Currency Updates:
AUD/USD traders continue to show lack of conviction as AUD gets more attention on the crosses. AUD/USD held to basically a 0.8790/0.8820 range for Europe & NY. With AUD bid vs. EUR & USD while being offered vs. NZD & JPY traders feel it’s best to not get overly aggressive taking AUD/USD views. Lack of premier Oz data is also a factor keeping the ranges tight. Tomorrow may see some activity as US data ramps up with Sep durable good and Oct consumer confidence. Then the Fed meeting on Wed is the next big risk. Until then AUD/USD likely sticks to the 0.8720/0.8860 range for now. A break of the broader 0.8640/0.8900 range is likely needed to really wake up the AUD/USD market
EUR/USD The below f/c German IFO numbers pushed EUR/USD lower from near the Asia high and had it near 1.2770 into NY’s open. NY made one early push lower & hit a low of 1.2665 but no further looses could be made. A bounce above 1.2780 took hold then as MNSI quoted ECB sources citing barriers to QE and that need to let old measures work. The sources also noted a GC move in ’14 is unlikely absent a big econ or inflation shit. A few rounds of soft US econ data aided to speed EUR/USD’s lift higher as US bond yields and the USD were heavy. The pair cleared spec offers into 1.2700 and hit a high of 1.2723 and left stops for those specs at 1.2725 untouched. Some profit taking by intra-day longs and stall in the USD’s slide prevented further gains but little pullback from the high was seen. Late in the day the pair sat just above 1.2710. There is no major data due from the EZ so traders will look to the USD side of the equation for direction. Tomorrow’s durable goods & consumer confidence data may ignite some sparks. The Fed meeting Wed. is the next big risk. Short covering until then cannot be ruled out.
USD/JPY General USD softness, a bit of renewed equities selling, and slightly lower Tsy yields amid below f/c econ data du jour dragged USD/JPY below hourly Cloud support by the 107.73 o/n low after the 108 option expiry at 10ET. Light stop-loss selling was triggered and prices eventually breached the daily kijun & prior 50% Fibo at 107.64 for a 107.60 session low. There is general concern that the yen’s retreat last week was just a correction within a broader derisking trend; one that is starting to manifest itself in renewed stocks mkt weakness. This angst is partly being fed by the event risk from the FOMC on Wed and the BOJ meeting Friday; the latter also providing updated econ forecasts that could hint at whether the BOJ will increase or modify its QQE in the coming months. Friday will also bring Japan CPI among several other key economic releases, so traders will be wary of overtrading before then unless the FOMC stir the pot on Wed. ECB stress tests didn’t put to rest the question of deflation risk and what the ECB might end up doing on the QE front to address it. EUR/JPY shed its o/n gains ahead of the NY open, but Fri’s low by 136.50 was untouched.
Looking Ahead – Economic Data (GMT)
• 23:50 JPY Retail Sales YY Sep f/c 0.6%, 1.2%-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
