Lackluster Markets Inspire Ranging FX

US traders returned to the market and although were initially bullish we ended flat and this has taken the wind out of many pairs attempted rallies. EUR/USD failed at 1.3000 and was the leader of the majors lower in the US session. Chicago PMI disappointed remaining in the contractionary at 49.9 vs. 51 forecast. Looking ahead, ADP Employment report forecast at 135k vs. 162k previously. Also, October Manufacturing ISM forecast at 51.2 vs. 51.5 previously.

The Euro (EUR) the sharp rally in Europe lacked the strength to hold onto reported month end USD buying throughout the US session. The outlook is mixed with the recent range holding for many weeks and direction fickle. EUR/GBP is being watched closely with many expecting a rise in the coming session after 0.8000 held many attempts. The Sterling (GBP) held on to gains better than most currencies with weakness failing to materialize and bulls remaining in control of the major. News from the Eurozone has been supportive with less anxiety about Spain evident given the falling bond yields overnight. Looking ahead, October PMI Manufacturing forecast at 48 vs. 48.4 previously. Also October Nationwide House Prices forecast at 0.2% vs. -0.4% previously.

The Japanese Yen (JPY) the USD/JPY regained the upper hand with USD buying overnight helping the major retest Y80 but reported strong selling at the figure capped the rally. EUR/JPY and GBP/JPY were especially strong surging in Europe over 100pips attempting to restart the recent uptrend. Australian Dollar (AUD) was strong after local housing data beat expectations before heavy selling at 1.0400 capped the rally and we have finished back at 1.0370 with a muddy outlook. The Chinese PMI released later today could help move the markets if the reading is significantly different to the initial flash PMI earlier in the month. Looking ahead, October China Manufacturing PMI forecast at 50.3 vs. 49.8 previously.

Oil & Gold (XAU) Gold rallied with the Euro but was able to hold onto most of the gains closing at $1720. OIL/USD bounced back to $87 before easing with the rest of the markets during in the US session.

Pairs to watch

USD/JPY to retest Y80 as bulls regroup?

EUR/USD failure at 1.300 to tempt sellers again?

TECHNICAL COMMENTARY