Currency Updates:
AUD/USD Early Europe saw bears push the pair to a new s-t trend low of 0.9113. Bids ahead of 0.9100 (likely barrier) prevented further losses & light profit taking had the pair near 0.9145 as NY got going. A small dip in early NY met short covering and the pair steadily climbed towards 0.9170. Aiding the rise was broad base EUR sales that saw EUR/AUD slide towards 1.4175/80 support. Late in the day AUD/USD say near 0.9165 as the 200-DMA and 38.2 Fib of 0.8660-0.9505 loomed. The market now awaits the August AU jobs data. Both the employment & U. rate data are f/c to improve. Should the data surprise to the downside bears will emerge and take the pair towards 50 Fib of 0.8660-0.9505. An inline or slight better than f/c number may see only a limited rally as the mkt feels the recent USD still has legs and AUD needs to play catch up to other currencies that bore the brunt of USD strength.
EUR/USD Bears were squeezed in Europe as EUR/USD matched the Sep 8 high (1.2963). The effects of the squeeze faded into NY’s open & sat near 1.2950. The USD was generally bid in early NY and bears erased most of Europe’s rally. Further pressure came after a DJN story ran stating the SNB was open to negative rates. While EUR/CHF spiked up to 1.2119, EUR was sold heavily vs. the other major currencies. EUR/USD slid to a 1.2883 low, EUR/GBP dipped below 0.8000 & EUR/AUD tested near 1.4075/80.EUR/USD tried to rebound above 1.2920 but couldn’t as GBP rallied to 1.6231. This pushed EUR/GBP to a new day low of 0.7954 and saw EUR/USD dip back near 1.2900 late in the session. Traders now look to consumer inflation reports from Germany and France tomorrow. The data could have added impact after ECB’s Mersch noted that QE style govt bond buys would only come under two conditions with one of them being inflation remaining at current low levels for too long. Weak CPIs may see 1.2850 break & the door to 1.2740 open.
USD/JPY The yen was sold far and wide Wed, but it was particularly punished by the pound and the CAD, but not the other two commonwealth currencies down under. More Tsy yield gains, below-f/c Japanese data and BOJ’s Iwata downplaying the net impact of yen weakness and a catch-up rally in the Nikkei o/n have USD/JPY nearing 107, with the up TL off the May ’13 & Jan ’14 highs a tech hurdle at 107.36, though 108.04, the Sept 19, 2008 rebound high, is the next historical hurdle and closer to some IB targets. CAD/JPY cleared the dn TL from ’13 high, a 76.4% of the preceding ’14 range and the top of a rising channel begun in March in the 97.12-26 range today. USD/CAD fell back after only fleetingly clearing its 61.8% hurdle at 1.1027 on Tues and despite yet another thrashing in oil prices amid a Saudi production cut announcement. EUR/JPY again breached the daily Cloud top, but won’t close above it. Beyond yen weakness and a touch of EUR p/t, there may be some betting EZ fiscal policy will ease enough to take some of the pressure of the ECB. Mersch noted w govt rates already this low QE might not do much good.
Looking Ahead – Economic Data (GMT)
• 23:50 JP Foreign JP Fgn Bond Inv w/e 503.7b-prev
• 23:50 JP Foreign Invest JP Stock w/e -110.7b-prev
• 23:50 JP Business Survey Index* Q3 -13.9-prev
• 01:30 AU Employment* Aug f/c 12000, -300-prev
• 01:30 AU Full Time Employment* Aug 14500-prev
• 01:30 AU Participation Rate* Aug f/c 64.8%, 64.8%-prev
• 01:30 AU Unemployment Rate* Aug f/c 6.3%, 6.4%-prev
• 01:30 CN PPI YY* Aug f/c -1.1%, -0.9%-prev
• 01:30 CN CPI YY* Aug f/c 2.2%, 2.3%-prev
• 01:30 CN CPI MM* Aug f/c 0.4%, 0.1%-prev
• 22:45 NZ Manufacturing PMI* Aug 53-prev
• 22:45 NZ Food Price Index* Aug -0.7%-prev
Looking Ahead – Events, Other Releases (GMT)
• 21:00 NZ RBNZ announces Monetary Policy Statement & OCR
