Currency Updates:
AUD/USD opened on Tuesday at 0.9283 and traded a moderate 0.9253-88 range in Asia; last at 0.9264. AUD/USD after falling 1.0% on Monday and closing in NY just off its low continued to struggle in Asia. AUD/USD saw some light exporter buying interest during the morning session before softer than previous NAB Business Confidence data pushed the pair to a session low of 0.9373. That low proved short lived once USD/JPY burst through 106.25. AUD/USD followed in kind making a fresh intraday low of 0.9253 after light stops were tripped below 0.9260. The bounce so far has been anemic so look for a test of key support around 0.9230/40 during the London session. There were plenty of reasons put forward this morning to substantiate the overnight moves but it seems more simply a continuation of broad based US Dollar strength. AUD/USD played catch-up after being left reasonably unscathed last week. The leveraged and real money crowd had the last laugh overnight denting the AUD’s seemingly ‘Teflon” coating. AUD is now also under pressure on the crosses with EUR, GBP and NZD set to regain some lost ground.
EUR/USD opened NYC 1.2889, chopped 1.2874/1.2908 for a while with stealth real money offers sating demand out of Europe for a while. A reserve manager came in, started lifting EUR/CAD, sparked some macro buying in EUR/AUD and a general liquidation of short EUR/ commodity bloc currency posis. EUR/GBP and EUR/JPY were also well bid albeit Carney comments re an earlier BoE rate hike than f/c Sterling Briefing stalled the GBP cross. Ahead of the 4.00 PM London fix EUR/USD surged to 1.2919 and after US 10-Yr yields topped out, there was a steady grind higher to 1.2927 NY session highs. EUR/USD closed 1.2926
USD/JPY Despite the protestations by Japan’s Econ & Fin Mins that the pace of the yen’s fall should be less volatile, it’s clear neither the Abe govt nor the BOJ are interested in talking the yen back up. They don’t want to be perceived as cheerleading its retreat is all. In any event, judging by comments from Japan Inc reps, the speed of the USD/JPY rise this year has in fact taken many of them by surprise, particularly importers. Exporters are feeling less compelled to sell into rallies, instead holding off as much as possible and until signs of meaningful top develop. Below f/c Japanese economic data have extended into Q3, the qtr Abe says will be key for assessing whether to hike taxes again next Oct. As to resistance, the TL drawn across the May ’13 & Jan ’14 highs is at 107.36 last, though most trade recs we’ve seen from banks are looking for 108-110. USD-JPY 2-yr yield spreads continue to drive the pair higher, even while the Nikkei lags. EUR/JPY rebounded to its daily Cloud base at 137.52 after running stops above 137.05 hurdles. Cloud top at 138.18 is key on a closing basis. EM & commodity crosses were widely hit. PPI & Machine Ords tonight.
Looking Ahead – Economic Data (GMT)
• : CN M2 Money Supply YY* Aug f/c 13.4%, 13.5%-prev
• : CN New Yuan Loans* Aug f/c 700.0b, 385.2b-prev
• : CN Outstanding Loan Growth* Aug f/c 13.2%, 13.4%-prev
• 23:50 JP Corp Goods Price MM* Aug f/c 0%, 0.3%-prev
• 23:50 JP Corp Goods Price YY* Aug f/c 4.1%, 4.3%-prev
• 23:50 JP Machinery Orders MM* Jul f/c 4%, 8.8%-prev
• 23:50 JP Machinery Orders YY* Jul f/c 0.6%, -3%-prev
• 22:00 NZ REINZ HPI MM* Aug -0.7%-prev
• 22:00 NZ REINZ HPI Year Ago* Aug 5.9%-prev
• 00:30 AU Consumer Sentiment Sep 3.8%-prev
Looking Ahead – Events, Other Releases (GMT)
• 05:00 JP BOJ Deputy Gov Iwata speaks at news conference in Kanazawa
