Dollar, Bond Yields fall; US Pending Home Sales tumble

AUD rebounds 1.2%, Euro reverses drop; Asia/EMFX up

Summary:

US Treasury Yields eased from multi-year highs after the latest batch of economic data revealed some pockets of weakness in the economy. Pending Home Sales in America plunged 7.1% in August from a 0.5% rise in July.

The benchmark 10-year US bond yield fell to 4.57% from 4.60%. Two-year US rates tumbled 6 basis points to 5.06%. The Dollar Index (DXY) which gauges the value of the Greenback against six major currencies fell 0.47% to 106.15 (106.50).

The Euro (EUR/USD) rebounded off an 8-month low at 1.0491 to finish at 1.0565 in late New York. Sterling (GBP/USD) settled to finish at 1.2202 up from 1.2110, a six-month low.

The Australian Dollar soared, rebounding 1.2% to 0.6427 from 0.6347 yesterday. Strong finishes in the Asian and EMFX currencies against the US Dollar lifted the Aussie Battler.

Against the Japanese Yen, the US Dollar held on to close at 149.30, little changed from yesterday’s 149.40. Overnight, the USD/JPY pair rallied to 149.56 before retreating in late New York.

The US Dollar was mostly lower against the Asian and EMFX. USD/CNH (Dollar-Offshore Chinese Yuan) dipped to 7.2955 (7.3105). USD/SGD (Dollar-Singapore) slid to close at 1.3657 after soaring to an overnight and 9-month high at 1.3728. The USD/THB pair rose to 36.55 (36.40).

Wall Street stocks rallied heading into the month and quarter-end. The DOW climbed 0.3% to 33,707 (33,670) while the S&P 500 was last at 4,307 (4,283 yesterday). Other global shares were higher.

Other economic data released yesterday saw Australia’s Annual CPI climb to 5.2% from 4.9% previously, which matched expectations. Australia’s August Preliminary Retail Sales eased to 0.2% from 0.5% previously, and lower than forecasts at 0.3%.

US Final GDP (q/q) dipped to 1.7% from 2% previously. The US September Kansas Fed Manufacturing Index plummeted to -13 from 12 previously, and lower than median forecasts at 5.

• EUR/USD – The shared currency finished little-changed against the Greenback at 1.0565 in late New York (1.0570 yesterday). Overnight, the EUR/USD pair tumbled to a low at 1.0491 before settling to rally at the close. The overnight high traded was 1.0579.
• AUD/USD – The Aussie Battler rebounded, jumping 1.24% against the Greenback to 0.6427 at the New York close. Yesterday, the Australian Dollar was changing hands with its US counterpart at 0.6397. In choppy trade, the overnight high recorded was at 0.6432.
• USD/JPY – Lower US bond yields pressurized the Dollar against the Japanese Yen, finishing modestly lower in New York at 149.30 (149.40). The Greenback rallied to an overnight high at 149.56 before easing. The Dollar traded to a weekly high at 149.70, just short of 150.00.
• GBP/USD – Sterling rallied against the overall weaker Greenback to 1.2202 from 1.2155 yesterday. Earlier the British Pound tumbled to an overnight and 6-month low at 1.2110. In volatile trade, the overnight high recorded was 1.2225.

On the lookout:

Today’s economic calendar is a busy one as we finish the week, month, and quarter. Japan kicks off a plethora of data today, starting with its August Unemployment rate (f/c 2.7% from 2.7% - ACY Finlogix), Japanese Tokyo Annual September CPI (y/y f/c 2.9% from 2.9% ACY Finlogix), Japanese Tokyo Annual Core CPI (y/y f/c 2.6% from 2.8% - ACY Finlogix), Japanese August Retail Sales (y/y f/c 6.6% from 6.8% - ACY Finlogix), Japanese August Preliminary Industrial Production (m/m f/c -0.8% from -1.8%; y/y f/c -3.0% from -2.3% - ACY Finlogix).

Germany starts off Europe with its German August Retail Sales (m/m f/c 0.5% from -0.8%; y/y f/c -0.7% from -2.2% - ACY Finlogix); German September Unemployment Rate (f/c 5.7% from 5.7% - ACY Finlogix). The UK follows with its UK September Nationwide Housing Prices (m/m f/c -0.4% from -0.8%; y/y f/c -5.8% from -5.3% - ACY Finlogix), and UK Final GDP Growth Rate (q/q f/c 0.2% from 0.1%; y/y f/c 0.4% from 0.2% - ACY Finlogix).

France follows with its September Preliminary Inflation Rate (m/m f/c -0.3% from 1%; y/y f/c 5.9% from 5.7% - ACY Finlogix). The Eurozone releases its Eurozone Flash September Inflation Rate (m/m f/c 0.7% from 0.5%; y/y f/c 4.5% from 5.2% - ACY Finlogix). Italy follows with its Italian Preliminary September Inflation Rate (y/y f/c 5.3% from 5.4% - ACY Finlogix).

Canada kicks off North America with its Canadian July GDP (m/m f/c 0.1% from -0.2% - ACY Finlogix); Canadian Preliminary August GDP (f/c -0.1% from 0% - ACY Finlogix). The US rounds up today’s busy economic calendar with its US August Core PCE Price Index (m/m f/c 0.2% from 0.2% - ACY Finlogix); US August Personal Spending (m/m f/c 0.4% from 0.8% - ACY Finlogix), and US August Personal Income (m/m f/c 0.4% from 0.2% - ACY Finlogix). The US also releases its August Trade Balance (f/c -USD 95.0 billion from -US 91.18 billion – ACY Finlogix) and finally US September Chicago PMI (f/c 47.6 from 48.7 – ACY Finlogix).

Trading perspective:

Lower US bond yields pulled the Dollar lower against its Rivals. Heading into the week, month, and quarter-end today could see a further pullback for the US currency. Upcoming data releases will also be scrutinized. We can expect more choppy trade today. Watch the data and its impact on US bond yields. And get ready to rumble!

EUR/USD – The Euro rebounded off its overnight and 8-month lows at 1.0491 to 1.0565 on short-covering. The technical correction could have further to go if the US economic data come out weaker than expected. Immediate resistance lies at 1.0580 (overnight high traded was 1.0579). The next resistance level is found at 1.0610. Immediate support can be found at 1.0530, 1.0500 and 1.0470. Look for more choppy trade in a likely range today of 1.05-1.06. Trade the range.

• USD/JPY – Against the Yen, the Greenback finished modestly lower at 149.30 against 149.40 yesterday. Immediate support today lies at 149.00 followed by 148.70. On the topside, immediate resistance is found at 149.60 (overnight high traded was 149.56). The next resistance level lies at 149.90/150.00. Look for more choppy trade today, likely between 149 and 150. Expect the BOJ to defend the 150 JPY level if it trades there, for the time being.
• AUD/USD – The Aussie Dollar rebounded in true Battler fashion, outperforming its peers to finish at 0.6427 from 0.6347, up 1.2%. The Australian Dollar has immediate resistance at 0.6435 (overnight high traded was 0.6432). The next resistance level is found at 0.6470 followed by 0.6500. Immediate support lies at 0.6400, 0.6370 and 0.6340. Look for more choppy trade in the Aussie, likely between 0.6370 and 0.6470. Trade the range.
• GBP/USD – Sterling rallied against the overall weaker US Dollar to 1.2202, from an overnight and six-month low at 1.2110. On the day look for immediate resistance at 1.2230 (overnight high traded was 1.2225). The next resistance level is found at 1.2260. Immediate support can be found at 1.2170, 1.2140 and 1.2110. Look for another roller coaster ride in this currency pair, likely between 1.2140-1.2240. Prefer to sell rallies.

Happy trading and Friday all. And a top weekend ahead.