Currency Updates:
AUD/USD The pair was quiet to start Europe’s morning but it quickly came to life. Stops in AUD/NZD were tripped on the 1.0900 break and a large US name spiked EUR/AUD higher from the 1.4570 area up near 1.4700. This combination saw AUD/USD dive from the 0.8560 area down to 0.8480. Profit taking bids halted the slide and a softer USD then saw the pair lift a bit. NY walked in with the pair near 0.8505. Short covering remained the theme in NY as a steady ascent persisted. The rise saw the pair reach near 0.8555/60 which was the level before the AUD/NZD break. JPY weakness then saw AUD/JPY lift towards 100.70. this kept AUD/USD closer to the NY high late in the day. Aussie Q3 CAPEX is the main risk in Asia. The Reuters poll suggests a drop from Q2’s result is due. A below f/c reading likely sees AUD/USD sink and retest today’s low.
EUR/USD Europe saw a brief spike above the 200-HMA but the gains were quickly erased as JPY strength drove EUR/JPY from the 147.25 area down near 146.50/55. NY walked in with EUR/USD sitting just off the day’s 1.2443 low. Early NY saw above f/c jobless claims and below f/c personal income & personal consumption. US bond yields and the USD sold off. EUR/USD tested Europe’s high before pausing. More below f/c US data hit yields further. EUR/USD then ran stops above 1.2510 and hit a high of 1.2532. Very little pullback was seen though as JPY weakness emerged to send EUR/JPY towards 147.40/45. Late in the day EUR/USD sat near 1.2515. Action in Asia is likely to be limited but may pick up in Europe. German Nov employment data and EZ Nov consumer confidence are due. If the numbers are upbeat, the recent squeeze may have further to go. The November high is then at risk of breaking. IF cleared it suggests a s-t double bottom is in place and a bigger rally may be due
USD/JPY was sideways to modestly lower on softer US data. The big global macro story is the ongoing collapse in interest rates and commodities, neither of which are having much impact on the yen. EURJPY and USDJPY managed to hold their 200 hma but we wouldn’t be surprised to see those break as the Nikkei feedback loop looks to be running out of gas for the time being. Short yen positions are heavy and squaring up in holiday-thinned markets seems to best describe today’s action, with Nikkei futures lower in NYC by 0.2%. All eyes now on Friday’s release of Japanese CPI
Looking Ahead – Economic Data (GMT)
• 21:45 NZ Trade – Imports* Oct 4.96b-prev
• 21:45 NZ Trade Balance* Oct -1350.0m-prev
• 21:45 NZ Trade Balance YY* Oct 0.65b-prev
• 21:45 NZ Trade – Exports* Oct 3.61b-prev
• 00:00 AU HIA New Home Sales m/m Oct 0.00%-prev
• 00:30 AU Capital Expenditure Q3 f/c -1.5%, 1.10%-prev
• 00:30 AU Building Capex* Q3 f/c -2%, 2.00%-prev
• 00:30 AU Plant/Machinery Capex* Q3 f/c -1%, -0.90%-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
