HK protests slow US$ rally. China manufacturing data, EU CPI, Jobs numbers ahead.

The dollar stalled somewhat today as the demonstrations in HK caused some cautious profit taking, with both the Euro and the Yen holding on above trend lows. No such luck for the Kiwi which took another dive and still looks heavy, as does the Aud$. Both will come under further pressure today if the HSBC China mfg data fails to meet expectations, with traders also nervously watching the events in HK. Later in the day, the direction will turn to the German Retail Sales/Employment data and the EU CPI/Unemployment, which comes ahead of the US Consumer Confidence.

EUR/USD: 1.2690

The Euro is pretty much unchanged today after the German CPI came in unchanged at 0.8% yy, having traded a tight range around 1.2700 but having held above the 1.2660 support.

Ahead of Thursday’s ECB meeting, today will be another session of watching data from the EU, with the important inflation and unemployment numbers due for release, as well as German Unemployment and Retail Sales. Later in the session sees the US Consumer Confidence which should reflect the steadily improving US data of the last few weeks. The HK protests will also be watched and any real escalation in the situation could provoke further profit taking by dollar longs.

Technically there is little to add as the Euro consolidates above the Nov 2012 low at 1.2660. A break of this level could lead to another slide though, and there would be little to stop the Euro from heading to minor support at 1.2625 and then at 1.2585, below which there is not much to hold it until 1.2505 (76.4%of 1.2041/1.3995). Under there would then open up the path for an even steeper decline towards the 22 July 2012 low at 1.2041.

While the DXY remains below the 85.65 resistance that we mentioned yesterday (currently 85.59), the topside could see a squeeze above the session high of 1.2715 and on to the 1.2745/55 area that acted as some support on the way down, where the major rising trend line sits from July 2001. A break of this would potentially head up to 1.2800 and to the descending trend resistance at 1.2825. The 4 hour indicators are looking a little more positive so a mild squeeze higher would not really surprise but would provide a sell opportunity if seen up near 1.2800.

Wait for the data, but overall I suspect we are in for a fairly rangebound session as the focus turns towards the ECB (little expected to come from that after last months surprise move, although Draghi will maintain his dovish outlook) and then to Friday’s NFP, where the general expectation is for a rise of 213K, although some of the big banks are expecting a more positive number (230-260K), which if correct would reignite the dollar’s uptrend.

Economic data highlights will include:

German Retail Sales, Unemployment, EU CPI, Unemployment, US Consumer Confidence, Case Schiller Home price Index.

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EUR/USD: 4 Hour

USD/JPY: 109.45

The dollar made it to a new session high in Asia at 109.74, but ran into sellers as stock markets and other risk trades were sold (NzdJpy, AudJpy in particular) on the back of the protests in HK. Having hit a session low in Europe at 109.12, $Jpy has since recovered and currently sits pretty much unchanged on the day near 109.50.

Little has changed technically although we may see some action today after the release of the Japanese data, which if below expectations would again add pressure on the BOJ, and the Jpy, and could see another run to the session highs.

Above 109.75 would run into export sellers, as well as option related sellers protecting the 110 barrier and will not be easy to overcome. Above 110, stops will be building and if triggered, would see a run towards 110.65 (August 2008 high), above which the dollar would head on to 112.50 (76.4% Fibo level of 124.13/75.56). Further out, a break of 112/113 would suggest that the dollar is on its way to the July 2007 high at 123.65 although we have a lot of work to do before then.

On the downside, 109.00/15 will now act as the initial support ahead of the 200 HMA at 108.90.  Below there, 108.45/50 remains solid support, ahead of the daily Tenkan at 108.15 although it looks doubtful that we head back here any time soon. If we do see 108.00/50 again, it should provide a decent buy opportunity.

With focus turning towards the NFP, we may be in for some choppy consolidation until Friday so I would not look for too much today, with plenty of protection ahead of 110, but still prefer buying dip for an eventual topside break.

Economic data highlights will include:

August Unemployment, Industrial Production, Retail trade.

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USD/JPY:4 Hour

GBP/USD: 1.6240

Having traded in heavy fashion through Asia Cable squeezed up to 1.6273 in Europe as some US$ weakness set in, before promptly giving up its gains and heading back below 1.6250 as the dollar strength returned and where it is finishing the US session.

We have the Gfk UK Consumer Confidence coming up in Asia but the real focus today will be on the final UK Q2 GDP (exp 0.8%qq, 3.2%yy) later in the day. A decent reading will have traders eyeing the calendar for when to expect a rate rise and will underpin Sterling.

Technically Cable remains rangebound between 1.62/1.63 and this could remain the case again.

On the topside, 1.6275 will again provide minor resistance ahead of 1.6300 and I am not sure that we head above here today. If wrong, further resistance will be seen at 1.6330/40 and then at 1.6400. If seen, which I doubt, it would be another opportunity to sell Cable.

The downside will again find bids at the Asian low of 1.6211, ahead of further support at 1.6200. A break of this would head back towards the 16 Sept low at 1.6162, below which would hint at a run down towards the recent 1.6050 low, seen just before the Scotland independence poll, albeit that this is some way off at this stage.

Use 1.62/1.63 as a guide for the session.

Economic data highlights will include:

Gfk Consumer Confidence, GDP, Current Acc.

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GBP/USD: Daily

USD/CHF: 0.9510

US$ Chf reached 0.9531 today, virtually touching the 0.9535 target (July 2013 high) before turning lower as some dollar weakness set in, falling to 0.9485 before recovering to finish back above 0.9500.

There is no change in view, and while today may be one of further consolidation, I suspect that eventually  0.9535 will be taken out, allowing the dollar to head on to 0.9565 (76.4% Fibo level of 0.9838/0.8698) and then on to 0.9600. Above here though will prove tricky to negotiate as there is plenty of congestion, and having already come so far, the dollar may get a bit choppy above 0.9600, should we see it.

The downside will again see buyers at 0.9485 and then again at Friday’s session low at 0.9460. I doubt we see it down here today, but below this, 0.9430/50 will see bids ahead of 0.9400 (200 HMA).

Buying dips remains the theme. The 4 hour charts are turning a little lower, so we possibly need to allow for a slightly deeper correction towards 0.9400/50 in the next few sessions, albeit that I am doubtful of seeing it down there.

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USD/CHF:4 Hour

AUD/USD: 0.8720

Having fallen to a new trend low at 0.8688 yesterday, the Aud eventually managed to find some balance of sorts and squeezed up to 0.8749 in NY before renewed selling interest pushed it back to 0.8730 at the end of the session.

The main focus today will be on the HSBC China September Mfg PMI. The prior reading was 50.2 and a weak reading, especially if it comes in below 50.0 would place the Aud under renewed pressure. Traders will also be keeping a close eye on how events unfold in HK, with any renewed tensions likely to place further weight to the downside.

Technically, today’s low at 0.8688 ties in roughly with the 31 Jan low at 0.8694 and should provide some decent support. If broken, the Aud would want to take a look at long term target at the previous trend low, the 24 January low at 0.8660, which should also act as strong support but below which would then head to the July 2013 at 0.8632. Below here there is little to suggest that the Aud will pull up ahead of the 50% pivot of the long term rally from 0.6006/1.1082, at 0.8538.

On the topside, sellers would again be seen at the session high at around 0.8750, above which, it would head to the descending trend resistance now at around 0.8765.  A break of this would trigger stops and would most likely head back towards 0.8800 (100 HMA) and on towards 0.8860 (200 HMA). I don’t see it up here and any rally should be used as a sell opportunity for lower levels which seem likely to lie ahead.

Anyone who wants to get really bearish can check my monthly chart at this link!:

http://www.fxchartsdaily.com/audusd-aud-heading-0-6000-check-monthly-chart/

Economic data highlights will include:

ANZ Business Confidence, Private Sector Credit, RBA Annual Report, HSBC Mfg China PMI.

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AUD/USD:4 Hour

NZD/USD: 0.7765

Having fallen sharply in Asia, from 0.7868 to 0.7707, on the story of RBNZ intervention and remarks by PM John Key, the Kiwi spent the Europe and NY session recovering, reaching a high of 0.7796 before the rally ran out of steam, and is finishing the US session at 0.7765.

With no local data due today focus will be on the China PMI and on HK for direction, but the bears remain firmly in control.

Various supports were taken out today and there is not too much ahead of the session low at 0.7707 (0.7701:50% of 0.6560/0.8842) to hold the Kiwi up. A break of this, which I am not sure that we are likely to see today, would head to the 24 June 2013 low at 0.7682. Below there is minor support at 0.7660 but realistically there is nothing to hold the Kiwi up until the May 2012 low which is down at 0.7452 and the 61.8 % Fibo support of 0.6560/0.8842 at 0.7430.

On the topside, the session high will be the first resistance, above which the Kiwi could make an attempt to get back into the long term channel seen on the weekly charts, through which it broke on Friday, at 0.7885.

While the short term charts are oversold, the longer term indicators are pointing sharply lower so rallies remain a sell opportunity. For today, I suspect that 0.7725/0.7825 will cover it, with direction dependant on what the US$ decides to do and on the China data.

Also keep an eye on NzdJpy as we have seen a strong selloff and will have the carry traders looking rather nervous. Currently at 85.00, a break of the day’s low at 84.35 would hint at a run towards the Head/Shoulder target at 82.50, keeping the pressure on the downside for the Kiwi..

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NZD/USD:4 Hour