Mixed economic data released from the US. Major currencies strengthen against the Greenback. Oil and metals lower.

CURRENCY TRADING SUMMARY

  • U.S. Dollar Trading (USD) weakened against the majors in the overnight forex trading session as a mixed bag of data was released to the market, keeping intact expectations of no further interest rate hikes from the Federal Reserve. US PPI fell by 1.3% compared to an expectation of -0.6% while core PPI rose by 0.6% when forecasts centred on +0.2%. Industrial production fell by 0.6% whereas markets were expecting 0% or no change, and US capital inflows rose to a record high of US$116.8bn in August compared to an estimated $50bn. In other markets, the Dow Jones index fell by 30pts while the NASDAQ gave up 18pts as analyst downgrades impacted the market. Crude oil fell by US$1.01 a barrel to US$58.93 as the market waits to see whether OPEC oil nations stick to a proposed cut in production. Looking ahead, CPI and housing starts are due out tonight.

  • The Euro (EUR) traded within a low of 1.2509 and a high of 1.2564, before closing at 1.2535 in the New York session. On the data front, industrial production came in at 1.8% compared to a 1.4% estimate, HICP final came in unchanged from expectations of 0%, and the ZEW survey came in at -27.4 compared to a -20 estimate.

  • The Japanese Yen (JPY) traded within a low of 118.59 and a high of 119.11 versus the dollar, before closing at 118.67 in the New York session. Looking ahead, the BoJ minutes for their September 8th meeting is due out today.

  • The Sterling (GBP) traded within a low of 1.8612 and a high of 1.8735, before closing at 1.8701 in the New York session. On the data front, UK CPI came in as expected at 0.1% for the month of August. Looking ahead, UK unemployment is due out today.

  • The Australian Dollar (AUD) traded within a low of 0.7526 and a high of 0.7555, before closing at 0.7530 in the New York session.   

  • Gold (XAU) fell by US$5.00 to US$593.50 an ounce as oil weakened overnight.  

TECHNICAL COMMENTARY

FX strategy

  • Euro 1.2540

Initial support at 1.2483 (Oct 13 low) followed by 1.2456 (Jul 19 reaction low and key support). Initial resistance is now located at 1.2615 (Oct 9 high) followed by 1.271 (Oct 6 high).

  • Yen 118.60

Initial support is located at 118.54 (Oct 17 low) followed by 117.32 (Sep 2 low). Initial resistance is now at 119.9 (Oct 13 high) followed by 120.0 (Psychological round number resistance).

  • Pound  1.8700

Initial support at 1.8493 (61.8% retracement of the 1.8090 to 1.9146 advance) followed by 1.8385 (Jul 25 low). Initial resistance is now at 1.8989 (38.2% retracement of the 1.8904 to 1.8516 decline) followed by 1.8715 (Oct 10 high).

  • Australian Dollar  0.7530

Initial support at 0.7414 (Oct 4 low) followed by 0.7405 (Jul 17 low). Initial resistance is now at 0.7559 (Oct 17 high) followed by 0.7582 (Sep 21 high).

  • Gold  589

Initial support at 577.4 (Oct 13 low) followed by 569.35 (Oct 10 low). Initial resistance is now at 598.25 (Oct 3 high) followed by 607.01 (Sep 28 high).