Currency Updates:
AUD/USD Europe managed to erase all the post-Oz jobs gains as traders focus more on the soft China and the underlying USD bid due to fears of a more hawkish Fed coming down the pike. Bears pushed the pair towards 0.9120 into NY’s open. NY saw an early dip below 0.9110 rebuffed as weekly jobless claims come in above expectations. The USD softened a bit and AUD/USD rallied near 0.9140. The USD regained its footings though and AUD/USD began sliding again. Leveraged and system names out of NY were steady seller and too on importer bids into 0.9100. The bids held for a while but eventually broke and the pair hit 0.9096. A profit taking bounce into Europe’s close saw the pair near 0.9120 but sellers took hold again and the pair went on to make a new low of 0.9093. The pair sat just above 0.9100 late in the session to keep touted 0.9090 and 0.9070 stops in play for the Asian session. If pressure persists support comes in near the 50% Fib of 0.8660-0.9505 which sits 0.9083 and then further support sits near 0.9050 where option related bids are touted.
EUR/USD Europe squeezed shorts a bit in their morning as they bounced the pair off the 1.2900 area towards 1.2940 before it pulled back near 1.2920 into NY’s open. The USD was soft in early NY and weakened further after jobless claims were worse than f/c. EUR/USD again lifted towards 1.2940. IT broke Europe’s high and cleared Asian offers sitting 1.2940/50 to make a 1.2952 high. No further gains could be made as more solid offering interest sat into 1.2960 as the market is firmly in sell rally mode. The USD mounted a comeback and EUR/USD slipped from the high. Pressure also came from BNP’s lowered year-end EUR/USD f/c to 1.2500 while also noting they have re-entered a short position to target 1.2500. A dip to 1.2920 saw a slight bounce & the pair sat just above 1.2930 late in the day. The pair continues to consolidate recent losses and this bodes well for shorts. The consolidation phase gives oversold techs a chance to unwind. The phase should resolve to the downside once complete. 1..2740 is the immediate target upon resumption of the down trend
USD/JPY In the NorAm session, USD/JPY’s 106.65-107.20 range came on the backs of above-f/c US Jobless Claims, that softened prices, and from BOJ Kuroda’s live appearance on Japanese TV that reiterated the bank’s policy line that the USD/JPY’s rise is due to divergent Fed & BOJ policies. He also said the BOJ’s wouldn’t hesitate to ease further, but he didn’t see the need to do so. And while admitting that econ data have been weaker-than-expected since the Apr tax hike, he said steady progress is being made in meeting their price target. USD/JPY rallied to 107.20 session highs after his appearance, but general risk-reduction mood in the market dampened demand. The bottom line is the BOJ is on hold, and either inflation will rise toward their 2% target over time, thus reducing real Japanese yields and weakening the yen, or the BOJ will launch QQE2, which would also be bearish for the yen. 107.36 TL resistance from last year’s highs is in focus heading into Friday’s JPY CU, IP & another Kuroda outing, as well as US Retail Sales. NFP & Claims misses increase scrutiny of other Aug US data into the FOMC next week.
Looking Ahead – Economic Data (GMT)
• 22:45 NZ Manufacturing PMI* Aug 53-prev
• 22:45 NZ Food Price Index* Aug -0.7%-prev
• 4:30 JP Industrial Output Rev* Jul 0.2%-prev
• 4:30 JP Capacity Util Idx Chg MM Jul -3.3%-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
