Currency Updates:
AUD/USD Europe saw bears cover shorts after the break of 0.8550 failed to see substantial follow through. The squeeze saw the pair just below 0.8600 into NY’s open and the US jobs report. The headline miss to NFP spiked USD lower. AUD/USD hit 0.8635 in no time but the gains were quickly erased as the revisions to prior jobs data were upbeat. AUD/USD dived down to 0.8567 but broad based USD weakness stopped the slide. US bond yields were soft after the data and their slides began to deepen. AUD/USD then spent the remainder of NY’s session ascending to the post-NFP spike high. A wave of USD selling hit the market late in the afternoon. AUD/USD ran stops above 0.8640 to hit a 0.8658 high. A slight pullback had the pair just below 0.8640 late in the day. Technicals flash warnings to bears. Daily RSI diverged on the new trend low and a bullish engulfing candle formed. A bigger short squeeze may be due. If China’s econ reports (Oct trade & inflation data) due at the start of next week show topside surprises recent AUD bears may run for the exits. the l-t trend still remains lower though. Above 0.8912 may dent the l-t slide
EUR/USD Some USD long unwinds took hold in Europe. EUR/USD lifted from the 1.2375 area to sit just below 1.2400 into the US jobs report. Algos sent EUR/USD on a wild ride after the headline NFP missed forecasts. The pair initially spiked up to 1.2443. Asian sellers capped the move and the pair quickly reversed as the market saw revisions were upbeat. The pair gave back all the gains and the Asian names bought the shorts back near 1.2380. Bear pressure persisted a bit though and a NY low of 1.2358 was hit. US bond yield got hit after the data and their slide deepened. Broad based bear pressure on the USD took hold. EUR/USD made several attempts to clear the reaction high. Several of them failed but the pullbacks became more & more shallow. With US yields unable to mount a comeback a large wave of USD sales hit the market. EUR/USD ran stops above 1.2450 and hit a 1.2470 high. A bounce for the USD saw the pair pullback and it sat near 1.2440 late in the day. there is little data early next week but thing might heat up later as several EZ nations see Oct CPI and the EZ releases Q3 GDP.
USD/JPY The USD grudgingly rolled over, succumbing to the pressure of sharply lower US rates and a key reversal higher in Gold after Non-Farm Payrolls missed expectations. USDJPY will still finish up with the highest weekly close in 7 years but near term it’s run, and that of the Nikkei, look tired. Yesterday’s key reversal in EURJPY gave the bears something to lean against and they pressed their advantage throughout the session, triggering some stops on a break of the hourly trendline at 114.60. Ditto the Nikkei (futures) which are almost 5% off intraday highs and at the lows of the past 3 days. As of this writing, the real panic spot under Thursday’s low at 114.06 looks safe but you never know
Looking Ahead – Economic Data (GMT)
• 02:00 (Nov 8) CNY Oct Trade Balance f/c USD42bln prev USD30.96bln
• 02:00 (Nov 8) CNY Oct Exports y/y f/c 10.6% prev 15.3%
• 02:00 (Nov 8) CNY Oct Imports y/y f/c 5.5% prev 7.1%
• 23:50 JPY Oct Foreign Reserves no f/c prev $1264.40bln
• 00:30 AUD Sep Investment Housing Finance no f/c prev -0.10%
• 00:30 AUD Sep Housing Finance f/c -1.0% prev -0.90%
• N/A CNY Oct New yuan loans f/c CNY650 bln prev CNY857.2 bln
• 01:30 CNY Oct CPI m/m f/c 0.10% prev 0.50%
• 01:30 CNY Oct CPI y/y f/c 1.6% prev 1.6%
• 01:30 CNY Oct PPI y/y f/c -2.0% prev -1.8%
Looking Ahead – Events, Other Releases (GMT)
• No major events scheduled
