Currency Updates:
AUD/USD Europe pushed back against the rally begun in Asia. Offers into the 200-HMA limited gains and the pair slipped towards 0.8725 into NY’s open. It sat near that level ahead of the US econ data as well. The US data had no redeeming qualities about it and that sent US yields and the USD sharply lower. AUD/USD spiked higher and cleared the 21-DMA and Oct 14 high. Weak stops above the latter were run and the pair went on to hit a 0.8860 high. A quick rebound in the USD saw a dip near 0.8775 take hold. A bounce from that level neared 0.8810 but sellers emerged. AUD/JPY’s break below 92.80/90 and AUD/NZD’s break below 1.1030/35 put massive pressure on AUD/USD. The pair dropped to pre-retail sales levels near 0.8715/20. A late day bounce for stocks and some JPY weakness allowed AUD/USD to lift back above the 200-HMA and sit near 0.8770 late in the day. Trades look to the Sep Consumer Inflation expectations as well as RBA Asst. Gov. Debelle’s panel participation at the Thomson Reuters FX Benchmark event for their next cues.
EUR/USD Tight ranges held in Europe as EUR/USD hugged the 200-HMA. The pair sat near 1.2640 into NY’s open & pre-US econ data. Below f/c retail sales, Empire Mfg & PPI rattled risk sentiment. US bond yields & the USD sank like a stone. EUR/USD spiked towards 1.2760. Offers ahead of the Oct 14 high allowed for a slight dip to 1.2735. The dip was bought as USD/JPY ran 106.50 stops & dived to a 105.20 low. EUR/USD spiked higher, pierced the 23.6 Fib of 1.3995-1.25005 & hit a 1.2887 high. A massive rebound in the USD saw much of the secondary spike gains erased & 1.2740/45 tested. More fears of Ebola hit the USD. This coincided with BoE’s Weale sounding a bit dovish. EUR/USD lifted to 1.2815 and was aided by EUR/GBP’s rise to 0.8046. A USD bounce late in the day then had EUR/USD !1.2780 as NY neared the close. Sep EZ CPI may get some play overnight but traders look to US data & numerous Fed speakers for their next cues. Any dovish rhetoric or weak econ data likley sends EUR/USD above 1.2900 and opens the door to big res near 1.3000 .
USD/JPY Big expires at 107.00/20 in NY were no match for USD/JPY selling pressure generated after US Retail Sales, Empire & PPI were all weaker than forecast and another Ebola case was confirmed here. Tsy yields disintegrated. 2-yr Tsy yields were down over 13bp at one point and only 4.3bp from the 2013 low of 20bp. 1-month vols surged to their highest since Feb. Sell stops were run under 106.65/50/00 and 105.50, but macros began an intraday rebound near 105.20 that retraced half the day’s slide before selling resumed. The daily Cloud top will be at 105 Thur to make that level even more pivotal. Talk of Japanese corporates also keen on 105 support holding. N225 futures are down 1.74% at this writing, but are -10.45% on the year in a clear affront to Abenomics. GPIF independence the talk o/n, but global deleveraging is making being long the Nikkei or short the yen a tough call now. A moderate Beige Book and talk of Yellen being reasonably upbeat on the US economy haven’t done much for USD/JPY or risk sentiment. EUR/JPY’s threatening a weekly Cloud break; 135 pivotal. GBP & CAD heavy losers to the yen today. No Japan data tonight.
Looking Ahead – Economic Data (GMT)
• 21:45 NZ Manufacturing PMI* Sep 56.5-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
