Market gets back to normal after big end-of-month flows

FX

Today should be a more normal trading day with the market watching developments in emerging markets as well as regional economic releases. China’s official manufacturing PMI came in better than expected over the weekend and this has led to an early rally in the AUD. Today sees the HSBC version of China PMI, as well as official non-manufacturing PMI and Australian retail sales. It should be a busy day. New Zealand markets are closed today.

Demonstrations in Turkey and heavy falls in LATAM stocks have put some of the focus back on emerging markets and it would be wise today to keep one eye on what’s happening in regional Asian markets.

AUD/JPY remains the bellweather for risk in this time zone and it seems to be in full retracement mode. The breakdown level at 96.90 should offer initial resistance and the obvious target is at 95.50 where the 38.2% pullback level is.

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In USD/JPY, despite heavy flows and option expiries, the market was unable to challenge important support at 100.00 and we may well see some minor relief rally today, especially if USD/AXY turns bid. Medium-term consolidation is still the story here.

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AUD/USD support and resistance is now very clear at .9525 and .9700 and short-term trendline resistance near .9650 may also prove a tough nut to crack. 

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AUD/NZD has broken back above 1.2000 and with AUD/JPY also nearing important support, it may be time for the AUD bears to reduce exposure.

Cable has put in a double-bottom and the neckline at 1.5150 was challenged on Friday but remains intact. Risk reward favours being long at 1.5178/80 with a stop-loss below 1.5130, targeting 1.5375. 

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The fact that EUR/GBP resistance near .8600 remains intact will also be encouraging GBP bulls.

EUR/USD remains in sideways mode around 1.3000 and cross flows are the dominant factor.

EUR/CHF support is reported to be very solid near 1.2370, with big Swiss banks reporting strong bids near there.

Good luck today.

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