Currency Updates:
AUD/USD The pair came under pressure in Europe’s morning and that pressure remained throughout NY. The pair sat near 0.9345 into NY’s open and was hit right out of the gate. the USD was generally firm and commodities were heavy for the most part. AUD/USD pierced the 100-DMA and 200-HMA before briefly pausing only briefly ahead of the Sep 4 daily low at 0.9330. The USD’s rally picked up the pace after USD/JPY broke above 105.30. AUD/USD’s slide resumed and accelerated as US yields sprang to life and USD/JPY broke above 106.00. AUD/USD hit a low of 0.9279 but saw virtually no bounce. Late in the day the pair sat near 0.9285. There is little major data overnight but traders may see AUD impacted by NAB’s Aug. business confidence & conditions report. Soft readings may see AUD/USD’s slide persist as market positioning remains net-long AUD. Support sits at daily lows near 0.9263 and 0.9235. If those give way a test of key 0.9180/0.9203 (200-DMA, 38.2 Fib of 0.8660-0.9505, May low) is likely.
EUR/USD A tight range held for Asia and Europe and the pair sat just above 1.2950 into NY’s open. Some early pressure was put on the pair as it dipped to match the o/n low but no follow through had the market thinking further consolidation would remain. The pair couldn’t gains ground back above 1.2950 though as US bond yields firmed and USD/JPY broke above 105.30 and didn’t look back until it reached a 106.09 high. EUR/USD bears awoke from their slumber and didn’t want to miss an opportunity. The overnight low was broken and the pair then cleared last week’s low. Stops below 1.2920 were run. This lead to the pair making easy work of the 1.2900 level. Bears pushed the pair to a new trend low of 1.2882 before a bounce had the pair just above e1.2905 late in the day. A test of 1.2740/90 support is likely now that 1.2900 has been cleared. L-T charts show little support until that level while weekly RSI still is biased down and DE-US yield spreads continue to go further in the USD’s favor. There is no major data overnight so there is a possibility that stretched positioning may allow the pair to bounce before the l-t bear trend resumes.
USD/JPY More bad Japan econ news today indicates Abe’s resistance to a planned consumption tax rise next Oct is building, as is pressure on the BOJ to lower their growth and inflation f/c and consider QQE2. Q2 and early Q3 Japanese data (more tonight) indicate the hang-over from this April’s tax hike is far worse than expected. Without the BOJ upping the QQE ante, the reflation trend could be at risk. USD/JPY, which had been consolidating its uptrend following soft US NFPs Fri, only got back to 104.86 before resuming the uptrend and making fresh 6-yr highs in NY. Those highs were helped along by a SF Fed research report that concluded the markets are not pricing in all the rate hikes implied by Fed’s forward guidance and seem ill-prepared for a rise in volatility. That and renewed worries about the direction of the Japanese and European economies, this time with a Scottish independence threat kicker, made the USD the default winner. Commodity/EM currencies also got hammered by the USD. 106 barriers and stops beyond remove, and not much else until 108. EUR/JPY capped by Tenkan, Kijun & 50% Fibo. GBP/JPY is finally well below its 200-DMA now.
Looking Ahead – Economic Data (GMT)
• 22:45 NZ Electronic Card Retail Sales mth Aug 0.00%-prev
• 22:45 NZ Elec Card Retail Sales YY* Aug 5.10%-prev
• 01:30 AU NAB Business Conditions Aug 8-prev
• 01:30 AU NAB Business Confidence Aug 11-prev
• 01:30 AU Housing Finance Jul f/c 1.00%, 0.20%-prev
• 01:30 AU Invest Housing Finance* Jul -0.30%-prev
• 05:00 JP Consumer Confid. Index* Aug 41.5-prev
Looking Ahead – Events, Other Releases (GMT)
• 23:50 JP BOJ Aug Meeting Minutes
