Currency Updates:
AUD/USD Bears gently persuaded AUD/USD lower in their session as the USD was generally firm. They pushed form 0.9390 and had it near 0.9365 as NY got going. ADP missed estimates and allowed a small bounce for the pair but it was quickly wiped out after GDP saw a big upside surprise. US bond yield and the USD were solid and remained so into Europe’s close. AUD/USD dropped post-GDP and hit 0.9309 before a small bounce had it near 0.9320 into the Fed. Post-Fed saw a knee-jerk spike down as algo grabbed onto the Fed’s notes on inflation. A new trend low of 0.9301 was hit but the pair reversed as notes to the Fed remaining accommodative inspired USD bulls to take some profit. AUD/USD lifted to 0.9355 but slipped again late in the day and sat just above 0.9320. Aussie building permits for June are due later and might impact the pair slightly but traders turn most of their focus to more US data tomorrow & Friday. Jobless claims and July PMI are due Thur & NFP is Fri. If those results are solid USD bulls will strike again. AUD/USD’s slide then likely deepens and 0.9185/0.9200 is eyed.
EUR/USD Steady bullish USD pressure saw Europe crack the 1.3400 barrier. Downside follow through was limited as the pair bounced off 1.3394 and sat near 1.3400 into NY’s open. Tight ranges held even after ADP’s miss saw only a limited lift. GDP’s big upside surprise woke the mkt from its nap and EUR/USD dived lower. 1.3667 was hit before light position squaring pre-Fed had the pair near 1.3380 into the Fed decision. Post-Fed saw algos go wild. The pair spiked to a new trend low of 1.3366 (aligns near the 50% Fib of 1.2740-1.3395) as the Fed made note of inflation’s likelihood of running persistently below 2% has ‘diminished somewhat’. Those losses were erased quickly as the the Fed also noted labor mkt slack and that they would remain accommodative. A short covering bounce lifted the pair to 1.3405. US yields didn’t give back much of their gains though and the pair slipped towards 1.3390 late in the day. Jobless claims, Chicago PMI and NFP are the next catalysts. Bulls need further robust US data for a break of the 50% Fib and test of the weekly cloud base & Nov low (1.3317 & 1.3295).
USD/JPY An array of barriers, stops and tech hurdles were cleared out above by USD/JPY’s surge in response to much-better-than-expected US GDP data and a sizeable uptick in the Fed’s preferred inflation gauge, the PCE. Mediocre ADP was close enough to f/c to not impeded the Tsy yield & USD surges. USD/JPY ran barriers and stops at/above 102.50 & 103, as well as the May 2 swing high at 103.02. The latter was probed before the FOMC statement creates a brief spasm of buying up to 103.15 session highs, at which point the Fed’s low-for-longer mantra, even after mandates hit, prompted some profit-taking on longs. Traders would feel more comfortable about today’s breakout beyond this year’s downtrend (& reversal of the vol one) going into Friday’s US Jobs report if USD/JPY daily oscillators were not now as overbought as they were when the early April & June price peaks were reached. EUR/JPY ran stops above 137.83, the daily Kijun and 50% of the July slide, for an 137.87 intraday peak. The Fed statement falls roughly into the risk-on folder, but EUR/JPY was already in oversold recovery mode. Poor Japan June IP reinforces the need for BOJ’s QQE
Looking Ahead – Economic Data (GMT)
• 23:50 JP Foreign Bond Inv w/e 116.1b-prev
• 23:50 JP Foreign Invest JP Stock w/e 139.2b-prev
• 01:30 JP Overtime Pay Jun 4%-prev
• 01:30 AU Building Approvals* Jun -2%, 9.9%-prev
• 01:30 AU Import Prices* Q2 -1.3%, 3.2%-prev
• 01:30 AU PVT House Approvals* Jun 0.5%-prev
• 01:30 AU PVT Sector Credit* Jun 0.4%, 0.4%-prev
• 01:30 AU Housing Credit* Jun 0.5%-prev
• 01:30 AU Export Prices* Q2 -4.5%, 3.6%-prev
• 05:00 JP Construction Orders YY Jun 13.7%-prev
• 05:00 JP Housing Starts YY Jun 11.5%, -15%-prev
Looking Ahead – Events, Other Releases (GMT)
• : JP BOJ board member Takahide Kiuchi speaks to business leaders in Kobe.
