Currency Updates:
AUD/USD Europe bought a dip from Asia’s high. Buyers emerged at s-t support near 0.9330 and they lifted the pair to have it near 0.9345 into NY’s open. NY pushed the lift further after the ECB cut rates. EUR/AUD dived from above 1.4060 to sub-1.3950 levels. Draghi’s presser added more pressure to the cross and sub-1.3850 levels were hit. This price action saw AUD/USD driven up to a new high of 0.9393. EUR/AUD’s slide pressed a bit further and neared 1.3802 with it eventually settling near 1.3835. AUD/USD was unable to benefit though as above f/c US non-Mfg ISM rallied US bond yields and the USD. A steady drift lower took hold and most of NY’s gains were erased as 0.9343 was hit. Little bounce was seen as US equity mkts turned heavy. AUD/USD sat below the 55-DMA and daily cloud base and near 0.9350 late in the day. The US jobs report is now the main focus. The NFP and unemployment rate are expected to improve. Should they beat substantially AUD/USD is likely to trade heavy and today’s 0.9393 high may denote a short-term high for the pair.
EUR/USD Tight ranges held in Europe as the pair consolidated losses before the US jobs report. EUR/USD sat ~1.2950 pre-data. The NFP missed as only 142k jobs were created vs. 225k f/c . US yields slipped and the USD dropped across the board. Model accounts covered short EUR/USD positions a 1.2990 high was hit. Offers into 1.3000 capped & the pair began slipping. Traders began to think the jobs report was likely a one-off blip & won’t change the Fed’s current course of ending asset buys. RM & sov selling entered the market and the pair dipped back below 1.2950 even as US bond yields weren’t far from the day’s lows. Late in the day the pair sat just above 1.2955. Next week presents a light data calendar for the US and EZ so consolidation may dominate for the first half of the week. August CPI figures for many EZ nations are due Thursday & Friday and might impact EUR/USD especially if they are below f/c. Technically the outlook remains bearish as the pair closes below the 50% Fib of 1.2042-1.3995 & the late-July 13 low while weekly RSI’s bias remains down. A move through 1.2900 opens the door to a test of 1.2740/90 support.
USD/JPY There was no danger of the o/n high at 105.71 being retest in NorAm trading after NFP missed badly. USD/JPY fell to the up TL off the Aug 28 lows, then at 104.68, before recovering beyond 105 as the shock of NFPs wore off and the drop in yields helped revive Nikkei futures. Most of the Street is reserving judgment on whether the Jobs report marks more than an overdue correction in that series’ recently hot run. By day’s end, the long end of the Tsy curve had steepened again, while short yields nursed a minor slide. By breaching the 61.8% of the ’07-’12 slide at 105.49 today, the technical door has been opened for higher prices medium-term. It’s clear there was more hedging done against downside USD/JPY risk than upside and the mkt, particularly importers, are playing catch-up. NFP’s inject S-T insecurity for a mkt heavily spec long, but calls for 108-110 from banks don’t look out of line, particularly if the BOJ is willing to trade more QE for another consumption tax hike. EUR/JPY nearly retested its 135.73 trend lows after the NFPs hurt USD/JPY. CAD/JPY neared several key hurdles near 97 o/n. Soft CAD jobs data reversed post high slide.
Looking Ahead – Economic Data (GMT)
• 22:45 NZ Manufacturing Sales* Q2 0.5%-prev
• 23:50 JP Bank Lending YY Aug 2.2%-prev
• 23:50 JP Current Acct NSA JPY* Jul f/c 444.2b, -399.1b-prev
• 23:50 JP GDP Rev QQ Annualised* Q2 f/c -7%, -6.8%-prev
• 23:50 JP GDP Revised QQ* Q2 f/c -1.8%, -1.7%-prev
• 23:50 JP GDP Cap Ex Rev QQ* Q2 f/c-3.5%, -2.5%-prev
• 23:50 JP GDP QQ Pvt Cons Rev Q2 -5%-prev
• 23:50 JP GDP QQ Ext Demand* Q2 1.1%-prev
• 01:30 AU ANZ Newspaper Job Ads Aug -2.8%-prev
• 01:30 AU ANZ Internet Job Ads Aug 0.4%-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
