Currency Updates:
AUD/USD The pair held a tight 0.8660/84 range in Europe’s morning with the pair spending most of that time near the upper limit. Offers in the 0.8685/00 zone adn near the 200-HMA capped the topside. A rebound for the USD saw the pair slide into NY’s open and sit near 0.8665. NY added pressure immediately as the USD stayed firm and US yields staged a comeback from Friday’s losses. A steady descent ensued with a brief pause at hourly support near 0.8640. The pace of the US yield lift accelerated and another leg lower for AUD/USD took hold. The slide went on to test hourly support in the 0.8605/10 area and sat within that zone late in the day. Oz Q3 house price index and NAB’s Oct business confidence/conditions data are due later. Soft data will likely weigh on AUD and we might see Friday’s low retested.
EUR/USD A lift late in Europe’s morning saw the pair test above 1.2500. Asian offers and the 200-HMA were too much to overcome though as the pair halted at 1.2509.The USD’s slide initiated Friday began showing some signs of faltering as the market decided the greenback looked a bit cheap. EUR/USD slid from the high and sat near 1.2485 in early NY. Bear pressure was immediately applied in NY as the USD lift accelerated. Hourly support near 1.2470 was tested but it couldn’t hold for long. Yields on US bonds reversed course and clawed back much of Friday’s losses. EUR/USD broke the support and accelerated lower. A slump in commodity prices likely added to the pair’s woes. The pair eventually tested hourly support near 1.2415/20 in NY’s afternoon before the slide halted. Very little bounce was seen though as the pair sat just above 1.2420 late in the day. Action may be limited as there is little data due and US celebrates Veterans’ Day tomorrow. The pair may remain range bound until European inflation reports on Thursday and German & EZ Q3 GDP and US retail sales data on Friday.
USD/JPY Long USD profit-taking in the wake of Fri’s NFP report ran out of steam in London today, in part because the USD/JPY pullback from Fri’s 115.60 peak to today’s 113.86 low gave traders a chance to buy at last Wed’s levels. In the post QQE2/GPIF world, and with no serious change in the Fed outlook, that was all macros needed to scoop up the ltd dip below 114. Bidding was steady and CTA led in NY, driving prices into, and eventually through the hourly Cloud in the 114.80s. Yield spreads & N225 gains are providing the fundamental lift. There was a Nikkei story out in the NY afternoon about possible continuing dissent at the BOJ re QQE2, but it looks unlikely this group will be able to reverse the new easing. Kuroda has a core cadre of QQE believers and is likely to get another one next summer when one of the committee members is replaced. At any rate, it would be a spectacularly slap in Kuroda’s face to not give QQE2 at least a few qtrs to either sink or swim. Japan has Trade, C/A, & Consumer Confidence releases tonight. There’s a US holiday Tuesday. The path of least resistance is higher for USD/JPY and the crosses.
Looking Ahead – Economic Data (GMT)
• 00:30 AU NAB Business Conditions Oct 1-prev
• 00:30 AU NAB Business Confidence Oct 5-prev
• 00:30 AU Home Price Index* Q3 f/c 1.5%, 1.80%-prev
• 21:45 NZ Electronic Card Retail Sales mth Oct -0.10%-prev
• 21:45 NZ Elec Card Retail Sales YY* Oct 5.40% -prev
• 21:00 NZ REINZ HPI MM* Oct 0.20%-prev
• 21:00 NZ REINZ HPI Year Ago* Oct 4.10%-prev
• 23:50 JP Bank Lending YY Oct 2.30%-prev
• 23:50 JP Current Account NSA JPY* Sep f/c 534.2b, 287.1b-prev
• 05:00 JP Consumer Confid. Index* Oct 39.9-prev
• 06:00 JP Economy Watchers Poll* Oct 47.4-prev
Looking Ahead – Events, Other Releases (GMT)
00:10 AU RBA’s Aymler Speech at Securitization Conference
