China PMI likely to increase volatility; USD/JPY fails at 100.00 again

China

The market gets all excited about Chinese PMI and next day can’t even remember what the number was! This will probably be the same today when the HSBC version of China’s PMI is released. Growth rates are slowing down and if today’s data confirms this then we could see the AUD suffering some heavier losses.

Hedge funds continue to sell the AUD quite heavily, especially against the USD and the NZD, although corporate and real money buyers are still solid buyers on dips. Last night saw AUD/USD break below 1.0250 but corporate bids at 1.0230/35 were reportedly quite heavy.

AUD/JPY looks to have posted a double top at a 61.8% retracement level, which is quite a bearish set-up.

Chart

EUR/AUD has been consolidating between 1.2600/1.2750 but an eventual break higher is also favoured here in line with the most recent trend.

USD/JPY saw some extremely heavy turnover yesterday as a few banks tried to trigger large stop-loss buy orders above 100.00. A combination of barrier-protection and real money offers helped keep the level safe and interbank longs were forced to sell later in the day as the spot price broke lower. 

EUR/JPY dipped quite sharply at times but the overall up-trend remains in control and buying dips for a re-test of 131.10 is still favoured.

Chart

EUR/USD is still trading in a sideways direction and it will need to break outside of its 1.3000/1.3150 consolidation range in order to generate fresh momentum.

Some quite large buying flows were reported overnight in EUR/CHF when it broke above 1.2200.

Good luck today.

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