Currency Updates:
AUD/USD Europe ha the pair hug the 0.8970 area for the most part in their morning as the mkt continued to digest the movement post-FOMC. NY walked in with the pair near 0.8975 and it looked set to consolidate further. Bear took control early on though as jobless claims came in much lower than f/c and the mkt grabbed hold of that data & ignored the poor housing data. US yields rallied and took the USD with them. AUD/USD dived lower & set a new trend low of 0.8927. The losses were quickly reversed though. US yields gave up some ground the the 2yr stalled short of 0.60% and the 10yr held below the 200-DMA again. AUD/USD steadily ascended from he low, took out Europe’s high and hit 0.8997. Some late day USD strength had the pair slip from the high and sit just beneath 0.8980 towards the close. The risk of a s-t squeeze exists. Daily RSI diverged on the new low and a long lower wick forms on today’s candle while yield spreads have widened. While the longer-term trend remains bearish, a retracement of the recent fall may be due.
EUR/USD A healthy bounce off Asia’s low was initially added to in Europe. EUR/USD lifted to 1.2909 but was swatted down on a combination of a weak take up for the initial TLTRO and a L’Opinion report that Moody’s is set to cut France to AA2 from AA1 on Friday. The pair dived down below 1.2870 before rebounding near 1.2885 into NY’s open. NY initially saw bears in control as well below jobless claims trumped weaker housing data. US yields and the USD rallied nicely. EUR/USD dipped to 1.2857. Yields couldn’t maintain the rally though and the US 2 yr gave up all the day’s gains after failing to clear 0.60%. It ended up putting in a bearish shooting star for the day. EUR/USD rallied from the NY low, pierced the 200-HMA & hit a 1.2928 high. A late day USD lift saw a slight pullback & the pair sat near 1.2915 late in the day. There is little major econ data overnight but traders will look to the Scottish vote for EUR/GBP impacts on EUR. Technically EUR/USD looks like it can squeeze higher as daily RSI diverges on the new lows & long lower wicks are in place on the last two weekly candles
USD/JPY One last stab at the 109 barriers came up short in the wake of the 36k drop in Jobless Claims, but even with that news, US short-term rates began to lose altitude and the USD with it. As has been the case for a some time, pullbacks in USD/JPY were limited, this time to 108.60. Nikkei futures retained their gains and are closing in on the Dec 31 Abenomics peak. The Topix already made new highs. The weaker yen will inflate some exporters profits and the value of earnings overseas, but it is unlikely to reverse the established trend of moving production overseas. Regardless, FX markets is mostly focused on CB balance sheet comparisons & nominal yield spreads, which make the JPY a favored short; at least while the broader risk-on flows persist in the majors. 110 is the next target beyond the 109 barriers. EUR/JPY got a fresh lift on the EUR/USD’s post-FOMC recovery, regardless of the weak TLTRO take-up. The cross has cleared its 200-DMA, down TL fm ’13 & 1’4 highs, the weekly Kijun line and the weekly Cloud top, all in the 139.00s. The next historical and tech hurdles are clustered around 141. GBP/JPY is at 6-yr highs into the Scottish vote count.
Looking Ahead – Economic Data (GMT)
• 23:50 JP Foreign Bond Investment w/e 763.6b-prev
• 23:50 JP Foreign Invest JP Stock w/e 187.9b-prev
• 01:00 NZ ANZ Cons Conf Index Sep 125.5-prev
• 01:00 NZ ANZ Cons Conf m/m Sep -5.4%-prev
• 04:30 JP All Industry Act Index m/m Jul f/c 0.0%, -0.4%-prev
• 05:00 JP Coincident Index Jul 109.9-prev
• 05:00 JP Leading Index Jul 106.5-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
