General US$ weakness developed through the session and it is closing near its lows against most of the other majors. With little EU or US data due today, focus will be on the China data, headed by the GDP. Estimates are of a Q3yy 7.2-7.5% rise although some analysts suggest that the number may be below 7% which would put another dent in global growth prospects. If so, look for another sell-off in equities and commodities in particular. Elsewhere, Asia also gets the WBC Leading Index & RBA Minutes. Later on, US existing home sales will provide the interest.
EUR/USD: 1.2806
EurUsd was pretty much rangebound for much of the session, although after hitting an early European low of 1.2730 it has since ground steadily higher, to peak at 1.2810 and is closing the session close to its highs..
Today is pretty empty of major data from the EU or the US and focus will look to the plethora of Chinese figures (GDP, IP, RS) for guidance, with a soft GDP number again raising concerns that below-par economic growth will again delay any impending rate rise from the Fed, which in the short term will keep the dollar under pressure. On the other hand, if the GDP should surprise to the upside, risk sentiment will improve and could be the catalyst to see the Euro stage a further short squeeze for a run towards 1.2900. The Euro though has plenty of pressures of its own and any rally may well prove short lived. While the short term icture looks supportive for the Euro, the medium term outlook for a resumption of dollar strength remains unchanged.
Technically there is little real change. Above today’s high will meet resistance at Friday’s top at 1.2837. A break of 1.2845/50 would see a return to last week’s spike high, following the US retail sales, at 1.2885. If this is taken out then, look for a run to 1.2900 and possibly to 1.2950 (38.2$% of 1.3699/1.2501 & weekly Tenkan) but with the dovish EU outlook it is difficult to the see the Euro being up here very long, if indeed it even gets close.
On the downside, minor bids will arrive at around 1.2755 (100 HMA) ahead of the session low at 1.2730 (200 HMA: 1.2725). A break of 1.2700 would lead towards 1.2645 (61.8% of 1.2501/1.2885) but below here seems out of range in the short term. The 15 Oct low at 1.2624 would see bids, ahead of 1.2600, but I would be doubtful of heading back to 1.2500 any time soon unless the EU flash PMI’s due on Thursday are soft in the extreme.
Look for more choppy range trade today, with a mild upside bias, perhaps towards 1.2850, with the direction to be provided mainly from the Chinese data.
Economic data highlights will include:
US Existing Home Sales.
Meta Trader – AxiTraderEUR/USD: 4 Hour
USD/JPY: 106.81
USD/JPY saw an early Asian rally, to a session high of 107.38, helped by a 4% rally in the Nikkei on the back of the weekend news that the GPIF (Government Investment Pension Fund) is looking to diversify from its portfolio, largely directed towards JGB’s (Japanese Government Bonds) and to increase its domestic equity allocation from 12% to 25%, with foreign stock and bond holdings to be increased from 23% to 30%.
From then on though, the dollar turned steadily lower, bak at 107.00 by the European open and then bottoming out at 106.77 in the US after the NY option expiries, before a mild rally into the session close.
The outlook appears to be fairly neutral today, and as elsewhere, is likely to look to the Chinese data for direction. A move back above 107.00 would see offers at 107.15 (200 HMA) and would then again encounter decent sellers at around the session high at 107.40. Above here looks unlikely today and further sellers would arrive at 107.55 (50% of 110.08/105.18) although a break of this could begin a run back to 108.00.
On the downside, below 106.75 would find bids at 106.60 (100 HMA) and then again at 106.30 and 106.00.
For the time being, use 106.60/107.15 as a guide.
Meta Trader – AxiTraderUSD/JPY: 4 Hour
GBP/USD: 1.6173
Cable did as we suspected it might, taking out the minor descending trend resistance and then squeezing a bit higher to close the NY session near its highs with the dollar being under pressure on all fronts for much of the session
Currently sitting at 1.6175, the 4 hour momentum looks positive, but Cable needs to take out 1.6180 (23.6% of 1.7191/1.5876) to make further headway to 1.6200, above which would head to the 9 Oct high at 1.6226. Further resistance would arrive at 1.6275 (61.8% of 1.6523/1.5873) and 1.6365 (76.4%)
The downside will find bids at the minor rising trend support at 1.6120 and then at 1.6100. A break of this would head back to the 200 HMA at 1.6065 but currently looks unlikely.
The daily charts show some decent bullish divergence and thus playing it from the long side is currently favoured, and buying dips towards 1.6120, looking for a run to 1.6225 seems to be the plan for today. SL should be placed below 1.6100.
Note that the October BOE minutes are due out on Wednesday and that further dovish rhetoric could well see Cable rapidly run out of steam on the topside ahead of the UK GDP, which will come into focus on Friday. PSNBR today.
Economic data highlights will include:
PSNBR
Meta Trader – AxiTraderGBP/USD: 4 Hour
USD/CHF: 0.9422
The dollar is closing the NY session on its lows and appears to be headed for a more severe test of 0.9400. A break of this would suggest another look at last week’s 0.9360 low and possibly a run down to 0.9312 (38.2% of 0.8698/0.9686). Minor interim support would be seen at 0.9322 (16 Sep low).
On the topside, sellers will arrive at 0.9460 (100 HMA) and at 0.9485 (38.2% of 0.9686/0.9360) ahead of 0.9500 (200 HMA). This looks unlikely to be visited today and a range of 0.9385/0.9450 may cover it.
Economic data highlights will include:
Swiss Trade Balance.
Meta Trader – AxiTraderUSD/CHF: 4 Hour
AUD/USD: 0.8798
The Aud was underpinned early on Monday after the Japanese Nikkei reported a revamped asset allocation for the Government Pension Investment Fund (GPIF), whereby foreign stock and bond holdings will be increased up from 23% to 30%.
General US$ weakness further underpinned the Aud as it headed steadily higher through the day and is closing the NY session on its highs just below 0.8800.
Today’s Chinese data will drive direction, and any upside surprise to the GDP (exp 7.2% yy Q3, 1.8% mm) will improve risk sentiment and could see a run to the topside in the Aud where, above 0.8800, the initial resistance will be encountered at around 0.8820, a break of which would head towards 0.8841 (23.6% of 0.9504/0.8641). Beyond there would see a run to 0.8860 (15 Oct high) and possibly to 0.8894 (9 Oct high).
The downside looks reasonably well protected today (unless the China GDP badly misses expectations) and bids will arrive at around 0.8760 (100/200 HMA’s) ahead of the session low at 0.8746. Below here looks a bit unlikely, but if wrong, further losses would head to Friday’s lows around 0.8730 and then to 0.8700. I doubt that we are heading below here for a while, but if wrong, would hint at a run towards last week’s lows at 0.8685, 0.8675 and below there at 0.8651.
The RBA Minutes will also be in focus today but are likely to repeat the recent mantra of continuing the current course of “steady as she goes”.
Economic data highlights will include:
WBC Leading Index, RBA Minutes, China GDP, Industrial Production, Retail Sales, Urban Investment, RBA Lowe Speech.
Meta Trader – AxiTraderAUD/USD: 4 Hour
NZD/USD: 0.7977
The Kiwi has spent the session grinding slowly higher and will finish the NY session just below the highs of 0.7978 as the market waits on the China data.
A solid number from the GDP would see a run towards 0.8000, a break of which will see stops triggered which could see a squeeze higher towards 0.8040 and possibly to 0.8070.
A poor reading from China would see the downside come back into focus and would retest the 100 HMA (0.7925) and the 200 HMA (0.7900). Below here would see a deeper correction towards 0.7885 and possibly 0.7840, but with the short term indicators looking mildly positive I don’t think we are going much below 0.7920 – if indeed we see it down there – unless the China data is well below expectations.
Meta Trader – AxiTraderNZD/USD: 4 Hour
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