Currency Updates:
AUD/USD The market is still in sell rallies mode as Europe smashed a rally from near 0.9050 to 0.9080 early in their session. the sales pushed the pair just below 0.9045 before a slight bounce saw the pair just above 0.9060 into NY’s open. A minor blip up in early NY met sellers after prior US retail sales data were revised up. The revisions sent US yields and the USD higher. AUD/USD slipped to a new trend low of 0.9030. some USD longs taking profit into Europe’s close saw a lift towards 0.9055 but the pair slid again and sat near 0.9045 late in the day. Bears appear fully in control as the pair sees multiple daily closes below the 200-DMA and closes the week below the 50% Fib of 0.8660-0.9505. Day/week RSIs still give bearish momentum. Although they are o/s there is no divergence. Bears now have their sights on 0.8986/95 (daily lows mid-March) and then the March low at 0.8891. Risks for AUD next week are the RBA minutes Tuesday and the RBA Bulletin and annual report on Thursday. It’s likely those events we again note AUD being too high.
EUR/USD A tight range held in Europe as the mkt contemplated whether short covering into the weekend or further USD strength would reign. The USD was firm but positioning dominated as EUR/USD lifted from 1.2915 & sat near 1.2930 into NY’s open. The short covering persisted in early NY as the pair neared 1.2955/60 but US retail sales data weighed. The headline data met expectations but prior data was revised up. US yield lifted as did the USD. EUR/USD spiked down below 1.2910 but the dip was bought. A steady ascent then saw the highs of Sep 8 & 10 cleared and weak stops above 1.2970 run. The rally extended to the 200-HMA but failed to gain ground as solid offering interest was reported in the 1.29870/90 area. The USD recovered some lost ground and EUR/USD slid towards 1.2940. Late in the day the pair sat just above 1.2945. Bears might get squeezed again early next week. Weekly RSI diverged on the new low and a doji formed on the weekly candle. With such a big drop recently a deeper retracement within the longer-term down trend cannot be ruled out. Above 1.3000 eyes good res near 1.3125/50.
USD/JPY A huge week for USD/JPY bulls is coming to its conclusion with prices pinned again the up TL drawn across last year’s lows, last by 107.40, and at fresh 6-yr highs. US Retail Sales were on target, but July was revised up, but this did little for USD/JPY. Softness in stocks and most of the Tsy yield gains happening out the curve, not within the policy horizon, also helped to limit persistent USD/JPY demand. Talk of profit objectives at 107.40-50, stops above there and more P/T at 108. Bids kept today’s lows close to 107.00 in a week were the pair gained 2.2%. Impressive. Numerous O/B levels are seen, but still no clear tops or bearish divergences. Next week’s Japanese Trade Deficit report will be a key local focus, while the Fed meeting, with its SEPs & Presser will be center stage. EUR/JPY blew beyond its 38.2% of the Mar-Aug slide at 138.81 after clearing the 100-DMA o/n. The advance extended in NorAm trade after EUR/USD cleared its 5-day highs at 1.2963, triggering buy stops. The 233-DMA, 50% Fibo & 200-DMA are the next hurdles, last at 139.26/76/85. Japanese foreign asset buying, BOJ QQE & trade deficits are the main yen drags.
Looking Ahead – Economic Data (GMT)
• Sat 05:30 CN Urban investment (ytd) yy* Aug f/c 16.9%, 17%-prev
• Sat 05:30 CN Industrial Output YY* Aug f/c 8.8%, 9%-prev
• Sat 05:30 CN Retail Sales YY* Aug f/c 12.1%, 12.2%-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
