Risk aversion dominate the Asian markets as major indices open sharply lower following selloff in US equities. At the time of writing, Nikkei is trading down -1.5%, Hong Kong HSI down -2.5%, Shanghai SSE (LON:SSE) down -1.6%. Traders are getting nervous ahead of speech of Fed governor Lael Brainard in Chicago today, at 17:00 GMT. Brainard is seen by many as the most dovish member of FOMC. And there are speculations that even she will signal that Fed is ready to hike interest rate again. And that would be a strong signal that Fed would surprise the markets by a rate hike in the September 20/21 meeting.
BoE and SNB will meet this week and no change is expected from both central banks. UK data, including CPI, jobs and retail sales will be closely watched. Sterling has been supported, in particular in crosses, by a string of strong economic data and there might be renewed buying this week. It's also an important week for Aussie as employment data and some China data will be featured. A batch of US data will also be closely watched including retail sales and CPI. Here are some highlights for the week ahead:
- Tuesday: Japan BSI manufacturing; China industrial production, retail sales; Australia NAB business confidence; Swiss PPI; UK CPI, PPI; German ZEW
- Wednesday: UK job data; Swiss ZEW expectations; Eurozone industrial production; US import prices
- Thursday: New Zealand GDP; Australia employment; SNB rate decision; BoE rate decision, UK retail sales; Eurozone CPI final, trade balance; US retail sales, PPI, Philly Fed survey, Empire state manufacturing, industrial production, business inventories
- Friday: Canada manufacturing sales; US CPI, U of Michigan sentiment
Sterling has been the strongest major currency this month while Aussie is one of the weakest. This could be seen in the rebound in GBP/AUD. Bullish convergence condition in daily MACD suggests that 1.6721 could be a medium term bottom. The cross is now at a juncture as it pressing 55 days EMA. Also, it's pressing neckline resistance of a head and should bottom pattern. Sustained trading above 55 days EMA (now at 1.7638) will confirm near term reversal and should at least target 38.2% retracement of 2.0535 to 1.6721 at 1.8178.
