Apple earnings will be released shortly and this could have a significant impact on risk sentiment through the equity markets, seeing as AAPL makes up around 10% of the NASDAQ index. Later today, HSBC will release its reading on Chinese manufacturing PMI and this could also have a significant impact on sentiment.
The Yen made some very solid ground during Asian trade yesterday but it gave back all of those gains overnight. This would seem to support the Prime Broker reports from last week which showed that most of the big Yen short positions were in Asia, primarily in Japan.
USD/JPY seems to be trying to form as interim top just above 90.00 and, given the increased rhetoric from the EZ in particular about Japanese policy, a medium-term range trade between 85/90 might just suit all parties. The charts show decent support at 87.80 (see chart) and we can expect profit takers and Japanese corporates to emerge in force above 89.50. I’d play this range for now with risk-reward favouring a sell-rally strategy in the shorter-term.
GBP/JPY touched support levels near 139.40 and has bounced by 100 pips so this level has increased in importance (see chart).
EUR/JPY looks very similar to USD/JPY, bullish consolidation but with scope for a deeper retracement perhaps towards 113.50 (see chart).
The GBP was the most volatile of the majors during European trade, testing its resistance levels against the USD, EUR and JPY before some decent jobs data took the pressure off and saw a modest bounce in sterling. Overall view remains bearish so look to sell GBP rallies particularly against the USD and the EUR.
EUR/CHF dipped to touch the 50% retracement of its vertical up-move and immediately bounced (see chart). Buying dips in this pair is still my favourite trade at present.
The AUD is still very much range-bound but its inability to fall on any bad domestic news does seem to suggest that we will eventually break higher.
Good luck today.