Currency Updates:
AUD/USD Europe erased losses from Asia as the USD’s rally stalled early in their morning. With AUD/USD unable to seriously test the 2014 low shorts began covering. The lift had the pair near 0.8645 as NY got going. NY pressed the rally further right out of the gate as USD/JPY’s slide from it’s high ran intra-day stops through 115.70. AUD/USD’s ascent briefly paused at the 200-HMA and hourly resistance in the 0.8675/80 area. The lift resumed as the greenback’s slide gathered pace. AUD/USD then cleared the 0.8680/90 area where the Nov 10 high, 38.2 Fib of 0.8912-0.8540 and the 10-DMA sat. The break saw stops run and the pair then tested the 0.8720/30 resistance zone late in the day. Little pullback was seen as the pair sat just below that zone late in the day. Westpac’s Nov consumer confidence report & Oz Q3 wage index are due. Upbeat readings may see this lift push further. Traders then set their sights on the 0.8760/70 zone where a series of daily highs and the 61.8 Fib of 0.8912-0.8540 sit.
EUR/USD Light short covering took hold in Europe’s morning after USD/JPY’s rally stalled. EUR/USD lifted from the 1.2400 area towards 1.2420 as NY got going. Early NY saw a slight bid but the pair was hemmed as USD/JPY remained near its highs early in NY and EUR/JPY was firm. The short covering resumed though as the USD saw broad based selling as USD/JPY broke key intra-day supports. EUR/USD broke s-t resistance near 1.2450 and cleared the 200-HMA as well. The pair went on to make a 1.2499 high before sellers emerged. USD/JPY bounced off the 115.00 area and this allowed EUR/USD to slip back towards the 200-HMA. Late in the day the pair say just above 1.2480. There is little in the way of major data overnight that might affect EUR/USD so action might be limited until the US bond market reopens on Wednesday. Big data risk towards the end of the week is likely to keep traders on the sidelines as well. Until then the 1.2355/1.2580 range likely holds.
USD/JPY Stories about Abe likely calling for a snap election and also delaying next Oct’s VAT hike gave USD/JPY the punch it needed overnight to print a new, multi-year high of 116.11. But that pair began to diverge from rising EUR/JPY and other yen crosses during the NorAm session as the EUR and higher beta ccys recovered against the USD. Japan’s monthly MOF investment data and the ECB’s weekly balance sheet offered EUR/JPY bulls a leg up, as MOF flows favored EZ core bonds and the ECB’s balance sheet contracted E22bln last week due to faster bank ECB loan repayments than new ABS purchases by the ECB. While these were superficially bullish for EUR/JPY, lifting it to a new high of 144.34, both EUR/JPY and USD/JPY came in for corrections toward the end of the NY holiday-thinned session. AUD/JPY surged to 100.47 and looks headed for 100.6/7, where recent & L-T Fibo targets coexist. All eyes are on Japan’s GDP report on Monday as possible trigger for official confirmation of Abe’s snap election and tax hike plans. Data calendar in Japan, EU and US heats up again the last two days of this week.
Looking Ahead – Economic Data (GMT)
• 23:30 AU Consumer Sentiment Nov 0.90%-prev
• 00:30 AU Wage Price Index QQ* Q3 f/c 0.60%, 0.60%-prev
• 00:30 AU Wage Price Index YY* Q3 f/c 0.03, 2.60%-prev
Looking Ahead – Events, Other Releases (GMT)
• 23:10 NZ RBNZ Governor at Parliament Finance Committee
