Currency Updates:
AUD/USD The pair spent most of NY near the top end of the day’s 0.9248-0.9278 range. The combination of improved AU econ data, wider yield spreads and a soft USD allowed the pair to linger just under 0.9280 for almost the entire NY session. The pair seems to be entering a consolidation phase that allows it to digest recent losses. This phase will also allow near o/s daily RSI to unwind ahead of the next leg lower. Westpac August consumer confidence data is due later. If the reading mimics the NAB business confidence data AUD/USD may get another boost and clear offers in the 0.9285/95 area. The longer-term trend remains bearish though and bulls will need to clear 0.9354/76 (daily cloud base, 55-DMA, Aug 6 high) to dent the recent slide. A clean break above the TL off the April 2013 high is needed to seriously threaten the bear trend.
EUR/USD The weak German ZEW data sent EUR/USD to a low of 1.3336 just ahead of NY’s open. Profit taking by intra-day names and bids ahead of the 1.3325 barrier stalled the slide. Early NY action saw the USD weak as a large US name was a noted seller of USDs across the board. EUR/USD lifted away from the low and steadily ascended throughout NY’s session. The pair couldn’t break hourly resistance in the 1.3375/85 zone and it sat just below 1.3370 late in the day. Downside risks remain for the pair as the 21-DMA exerts pressure and price holds below the 200-WMA. RSIs have rolled over again and recent yield compression has abated. Data risks may see the pair’s slide pick up speed. Final readings for July HICP and US retail sales data are due tomorrow while Q2 EZ GDPs are due Thursday. Particular attention will be paid to the German components of those data points If Germany is weaker than expected we may see the down trend resume and 1.3295/1.3325 support cleared. The door then opens for a test of the September 2013 low (1.3105).
USD/JPY The yen was generally softer Tuesday after further evidence the post-tax-hike economy has been weaker than expected, leaving the BOJ and the Abe govt in something of a bind regarding the upcoming decision on whether to raise the consumption tax again next year. Few see the BOJ’s 2% CPI goal as attainable within two years and the betting for another BOJ QQE has firmed again, though with JGB yields as low as they are and most of the govt’s new issuance already being bought by the BOJ, one has to wonder about the scope for QQE2. USD/JPY is mean reverting to the slowly rising 200-DMA, last at 102.32. Bids remain at 102 with offers at 102.40-50, though most look to fade ranges while daily closes are above 101.50 and below 103. The Nikkei’s daily Cloud base rebound Friday has been followed by a Cloud top rejection so far this week. Tsy yield curve steepening via the long-end did little for USD/JPY as the move was seen as corrective. 1-mo vols holding by 5 as traders look for signs of a trend other than sideways. EUR/JPY still managing closes above Feb 136.25 low, with some hopes on the Ukraine front offsetting a lousy German ZEW. Japan GDP out Wed.
Looking Ahead – Economic Data (GMT)
• 23:50 JP Corp Goods Price MM* Jul f/c 0.4%, 0.2%-prev
• 23:50 JP Corp Goods Price YY* Jul f/c 4.4%, 4.6%-prev
• 23:50 JP GDP QQ Q2 f/c -1.8%, 1.6%-prev
• 23:50 JP GDP QQ Annualised Q2 f/c -7.1%, 6.7%-prev
• 23:50 JP GDP QQ Pvt Consmp Prelim Q2 f/c -4.3%, 2.2%-prev
• 23:50 JP GDP QQ Capital Expend. Q2 f/c -3.1%, 7.6%-prev
• 23:50 JP GDP QQ External Demand Q2 f/c 0.8%, -0.3%-prev
• 00:30 AU Consumer Sentiment Aug 1.9%-prev
• 01:30 AU Wage Price Index QQ* Q2 f/c 0.7%, 0.7%-prev
• 01:30 AU Wage Price Index YY* Q2 f/c 2.6%, .6%-prev
• 05:30 CN Urban investment (ytd)yy Jul f/c 17.4%, 17.3%-prev
• 05:30 CN Industrial Output YY Jul f/c 9%, 9.2%-prev
• 05:30 CN Retail Sales YY Jul f/c 12.4%, 12.4%-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events.
