Mildly Negative Start To Week

Fresh Chinese slowdown concerns and further negative economic data from Europe and the US hurt global risk appetite yesterday. The selling was contained however and the EUR/USD and AUD/USD kept inside 100 pip ranges comfortably. Looking ahead, July Case Shiller House Prices forecast at 1.0% vs. 0.5% previously y/y. Also, US Treasury Secretary Speaks.

The Euro (EUR)
The EUR/USD tested 1.2900 at the height of its weakness overnight with concerned about Greece meeting its budget targets and weak German IFO at 101.4 vs. 102.3 forecast. Adding to the uncertainty was reported infighting between French and German leaders regarding the implementation of an EU wide banking regulator.

The Sterling (GBP)
The pound was on the back foot from the start of the Asian session and fell below 1.6200 during the European session. We saw a small bounce to 1.6220 but the market is heavy as the lack of fresh direction prompts profit taking across the board. Looking ahead, ECB President Draghi Speaks. October German GFK Consumer Sentiment forecast at 5.9 in October.

The Japanese Yen (JPY)
USD/JPY fell below Y78 and found support at Y77.85 but it still pressuring the downside as risk aversion sinks the Yen crosses. EUR/JPY is eyeing a retest of Y100 and AUD/JPY is just above Y81 but falling most of yesterday. More Jawboning will be expected today as the Currency wars continue.

Australian Dollar (AUD)
The AUD/USD is pushing lower back towards last week lows falling under 1.0400 briefly as commodities around the world fall and China sentiment remains soft. We are seeing some support on the dips but a lot more interest to sell rallies with analysts seeing a bumpy road for the risk sensitive commodity linked currency ahead.

Oil And Gold (XAU)
Gold was heavy for a second day as longs liquidated after reaching fresh highs on Friday night. Support was found under $1760 and we closed at $1765. OIL/USD fell to $92 but held up better than most commodities.

Pairs To Watch
EUR/JPY: To test Y100 or resume rally?

AUD/USD: Range trading to continue 1.04-1.05?

TECHNICAL COMMENTARY