Market Brief
The Aussie unwinds dominated the overnight trading session. The Australian economy erased 300 jobs in July (vs. +13.2K exp. & 14.9K a month ago according to revised data), the unemployment rate surged from 6.0% to 6.4%. The supportive news was the faster growing construction activity in July (AiG performance index advanced from 51.8 to 52.6) and the sharp drop in part-time jobs (-14.8K) being almost fully counterbalanced by 14.5K jobs added in full time jobs. AUD/USD tumbled down to 0.9263 (at the time of writing) and is likely to extend losses as August support at 0.9275/80 is well broken. The option related bids trail above 0.9250 to give some support. More bids are eyed at 0.9180/0.9209 (200-dma / Fibonacci 50% on Oct’13 – Jan’14 pullback). AUD/NZD trades within the Fibonacci 61.8% and 50.0% levels (1.0911/1.1040) on Oct’ 13 – Jan’14 drop, a breakout in either side should hint for clearer short-term direction.
The Japanese investors’ interest in foreign bonds and stocks increased during the week to August 1st, alongside with higher foreign inflows into Japan bonds. USD/JPY recovered yesterday sell-off (101.78) and bounced back to 101.46 in Tokyo. The sentiment remains marginally bullish with light option barriers at 102.25/50 zone for today expiry. Bids are eyed at 101.78/101.90 (Aug 6th low / Ichimoku cloud top). On a similar pattern, EUR/JPY rebounded from 136.16. A daily close below 136.40 (MACD pivot) should keep the sellers in charge.
EUR/USD extended weakness to 1.3333 (a 9-month low) before the New York open yesterday. The corrective upmove and light profit taking saw resistance pre-1.3400 in Asia. The sentiment in EUR remains bearish pre-ECB/Draghi press conference. Traders’ bets favor a sufficiently dovish tone from Draghi’s monthly speech given the soft inflation threat. If EUR/USD manages to hold ground, a daily close above 1.3333 (yesterday low) is likely to allow some profit taking. Solid resistance is eyed at 1.3475/1.3500 (21-dma /optionality).
The Cable consolidates weakness at about its 100-dma (1.6872). The pair trades in the bearish consolidation zone (below January-July uptrend channel), while trend and momentum indicators hint of lighter selling pressures. The critical short-term support stands at 1.6814 (Aug 1/4th double bottom). The BoE decision is likely to be a non-event.
The BoE and the ECB will give policy verdict today (11:00 GMT and 11:45 GMT) and are expected to keep their respective rates unchanged. The ECB President Draghi will speak at 12:30. The economic calendar consists of German and Spanish June Industrial Production m/m & y/y, French June Trade Balance, Swiss July Foreign Currency Reserves, Spanish June House Transactions, Norwegian June Industrial Production and Manufacturing m/m & y/y, Swedish July Budget Balance, Canadian June Building Permits and July Purchasing Managers Index, US August 2nd Initial Jobless Claims and July 6th Continuing Claims and US June Consumer Credit.
Currency Tech
EURUSD
R 2: 1.3445
R 1: 1.3400
CURRENT: 1.3380
S 1: 1.3333
S 2: 1.3296
GBPUSD
R 2: 1.7000
R 1: 1.6889
CURRENT: 1.6841
S 1: 1.6814
S 2: 1.6738
USDJPY
R 2: 103.09
R 1: 102.50
CURRENT: 102.28
S 1: 101.78
S 2: 101.07
USDCHF
R 2: 0.9156
R 1: 0.9115
CURRENT: 0.9081
S 1: 0.9054
S 2: 0.9035