Currency Updates:
AUD/USD The pair held to a tight but choppy range (0.8766/0.8816) for the NY session. NY walked in with the pair sitting just above 0.8800. An early bout of USD strength brought on by the above f/c headline CPI number had AUD/USD slip to the low of the range. The dip was bought though as AUD buys in the crosses ensued. EUR/AUD’s break below 1.4430 support towards 1.4365 and AUD/JPY rally above 94.50 aided to push AUD/USD to the day’s high of 0.8816. Risk soured in NY’s afternoon as stocks turned heavy. JPY caught a bid and AUD/JPY slid towards 94.00. AUD/USD was dragged lower. Late in the day AUD/USD sat just below 0.8785. A speech by the RBA’s Stevens, NAB Q3 Business Confidence and China’s Oct HSBC mfg PMI are the risks for the Asia session. Stevens is likely to harp on AUD strength so he’ll likely have little impact. IF the data points are soft AUD/USD likely slides lower and a test of s-t support near 0.8735 might ensue.
EUR/USD Europe pushed EUR/USD from the day’s high (1.2740) to 1.2681 ahead of NY’s open on HF sales and a report from EFE that 11 banks will fail the stress test. The pair bounced a bid off the low & sat near 1.2690 as NY got going. NY lifted the pair as the ECB released a statement saying media reports on the tests outcome are by their nature highly speculative. EUR/USD rallied towards the 200-HMA but fell short as it could only reach 1.2728. The lift began to fade. The pair’s slide picked up its pace after US CPI headline data came in above forecasts. A quick dive to 1.2660 ensued. Some consolidation took hold but the limited bounces met selling pressure. Risk sentiment soured in NY’s afternoon as stocks erased all earlier gains and turned negative on the day. EUR/USD slid with risk and hit a new low of 1.2642. Very little bounce was seen and the pair sat just above 1.2645 late in the day. Economic data presents the next risks for EUR/USD. China’s Oct HSBC Mfg PMI and numerous EZ PMIs are due. Soft results should weigh on EUR further. Daily lows in the 1.2585/1.2625 zone may then get tested. Breaks of those lows puts the 2014 low back in play
USD/JPY Cross-currents affected the yen pairs today: USD strength and increased intraday derisking chief among them. A broadly stronger USD and some firming on the USD/JPY technical front gave that pair a lift to 107.38, a tick below Monday’s high that offers were placed by. Macros were doing the bulk of the buying, largely on the CB balance sheet play, but risk-driven traders covered some yen shorts amid the attack in Ottawa and a fresh tumble in crude prices after another big build in US inventories. The N225 futures ceded some of their intraday gains and US stocks went from decent gains to losses. Tsy yields were pretty steady with today’s CPI report not changing the Fed outlook. USD/JPY traded wholly above is daily Tenkan line (106.67) for the first time since Sept 30, while the daily Cloud top rises, Thur to 106.23. Beyond offers at 106.40-50, key tech resistance is by the daily Kijun & 50% of 110.09-105.20 at 107.64. One-month vols off again today as something a stalemate between the re and de-risking camps is waged. EUR/JPY and most other yen crosses struggled as risk receded during NorAm trading. Oct Markit PMI is out tonight w weekly flows.
Looking Ahead – Economic Data (GMT)
• 21:45 NZ CPI QQ* Q3 f/c 0.5%, 0.3%-prev
• 21:45 NZ CPI YY* Q3 f/c 1.3%, 1.6%-prev
• 23:50 JP Foreign Bond Investment w/e 796.0b-prev
• 23:50 JP Foreign Invest JP Stock w/e -254.3b-prev
• 01:35 JP Manufacturing PMI Flash Oct 51.7-prev
• 01:45 CN HSBC Mfg PMI Flash Oct f/c 50.3, 50.2-prev
Looking Ahead – Events, Other Releases (GMT)
• 20:00 NZ RBNZ’s Wheeler Speaks at BIS Conference
• 21:00 AU RBA’s Stevens Speech at Payments
• 00:00 NZ RBNZ’s Head Of Prudential Supervision Toby Fiennes Speaks
