Currency Updates:
AUD/USD A steady drift up took hold in Europe after the August Westpac confidence data improved. The ascent had AUD/USD near 0.9295 into NY’s open. It held steady near that level in US retail sales. The sales report had no redeeming qualities and the USD dived lower across the board. AUD/USD rallied to a 0.9320 high. Offer touted in the 0.9320/30 area halted the rise. Much of the USD losses post-sale were erased in EUR/USD and USD/JPY. This aided to push AUD/USD away from the high and it steadily drifted lower fro the remainder of the session. Late in the day the pair sat near 0.9305.There is little data in Asia’s session to drive the pair so traders will look to EZ GDP and US weekly claims data for their next cue. For now the recent down trend remain intact. The T-L off the April 2013 high is formidable and the pair continues to hold below the daily cloud and 55-DMA. Only above the 0.9475/80 area will the recent drop be put in doubt.
EUR/USD Europe tried to run the pair through the August 12 low but failed as profit taking from s-t macros halted the drop and a low of 1.3342 was hit. The subsequent bounce had the pair near 1.3365 into NY’s open and the US retail sales data. No silver lining could be found in the miss to the sales data. This buoyed the recent tip by Yellen & co. that US rates won’t be rising too soon in order to avoid harming the US econ. The USD dived down across the board. EUR/USD spike to a 1.3416 high. No further gains were possible though. European RM names and intra-day profit taking stalled the lift. The USD mounted a comeback and all the post-sales gains eroded. EUR/USD dipped to 1.3355 before a bounce in the afternoon had it settle the day just above 1.3365. Trades now look to the EZ HICP final and GDP reports. Should the data come in below expectations EUR/USD is likely to make a serious attempt at taking out 1.3295/1.3325 support. Weak data may prompt added action from the ECB beyond the TLTRO [ID:nIFR9zTqTl]. A break below 1.3295 then eyes support near 1.3100.
USD/JPY Doubts about domestic demand in Japan, lingering concerns about growth in the EZ, a halving of the BOE’s wage growth f/c for this year and a downside miss from US Retail Sales left the mkts with the impression that major CBs will be easier than expected for a while. That was positive enough for risk to keep Nikkei futures gains from o/n intact and to allow a drop in Tsy yields to be largely shrugged off by the USD/JPY. The initial response to poor US RS data was a further pullback from the o/n high at 102.52 (61.8% of the 103.15-101.51 slide) to pre-London lows and the hourly Cloud top in the lower 102.20s. The pair went on to run light stops above 102.52 by midday and then flattened out. Large 102 expiries Thur and offers into and above 103 may dampen trade into the Obon holiday. A daily close above 103 is needed to convince traders there are better odds of the 105.45 Abenomics highs being retested before this year’s lows at 100.68. EUR/JPY’s trying to make an oversold base, but’s so far stuck below the Kijun at 137.25. GBP/JPY’s post BOE dive has yet to break Fri’s low. AUD/JPY’s 200-DMA rebound accelerated. MOF flows & Machine Orders tonight.
Looking Ahead – Economic Data (GMT)
• 22:45 NZ Manufacturing PMI* Jul 53.3-prev
• 22:45 NZ Retail Sales Volumes QQ* Q2 f/c 1%, 0.7%-prev
• 22:45 NZ Retail Qrtly Vs Yr Ago* Q2 f/c 3.4%, 3.4%-prev
• 23:50 JP Foreign Bond Investment w/e 897.4b-prev
• 23:50 JP Foreign Invest JP Stock w/e 94.9b-prev
• 23:50 JP Machinery Orders MM* Jun f/c15.3%, -19.5%-prev
• 23:50 JP Machinery Orders YY* Jun f/c 3.3%, -14.3%-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events.
