Currency Updates:
AUD/USD Europe erased Asia’s gains and had AUD/USD dip to 0.8718 before it bounced near 0.8740 into NY’s open. Early NY saw some USD weakness and risk sentiment shift up a bit. This allowed AUD/USD to rally but the lift stalled short of the 200-HMA as it could only reach 0.8754. The USD reversed course and aided a push back near 0.8720. The pair lingered near that level for most of NY’s afternoon but bears pushed harder. A hard hit to WTI, a give back for a good part of equity gains and JPY strength softened risk sentiment. AUD/USD & AUD/JPY traded lower. AUD/USD dipped towards 0.8700 while AUD/JPY dived from near 93.45 towards 93.05. Little bounce was seen and AUD/USD sat near 0.8705 late in the day while AUD/JPY sat just off its low. Trades now look to Westpac’s Oct consumer confidence data and China’s Sep CPI & PPI readings. Soft results for hose data points should have AUD trading heavy in Asia.
EUR/USD Europe pushed EUR/USD below the 200-HMA and hit 1.2640 as sour risk sentiment took hold. The pair hit a 1.2640 low as EUR/JPY’s plunge from 136.25 to 135.04 weighed. An upward shift in risk sentiment weakened JPY a bit and lifted stocks. EUR/JPY bounced to 135.70. EUR/USD got only a slight lift and neared hourly resistance at 1.2680. The bounces faded though as US equity markets slid from their highs and gave back a good part of their gains. EUR/USD slid back near 1.2740 and EUR/JPY slipped towards 135.25. Both pairs sat near those levels late in the day. Traders now turn their focus to September inflation readings from China and Germany. China releases CPI & PPI while Germany gives the mkt CPI & HICP. Should the results come in soft EUR likely gets hit as deflation fears will increase. EUR/USD is then likely to run stops touted below 1.2600 and we’ll then see the 2014 low back in play.
USD/JPY traded almost purely as a derivative of the S&P during the NYC time slot, lagging well behind other dollar pairs as yen remained in demand, especially on the crosses against EUR, GBP and AUD. All three crosses are at or near the lows of the move and reflect wariness about the state of carry trades despite the feeble attempt of major stock markets to bounce. The early London highs at 107.30-35 will serve as a pivot point with yen bulls determined to use the ongoing weakness in the Nikkei to press their advantage. USDJPY 106.80-107.00 represents the 40 dma (106.88) and the liftoff point for the pair after the Fed’s Sep 17 meeting and is a key hold for the yen bears.
Looking Ahead – Economic Data (GMT)
• 23:30 AU Consumer Sentiment Oct -4.6%-prev
• 0:30 AU New Motor Vehicle Sales m/m* Sep -1.8%-prev
• 1:30 CN PPI YY* Sep f/c -1.6%, -1.2%-prev
• 1:30 CN CPI YY* Sep f/c 1.7%, 2%-prev
• 1:30 CPI MM* Sep f/c 0.4%, 0.2%-prev
• 4:30 JP Industrial Output Rev* Aug -1.5%-prev
• 4:30 JP Capacity Util Idx Chg MM Aug -0.8%-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
