Welcome to Varengold’s Daily FX Comment. As expected, the Chinese reports influenced the FX market while a lot of currencies gained against the USD. Nevertheless, we hope you’ll have good luck in trading and a nice weekend.
Market review
After Chinese reports, the low-yielding U.S. currency made further losses. The USD fell for a seventh day against the EUR after China’s factory output and new lending gained last month more than economists expected, which reduced demand for the USD as a refuge. The JPY climbed surprisingly for a second day against the EUR after expectations Japanese exporters may repatriate earnings toward the end of the third quarter. According to an economist “Japan’s exporters are bringing home their earnings, a typical move in September toward the end of third quarter,” The Japanese government announced earlier this year that it would abdicate taxes on repatriated profits from April 1st to support the economy. Under previous laws, companies had to pay a combined 40 percent tax on overseas earnings. However the strong JPY climbed against 11 of the 16 most-traded currencies.
The GBP climbed to a one-month high versus the USD after the BoE kept its bond-buying plan unchanged yesterday, which was a sign that policy makers assume the economy is recovering. The GBP gained to a high of 1.6710 USD after opening at 1.6651.
GBP/CHF
At the beginning of September, the GBP/CHF has entered the downward Fibonacci fan and reached the upper line of the fan. After finally breaking the upper fanline and the middle weekly pivot point, the GBP buyers took profit and the market pulled back under the middle pivot point. If it breaks the pivot point at 1.7330 clearly, it may test the first pivot resistance at 1.7500 with a potential resistance at 1.7400.
CHF/JPY
The CHF/JPY has been moving inside a bullish and a bearish trend channel including a support level at around 87.40. At the moment, the currency pair is trading for the fourth time on the lower line of the bullish trend channel. If the market may break through the lower trend channel-line, it could extend its losses towards the support level at around 87.40.
