Currency Updates:
AUD/USD Europe added to losses from Asia as concerns about EZ banks had risk assets trading heavy. Bears pushed the pair to hourly support near 0.9355/60 and the pair sat just above that level as NY got going. It looked as if another run at the support would take hold in NY as US bond yields sank and JPY was bid across the board on safe haven bets. AUD/USD managed to hold above the 0.9361 low though. The pair then began a slow ascent after US stocks opened near their lows and steadily climbed while US bond yield took back much of their earlier losses. AUD/USD test s-t resistance ahead of the 200-HMA (0.9400) and hit a NY high of 0.9394. It sat near that level late in the day to leave the pair down near 0.25% on the day. Techs are flashing some warnings for recent longs. Daily RSI turns lower again, a bearish engulfing candle is in place on daily charts and a long upper wick forms on the weekly candle. With risk aversion upped we may see recent longs unwind going into the weekend. A test of key support in the 0.9320/40 zone may take hold. If that breaks the 200-DMA is the next bear target.
EUR/USD Weak econ data from France & Italy added to concerns over EZ banks and rising EZ peripheral bond yields. Bears pushed EUR/USD from Europe’s 1.3651 high and had it near 1.3625 as NY got going. NY added pressure right out of the gate. The appetite for safe haves grew in early NY. US bond yields sank while the USD and the JPY were well bid. The pair pierced the 21-DMA and hit a low of 1.3589. Aiding the slide was US equity mkts opening near their lows. Macro bids in the 1.3580/85 area aided to stem the slide. After a second attempt to break to new lows failed a small bounce ensued and the pair sat just above 1.3600 late in the day. A EUR/JPY rally near 137.90, driven by a recovery in US equity mkts and bond yields, aided EUR/USD’s late day lift. The pair still remained down near 0.30% for the day though and the technical picture has grown a bit more bearish. Daily RSI has rolled over, a bearish outside day candle is in place, the 55-DMA is crossing below the 200-DMA & the daily cloud base has slipped below 1.3670. This may result in a test of June’s low in the near future.
USD/JPY Europe sold risk this morning, as paroxysms on the periphery joined forces with poor Trade data from China & terrible IP reports to send JPY shorts scrambling to cover, particularly on crosses. EUR/JPY ran sell stops below the preceding two days’ lows and then the June lows. 137.50 is the low as we head toward the NY close, but some serious psychological and technical damage is in the offing with the first close below the 233-DMA (138.29) since 2012 and the lowest lows since Feb. EZ stocks pared some of their losses, but peripheral bond yields are near their multi-month highs, along with spreads to the core. A weekly close below the weekly Cloud top at 138.36 is the concern for Friday, with just German CPI to guide prices. USD/JPY pierced its June lows, but doesn’t look as though it will be able to close above the 233-DMA at 101.42, while the weekly Cloud top at 101.57 is at risk Friday. Demand, semi-official or not, was found ahead of 101, staving off a test of crucial supports at 100.76 and 100.62-3. AUD/JPY finally found 100-DMA & Cloud support; NZD/JPY the 21-DMA. USD/JPY vols bounced, RR’s fell, but no clear reversal yet.
Looking Ahead – Economic Data (GMT)
• 22:00 NZ REINZ HPI MM* Jun -1.2%,-prev
• 22:00 NZ REINZ HPI Year Ago* Jun 6.5%,-prev
• 22:45 NZ Food Price Index* Jun 0.6%,-prev
• 23:50 JP Foreign Bond Investment w/e -1051.1b
• 23:50 JP Foreign Invest JP Stock w/e -32.5b
• 01:30 AU Housing Finance* May f/c -1%, 0%,-prev
• 01:30 AU Invest Housing Finance* May 2.3%,-prev
• 03:00 NZ RBNZ Offshore Holdings* Jun 62.8%,-prev
