD (1.4215-1.4312) combined with JPY weakness in EUR/JPY (136.37-137.19) to push EUR/USD back towards 1.3470 late in the day. Japanese CPI for June and German IFO for July are the big econ risk factors overnight. Particular attention will be placed on the German data as the market looks to see if the Russia/Ukraine situation has impacted business sentiment. Should the data be benign traders may look at techs that are flashing some s-t warning s for bulls. Risks may be to the topside as traders may cut back shorts heading into the weekend.
USD/JPY Rising L-T Tsy yields, weaker-than-f/c Japanese Trade and Markit PMI and US Jobless Claims tumbling to 2006 lows gave the oversold rebound in USD/JPY prices the ammo needed to clear last week’s highs by the 61,8% Fibo at 101.80. Upside beyond there was chastened by a horrendous US New Home Sales slide and downward revision that was led by a drop in the NE vs the plunge in Southern Housing Starts reported last week. That and a mediocre US Markit PMI result sapped the USD rally of momentum into the London close. Nonetheless, most of the day’s rise in Tsy yields and the USD were maintained and USD/JPY is being drawn toward the converging 100-, 200-DMA, upper 21-day Bolli and thin Cloud at 101.90-102.10. CPI and MOF flow data are on tap from Japan tonight ahead of Durable Goods Orders from the US Friday. Econ Min Amari’s fiscal “tightrope” walking comments were meant to scare some money out of ultra-low-yield JGBs and into equities, but so far only front-end yields are bouncing. NZD/JPY’s break of its 2-yr up TL (87.63) bears watching, as does bear trap risk below the Cloud. O/S rebound underway in EUR/JPY on PMIs.
Looking Ahead – Economic Data (GMT)
• 23:30 JP CPI, Core Nationwide YY Jun f/c 3.3%, 3.4%-prev
• 23:30 JP CPI, Overall Nationwide* Jun 3.7%-prev
• 23:30 JP CPI Core Tokyo YY* Jul f/c 2.7%, 2.8%-prev
• 23:30 JP CPI, Overall Tokyo* Jul 3%-prev
• 23:50 JP Foreign Bond Investment w/e 671.5b-prev
• 23:50 JP Foreign Invest JP Stock w/e -160.9b-prev
• 1:00 NZ NBNZ Business Outlook Jul 42.8%-prev
• 1:00 NZ NBNZ Own Activity Jul 45.8%-prev01:45
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events.
