Currency Updates:
AUD/USD Commodity currencies were well bid in Europe’s session and AUD/USD added to gains made during Asia’s session. The pair managed to work into structural resistance and sat near 0.9340 into NY’s open. US bond yields were soft in early NY and the pair’s rally pushed further. Some stops were run through 0.9345 and a high of 0.9352 was made. Offers touted in the 0.9350/75 zone (daily cloud base, 55-DMA, Aug 6 high) capped gains and a broad recovery for the USD saw the pair slip just below 0.9330. Buyers were waiting though and the pair lifted back near 0.9340 late in the day. With little data due until the US jobless claims and GDP reports and global bond yields soft the AUD/USD may push higher still overnight. Daily & weekly RSI provide positive momentum and could aid further gains. A break above 0.9375/0.9400 may see bears throw in the towel and we may see the July high back in play
EUR/USD A tight range held in Europe’s morning with EUR/USD lingering near 1.3190 as the USD and US bond yields were generally soft. Early NY saw a minor recovery for yields and USD. EUR/USD dipped below 1.3170 even as it was announced the ECB selected Black Rock to help develop a plan for ABS buys. The dip was short lived though. A Reuters story quoting unnamed ECB sources stated that new ECB action next week is unlikely unless August’s CPI data show the EZ heading significantly towards deflation. EUR/USD spiked higher as shorts scrambled to cover. The pair cleared 1.3200 and hit a 1.3210 high. Asian sellers stalled the rise and the pair then drifted a bit lower. Late in the day the pair sat just below 1.3200. Traders now turn their focus to German August jobs and inflation data followed by US GDP and jobless claims. Should the German data come in weak the comments by the ECB sources may lose their influence and EUR/USD might then make another try at cracking 1.3150.
USD/JPY The expected qtr-end and overbought consolidation of the USD/JPY uptrend persisted on Wed. Japanese exporter offers were touted by Wed & Tues’s 104.16-17 highs along with light long spec profit-taking in the absence of fresh US news to goose prices higher. Few are willing to take on the 104.50 option barrier that stopped Monday’s rally in its tracks at 104.49, at least not before getting a bead on key Japanese and EZ econ data due out at week’s end. Friday will also bring US regional PMI results for Aug as a leading indicator for those timing Fed policy normalization. A Reuters poll shows the mkt split on whether the BOJ will up QQE this year. Bids are into Tues’s 103.75 low and mixed by Monday’s 103.50 low. 38.2% Fibo & daily Tenkan support are at 103.35/31. Yen crosses were mostly firmer, but Tues’s EM rebound fizzled, while the dollar bloc sizzled, namely CAD, Kiwi and Oz. CAD/JPY surged beyond its weekly Cloud top at 95.90 for a 95.96 high. July’s tries at a weekly closes above the Cloud top failed, so all eyes are on that going into Friday. New low for the week in EUR/JPY below the daily Kijun, but not a close below there yet.
Looking Ahead – Economic Data (GMT)
• 23:50 JP Foreign Bond Investment w/e 659.8b-prev
• 23:50 JP Foreign Invest JP Stock w/e 87.7b-prev
• 01:00 AU HIA New Home Sales m/m Jul 1.2%-prev
• 01:30 AU Capital Expenditure Q2 f/c -0.3%, -4.2%-prev
• 01:30 AU Building Capex* Q2 f/c 0%, -7.4%-prev
• 01:30 AU Plant/Machinery Capex* Q2 f/c -0.7%, 2.8%-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
