Today’s HSBC China PMI will be the main risk event during Asian trade with the market expecting an improvement from last month’s number of 51.5. Any reading above 52 will likely give the ‘risk-on’ trades some added momentum and pairs like AUD/JPY are likely to attract the most volatility. Tonight’s big risk event will of course be the US non-farm payrolls data.
Nothing much to report from overnight trade with the market probing up and down a few times but there were no major levels breached and recent trends remain very much in play.
The important technical event overnight was the testing of former resistance at 123.10 in EUR/JPY. This level held firm and must now be considered to be an important support point. Buying dips remains the path of least resistance here.
EUR/USD moved slowly higher in quiet trading conditions before running into solid European corporate offers ahead of 1.3600. The trend here remains bullish in the short-term and there is little in the way of technical resistance on the longer-term charts until we reach 1.40 (see chart). Stay in dip-buying mode here.
The bull trend in USD/JPY remains very resilient, breaking above recent highs near 91.40, and there seems to be little value in trying to fight it. Once again we have to look to the longer-term charts for resistance levels, with nothing of note until 95.00 (see chart). Short-term support levels are firming between 90.40/80.
The AUD should see some volatility around the time of the PMI data release. Hedge funds have been selling rallies and asset managers are buying dips, so we may see continued range trading inside of a very broad 1.03/1.06 range. Short-term parameters are 1.0380/1.0480 and it will be interesting to see if the HFs appear again.
Cable is testing Fibo resistance near 1.5865 and the next resistance above there is at hourly highs near 1.5890 (see chart). EUR/GBP is still the main driver here and cable recovers some ground when the cross hits a resistance level, like presently ahead of 0.8600.
USD/CHF is also near technical support levels at .9080 and USD/CAD saw some very heavy turnover as it moved back below 1.0000.
Good luck today.