Currency Updates:
AUD/USD Broad based USD strength saw Europe add to losses begun in Asia. Bears pushed AUD/USD from the 0.8720 area towards 0.8610 as NY got going. An early lift towards old support/now resistance near 0.8640 was thwarted as the USD remained firm and commodities couldn’t mount any comeback. AUD/USD broke below the 0.8600 barrier, ran stops and quickly hit a low of 0.8565. A lift back near 0.8600 found sellers and the pair sat just below 0.8575 late in the day. Traders now turn their focus to the Oz Oct jobs report. Should a weak result be printed it’s likely further losses are due. As it stands now the technical picture is growing bearish. The pair has cleanly broken below the 38.2 Fib of 0.4775-1.1081, day /week RSIs provide bear momentum and a bearish outside candle formed today. Should the bear trend persists the May 2010 low near 0.8065 will be a major bear target.
EUR/USD The combination of weak EZ Sep retail sales &Oct services PMI and broad USD strength saw EUR/USD dive below 1.2470 into NY’s open. Early NY saw a lift even as the ADP jobs report saw a topside surprise. USD bulls emerged though as EUR/USD neared 1.2510 & USD/JPY pressed on towards 115.00. EUR/USD gave up the early NY gains & went on to make a NY low of 1.2458 after the ISM non-manufacturing employment came in at its highest since August 2005. The slide couldn’t gather pace though as large option expiries at 1.2500 for later this week and the upcoming ECB meeting & US NFP report kept traders from pushing the pair too far in either direction. A lift back to 1.2500 took hold into Europe’s close. A late day sip then saw the pair near 1.2475 near the end of the session. It’s likely the pair doesn’t stray too far from 1.2500 until Friday. The ECB isn’t expected to make any new moves tomorrow so Friday remains key. With large expiries for that day and the NFP due traders will keep their power dry. A big upside surprise for NFP might see the l-t bear trend resume and the July 2012 low will be eyed.
USD/JPY Well-know spec profit-taking targets by 115 got front-run by nimble traders at 114.85, but USD/JPY remains up almost 1% on the day and pullbacks are being bought into quickly because the BOJ/GPIF stunner on Friday has drastically changed the M-T outlook. The above-f/c ADP was the catalyst for the session high, while the Services ISM later helped to subdue the rebound from the 114.40 morning low. More barriers are seen at 115, with stops above, but trading may become a tad more cautious awaiting the NFPs report Friday. AUD/JPY tumbled after making a marginal new trend high. By contrast, CAD/JPY surged, in part helped by a bounce in oil. GBP/JPY shrugged off a weak Services PMI to nearly close the gap on the 50% retracement of the post GFC dive at 183.96. EUR/JPY gains were more modest due to the ongoing concerns about the region’s economic outlook, debt servicing on the periphery and the ability of the ECB to enact QE in a timely manner. On that score, Thur’s ECB meeting will be watched for any indication the move to buying govt bonds will come sooner rather than too much later. JPY Leading/Coincident Indicators tonight.
Looking Ahead – Economic Data (GMT)
• 00:30 AU Employment* Oct f/c 10.0k, -29.7k-prev
• 00:30 AU Full Time Employment* Oct 21.6k-prev
• 00:30 AU Participation Rate* Oct f/c 64.5%, 64.5%-prev
• 00:30 AU Unemployment Rate* Oct f/c 6.1%, 6.1%-prev
• 01:35 JP Markit/JMMA Comp PMI Oct 52.8-prev
• 01:35 JP Markit Services PMI Oct 52.5-prev
• 05:00 JP Coincident Index Sep 109.8, 108.3-prev
• 05:00 JP Leading Index Sep 105.5, 104.4-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
