Market Brief
The RBNZ maintained its official rate unchanged at 3.50% as expected and hinted for further pause in policy tightening. It has been restated that the NZD remains strong by historical means, at unjustifiable and unsustainable levels. The growth is expected to remain moderate due to tighter policy and subdued commodity markets. Traders still foresee further rate hike in the first half of 2015 as the RBNZ says the “neutral rate” stands around 4.5%. NZD/USD extended weakness to 0.8178 post-RBNZ. Bearish trend momentum strengthens, with large option barriers building at 0.8225+. The key support is placed at 0.8052 (Feb 4th low), level at which the 2014 gains will be fully pared. Selling pressures on the Kiwi should remain walking into September 20th national elections, which may result in new challenges for the RBNZ (CAD-target and pension contribution as additional policy tool). AUD/NZD bounced back to 1.1227, there is room for higher levels as long as the 21-dma support (1.1132) holds.
The Aussie switched position and recorded the highest gains against USD since the session began in Sydney. The surprising employment figures triggered a broad short-covering in the Aussie-complex. The Australian economy added 121’000 jobs in August (14.3K full-time and 106.7K part-time) versus 15K expected (and -0.3K last). The unemployment rate fell from 6.4% to 6.1%, while the participation rate improved from 64.8% to 65.2%. AUD/USD rallied to 0.9218 yet is seemingly having hard time to hold ground at 200-dma on asymmetric full/part-time job ratio. Trend and momentum indicators remain comfortably bearish with next support zone eyed at 0.9000/0.9079 (optionality / Fib 38.2% lvl). EUR/AUD traded below the 21-dma. Yesterday’s close below 1.41500 keeps the bullish trend uncertain at this stage.
The yen extended weakness as in his meeting with the PM Abe, BoJ’s Kuroda pledged to add more monetary stimulus if needed. USD/JPY advanced above 107.00 as Europe walked in. Japanese exporter offers are presumed above 107.00, yet the sentiment remains comfortably bullish. Option bids are solid at 105.50/106.00 to limit downside attempts. EUR/JPY tests the daily Ichimoku cloud top (137.41/138.13). More resistance is eyed pre-138.50 (100-dma & Fib 50.0% on Nov-Dec’13 rally).
EUR/USD consolidates weakness at 1.2897/1.2925. In the absence of news, more short-covering are likely to balance the EUR selling pressures. GBP/USD recovered to weekly opening levels (1.6230) as a new poll suggested that the majority of Scots would vote no for independence. EUR/GBP’s attempt to 0.80660 yesterday triggered sizeable correction. The pair sold-off below the 21-dma (0.79746). Technically, extension and consolidation at 0.79350/500 (MACD pivot / 50-dma) should send the technicals back in the red zone. Yet we chose to remain on the sidelines as the GBP-complex is too sensitive to news/speculations/polls on Scottish vote (Sep 18th), and the predictability is limited.
Today, the ECB publishes its Monthly Report. The economic calendar of the day consists of German, French and Swedish August (Final) CPI m/m & y/y, Swedish August Unemployment Rate, Canadian July New Housing Prices Index m/m, US September 6th Initial Jobless Claims & August 30th Continuing Claims and US August Monthly Budget statement.
Currency Tech
EURUSD
R 2: 1.3110
R 1: 1.2988
CURRENT: 1.2911
S 1: 1.2860
S 2: 1.2755
GBPUSD
R 2: 1.6280
R 1: 1.6233
CURRENT: 1.6210
S 1: 1.6052
S 2: 1.6000
USDJPY
R 2: 108.00
R 1: 107.04
CURRENT: 106.86
S 1: 105.70
S 2: 105.00
USDCHF
R 2: 0.9456
R 1: 0.9404
CURRENT: 0.9367
S 1: 0.9287
S 2: 0.9212