Currency Updates:
AUD/USD Europe saw an opportunity to sell AUD/USD after AUD/NZD put in an impressive rally overnight. They sold the pair from the 0.9324 high ad had it near 0.9315 as NY got going. NY maintained pressure as the USD firmed up in early NY after bond yields recovered some losses. AUD/USD cleared the 200-Hour MA and then matched Asia’s 0.9289 low. Little bounce was seen and the pair sat near 0.9295 late in the day to leave it off 0.20% for the day. Action may be limited in the overnight session as there is little data or event risk scheduled. Traders will look to US July durable goods orders and August consumer confidence data for their next cues. From a technical point of view it appears downside risks remain. Structural resistance near 0.9330/40 is formidable, the T-L off the April 2013 high is nearby and day/week RSIs have a bearish bias. If US data leads to further USD gains, the May low and 200-DMA should come into focus.
EUR/USD Europe and NY both made feeble attempts to rally EUR/USD off Asia’s low. The bounces were short lived as solid offers camped in the 1.3210/20 zone combined with a broad based USD bid were too much to overcome. A recovery in US bond yields from their lows allowed yield spreads to edge further in the USD’s favor. This aided in keeping bearish pressure on EUR/USD even after a well followed US bank’s tech team cut their EUR/USD short and flipped it to a long position. Late in the day the pair sat just above 1.3190 to se the pair down near 0.35% on the day. The risk of a squeeze does exist as day/week RSIs are o/s. However, they show no signs of diverging on the new trend low, so further losses cannot be ruled out. Big data risk later this week may see profit taking enter the mkt if no additional losses occur soon. The mkt will be keying on the EZ’s August CPI due Friday. A below f/c result should see spreads widen drastically and EUR/USD’s slide accelerate.
USD/JPY The vast majority of the day’s USD/JPY range had already been carved out by the time NY opened. Prices gapped up in Asia to 104.49 before running into offers ahead of 104.50 barriers. From there prices drifted back to NY afternoon lows from Friday (post Yellen and Draghi speeches) by 103.85. A soft US New Home Sales report put a quick end to a muted intraday rebound. Kuroda’s speech Saturday maintained his pledge to forge ahead with QQE for as long as it takes to get wage-driven inflation well established. But with the USD/JPY heavily o/b coming into a holiday-thinned week with ltd data and prices within one yen of this year’s 105.45 peak and 104.59, 61.8% retracement of the pre-post crisis slide, the urge to book some profits while awaiting breakouts above those hurdles is not insignificant. That urge would become more of a purge if prices were to fall below the 100-HMA & hourly Cloud base, last by 103.73. That Cloud base rises to 103.95 tonight, pressing prices to either resume their rise or correct. EUR/JPY was again rejected near the Aug 1 high on ECB QE, IFO & Ukraine concerns. July Corp Service Prices from Japan are out tonight.
Looking Ahead – Economic Data (GMT)
• 22:45 NZ Trade – Imports* Jul f/c 4.50b, 3.95b-prev
• 22:45 NZ Trade Balance MM* Jul f/c -475.0m, 247.0m-prev
• 22:45 NZ Trade Balance YY* Jul f/c 1.49b, 1.20b-prev
• 22:45 NZ Trade – Exports* Jul f/c 3.98b, 4.19b-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
