Ipek Ozkardeskaya
Swissquote Bank Ltd
Market Brief
Economic news from China is mixed in September. The HSBC flash PMI suggests expansion of manufacturing activity this month, while the employment sub-index falls to 46.9 – 5 ½ year low. Despite soft employment, high beta currencies came in demand overnight. Traders continue watching the PMIs in European and US sessions. We do not expect significant volatility in the FX trading.
The Aussie-complex was better bid in Sydney. Lift in AUD/JPY pulled AUD/USD up to 0.8923 in Sydney, the ASX stocks gained (appr. 1%). Trend and momentum indicators remain comfortably bearish, decent option barriers at 0.8900 are tipped in New York settlement. NZD/USD remains supported above the critical 0.8052 (year low), yet the buying interest remains limited due to looming dairy prices. According to Rabobank, 37% of farmers expect more deterioration (vs. 24% in 2Q), while 47% see worsening business performance over the next 12 months. The bias remains negative. AUD/NZD rebounds from the 100-dma (1.0923) for the second consecutive day. Break below 1.0900/23 should intensify the selling pressures.
USD/JPY and JPY crosses traded ranged in Tokyo. USD/JPY sees decent offers pre-109.00/50. In the absence of fresh catalyzer, the 110-psychological resistance is expected to stay solid. The softness in US yields (despite hawkish Fed and broad USD strength) contains the upside limited in USD/JPY. Consolidation is underway between 107.50 - 110.00. EUR/JPY stabilizes at about its 200-dma (139.78).
EUR/USD consolidates weakness below 1.2870. Technical indicators are flat; break out of 1.2825/1.2900 is monitored to assess fresh short-term direction. EUR/GBP trades at two-year lows. Solid option barriers trail below 0.7900 for the week ahead and should keep the upside limited. GBP/USD continues paring past weeks’ losses. Positive technicals suggest a re-test of 1.6500/25 zone (Scottish no victory reaction high).
Today traders watch the September (Prelim) Manufacturing PMI in France, Germany, Euro-Zone, UK and US, French 2Q (Final) GDP q/q & y/y, French September Own-Company Production Outlook, Manufacturing and Business Confidence, UK August BBA Loans for House Purchase, Public finances and Public sector Net Borrowing, Canadian Retail Sales m/m and Richmond Fed September Manufacturing Index.
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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