strong Chinese PMI data kick started a global equity rally yesterday that saw risky assets do well and the Dollar sold. Demand for the other safe haven Japanese Yen also fell with USD/JPY breaking above Y80 after US data beat expectations. ADP Employment change was +158k vs. +135k forecast. ISM Manufacturing PMI at 51.7 vs. 51.2 forecast. Looking ahead, October NonFarm Payrolls forecast at 125k 114k previously.
The Euro (EUR) another day of ranging for the EUR/USD with a small rally in the European session reversed back by the close of the U.S. session. The 50 pip range for the day is ominous sign for the NFP tonight which should set the next direction for the single currency. The Sterling (GBP) GBP/USD faded a rally overnight with the usual Dollar weakness after good news not as evident yesterday with the data from the U.S. itself. Today’s NFP will be critical for the GBP/JPY cross which has rallied recently towards key resistance at Y130. Looking ahead, October EU PMI Manufacturing forecast at 45.3. October UK PMI Manufacturing forecast at 49.1 vs. 49.5 previously.
The Japanese Yen (JPY) the USD/JPY was closely watched overnight after the major broke through multi-month resistance at Y80 and closed above the key level. All the Yen crosses moved higher with AUD/JPY breaking key levels whilst EUR/JPY and GBP/JPY both threatened to. USD/JPY pushed higher in Asia today with traders more comfortable buying above the range. Australian Dollar (AUD) has been grinding away at the 1.0400 level and we finally broke above the key resistance in Asia today but have had little follow through buying. U.S. Nonfarm and RBA Interest Rate decision next Tuesday will be the major source of direction over the next few days. UPDATE Australia Q3 PPI at 1.1% vs. 1.6% y/y previously.
Oil And Gold (XAU) Gold pushed back towards $1730 in Europe yesterday before reversing with the EUR/USD and remains under pressure in Asia Friday. OIL/USD was supported closing near $87 with a short term bottom at $85 encouraging buyers to return to the market.
Pairs To Watch
- USD/JPY to push higher after resistance broken?
- XAU/USD US Nonfarm Payrolls key for US Monetary Policy
