Currency Updates:
AUD/USD The pair rallied in Europe as EUR/AUD sales from model accounts gave AUD a bid. AUD/USD rallied near 0.8800 before pulling back towards 0.8780 into NY’s open. Early NY saw risk get a solid boost of Caterpillar’s earning beat and upped forward guidance. AUD/USD followed risk higher and hit a 0.8807 high. The gains faded quickly though as US bond yields and the USD went bid after the US econ data. AUD/USD steadily slid lower, pierced the 200-HMA and hit a NY low of 0.8752. Very little bounce was seen and the pair sat near the low late in the day. There is no major data from Oz until next week so price action for AUD/USD is likely dictated to by the crosses and external factors. NZ September trade data is the risk Asian traders will look at as it may have some impact on AUD/NZD.
EUR/USD The EZ Oct PMI came i above f/c and EUR/USD covered a bit. The rally lifted the pair to a 1.2676 high just ahead of NY’s open. It sat just below that level as NY got going. The rally couldn’t push further. After the worse than f/c jobless claims were reported US bond yields and the USD firmed up as risk sentiment was buoyant. Even EUR/JPY’s rally from the 136.10/15 are to a high of 137.01 couldn’t lift EUR/USD. Instead EUR/USD slid lower for most of the NY session. The pair traded near 1.2630 into Europe’s close. The NY afternoon saw the pair range in the 1.2662//1.2638 range as the USD remained firm and EUR/JPY maintained its bid tone. Late in the day EUR/USD sat just above 1.2650. There is little major EZ data that will impact EUR. German Sep GfK consumer confidence and the UK’s Q3 GDP report are the main risks for EUR traders overnight. Unless there are major surprises to those data points EUR/USD may hold to its recent 1.2625/1.2845 range.
USD/JPY Only the poor Kiwi couldn’t make ground on the yen today amid further unwinding of haven trades (yen sales) from earlier in the month. Japan’s PMI beat o/n set the tone for mostly upbeat data and re-risking, even though the US Markit PMI missed (most other US releases were firmer than f/c). Tsy yields surged with stocks, and lifted USD-JPY yields spreads. A DJ story that the BOJ may view the M-T slide in energy prices as putting downward pressure on Japan’s CPI, perhaps bringing it below 1% temporarily, was another reason for yen sales, but there was plenty of stop-loss and trend-following buying in USD/JPY above 107.64, the daily Kijun & 50% of the 110.09-105.20 slide. Japanese exporter offers into 108 slowed the advance for a bit, but that and the 61.8% Fibo at 108.22 were cleared in time. There’s an ABC measured objective at 108.44. A close above the 108.22 Fibo would suggest a retest of the upper 21-day Bolli by the Oct peak is next. EUR/JPY retested Mon’s 137.00 high, but so far only got 1 pip above it. EZ banks got their AQR results today, and so far we’ve only heard about passes that some feared would be fails. 137.68 is key tech rsst here.
Looking Ahead – Economic Data (GMT)
• 21:45 NZ Trade – Imports* Sep f/c 4.20b, 3.99b-prev
• 21:45 NZ Trade Balance* Sep f/c -700.0m, -472.0m-prev
• 21:45 NZ Trade Balance YY* Sep f/c 1.51b, 2.02b-prev
• 21:45 NZ Trade – Exports* Sep f/c 3.50b, 3.52b-prev
• 01:30 CH China House Prices YY* Sep 0.5%-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
