Currency Updates:
AUD/USD spent the NorAm session slowly dribbling back the gains made after yesterday’s China PMI beat. Specs were sellers against the April highs (.9460) figuring that with Oz interest rates still soft and the Shanghai Index unable to get too far from the critical 2000 level it will take more than one number to change the currency’s fortune significantly. Immediate support rests in the .9390 area, which was the inflection point for the PMI data and the 200 hma (see chart below). Otherwise, the USD remained softer against the other majors as US rates continue to recede, much to the consternation of Wall St. Vol continues to be a killer for the higher rate/higher USD contingent.
EUR/USD opened NYC 1.3586, -15 pips vs Friday night’s close, O/N range 1.3574/1.3614. Soft French PMI undermined the EZ average and dropped EUR/USD to O/N lows. NYC traders had little risk appetite and were content to trade inside Europe’s ranges, 1.3581/1.3604. A plethora of ECB speakers overnight alluded to various QE approaches they may take and basically justified the next actions if and when they are taken. US data was perkier, the Markit PMI at 57.5 vs 56.5 f/c a stark difference to France’s sub- par performance. US existing home sales +4.9% vs +2.2% f/c gave the buck a boost but couldn’t stick, EUR/CAD sales from H/Fs and macro funds putting a lid on EUR/USD. Even a reference from ECB’s Nowotny that part of the ECB’s policy objectives is to limit EUR strength got limited airplay [ID:nIFRccV60d] The German IFO is due tomorrow alongside Swiss trade & Italian wages & trade data. Also, a slew of US housing data, consumer confidence and Richmond Fed idx.
USD/JPY Above-f/c Markit Japan PMI and HSBC China PMI failed to do the Nikkei any favors o/n, leaving USD/JPY struggling until bids by the daily Kijun line and Friday’s low at 101.80-815 were reinforced by a spate of better-than-expected US data and firmer Tsy yields. A Reuters story on Abe’s third arrow announcement due out Tuesday being light on key labor reforms suggests if there is upside for the Nikkei and downside for the yen, it probably will not be from Tuesday’s announcement. Offers remain by the 100-DMA at 102.20. AUD/JPY surged on the China PMI, but gave back most of its gains over the course of the session after this year’s highs couldn’t be removed. GBP/JPY had its first session since June 12 without either a higher high or higher low and looks top-heavy technically and perhaps at some risk if the UK’s FPC on Thur put forth a solid plan to keep the housing bubble under control, thus removing one reason for the MPC to hike rates sooner rather than later. EUR/JPY remains stuck below the 50% Fibo & 200-DMA at 138.90/96.
Looking Ahead – Economic Data (GMT)
• No Significant Data
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
