Market Brief
The AUD/USD took a dive overnight as the Westpac’s consumer confidence index dropped significantly by 4.6% on month to September. AUD/USD cleared resistance at 0.9200 (Fibonacci 50% on Oct’13 – Jan’14 drop), crossed below and remained capped at its 200-dma (0.9182). The ASX stocks wrote-off 0.66%. Trend and momentum indicators remain comfortably bearish with next support zone eyed at 0.9000/0.9079 (optionality / Fib 38.2% lvl). Despite the broad EUR weakness, EUR/AUD surged more than 1.5% since yesterday. The move is interpreted as short-covering for the moment, triggered by reaction bids from the oversold territories. A daily close above 1.41500/1.41550 (21-dma / MACD pivot) will however suggest a short-term bullish reversal. The AUD/NZD tests the 21-dma (1.1122) on the downside, a significant breakout below the 1.1100/30 area depends on the RBNZ comments tonight.
The RBNZ is expected to keep its official cash rate unchanged at 3.50% while investors foresee one or more rate hikes in Q1, 2015. The Governor Wheeler will likely take advantage of inaction to promote weaker NZD, especially given that the subdued activity on commodity markets weighs on the NZ recovery. NZD/USD rebounded from 0.8224 yesterday. Option barriers trail above 0.8250+ for today expiry.
In the equity markets, the Nikkei index gained 0.25%, unlike other Asian stock markets. Hang Seng lost 1.75%, Shanghai Composite retreated 0.38% (at the time of writing). USD/CNY fell to 6.1293, almost reaching the Fibonacci 38.2% on January-April rally. The Chinese CPI and PPI figures are due tomorrow, if the weak market expectations are met, the Yuan should pare gains on the idea that the PBOC has room to add more stimulus and should do so to contain the strengthening Yuan.
In Japan, the producer prices unexpectedly slowed by 0.2% in month to August (vs. 0.0% exp. & 0.4% revised in July); the PPI y/y retreated to 3.9% (vs. 4.1% exp. & 4.3% last). The post-sales tax hike effects are seemingly not fully accounted by traders. USD/JPY hit a fresh 6-year high of 106.56. The bias remains comfortably positive, with decent option bids likely to keep the downside safe at 105.00/50 area. Exporter offers are presumed pre-107.00. EUR/JPY opened above the 50-dma and traded in the daily Ichimoku cloud cover in Tokyo (137.41-138.13). Offers are tipped towards the cloud top and the 100-dma (138.44).
EUR/USD traded in the tight range of 1.2923/52 in Asia, the sentiment remains negative yet some short-coverings are possible given the oversold conditions (RSI at 23%). The Cable recovered to 1.6152 as the BoE Governor Carney said they are ready to raise or lower rates before the Scots election as needed. EUR/GBP is still subject to 0.80300+ offers. A breakout will shift the resistance zone to 0.80850/0.81000. Given the uncertainties, we remain on sidelines on GBP.
Today, traders watch French 2Q (Final Nonfarm Payrolls q/q, French July Industrial and Manufacturing Production m/m & y/y, Spanish July Industrial Output y/y, Norwegian August CPI m/m 6 y/y and PPI including oil m/m & y/y, US September 5th MBA Mortgage Applications, Canadian 2Q capacity Utilization and the US July Wholesale Inventories and Trade Sales m/m.
Currency Tech
EURUSD
R 2: 1.3110
R 1: 1.2988
CURRENT: 1.2935
S 1: 1.2855
S 2: 1.2662
GBPUSD
R 2: 1.6280
R 1: 1.6233
CURRENT: 1.6136
S 1: 1.6000
S 2: 1.5855
USDJPY
R 2: 108.00
R 1: 107.00
CURRENT: 106.25
S 1: 105.70
S 2: 105.00
USDCHF
R 2: 0.9456
R 1: 0.9385
CURRENT: 0.9346
S 1: 0.9287
S 2: 0.9212