US job openings, consumer confidence fall; Yields tumble

Dollar Index breaks lower; AUD, NZD, EMFX outperform

Summary:

US Job Openings in July fell by more than expected to larger-than 2-year low, at 8.83 million, versus expectations of 9.49 million. The previous number was revised lower to 9.17 million from 9.58 million.

US Consumer Confidence also took a hit, down to 106.1 from a downward revised 114, and missing forecasts at 116. Treasury yields tumbled. The 10-year US bond rate fell 12 basis points to 4.12%.

The Dollar Index, which measures the value of the Greenback against a basket of 6 major currencies, slid to 103.47 from its open at 104.17. The Euro (EUR/USD) rebounded 0.56% to 1.0890 (1.0795).

Against the Japanese Yen, the Greenback (USD/JPY) slumped 0.5% to 145.82 from its opening at 146.45 yesterday. In volatile trade, the USD/JPY soared to an overnight and 9-month high at 147.38.

New Zealand’s Kiwi (NZD/USD) outperformed, soaring 1.05% to 0.5972 (0.5902 yesterday). The Australian Dollar (AUD/USD) gained 0.8% to 0.6482 against 0.6405.

The US Dollar finished lower against the Asian and Emerging Market Currencies. The USD/CNH (Dollar-Offshore Chinese Yuan) settled at 7.2850 from 7.2900 yesterday. USD/THB (Dollar-Thai Baht) eased to 35.00 from 35.15.

The Chinese government may announce that its big state-owned banks are cutting mortgage rates on majority of the country’s US$5.3 trillion of existing mortgages.

Wall Street stocks rallied. The DOW finished up 0.83% to 34,865 (34,325) while the S&P 500 gained 1.4% to 4,500 (4,405). Other global equity markets rose.

Following the release of the US Consumer Confidence and JOLTS Job Opening data, expectations that the Federal Reserve would hike rates in their September meeting fell.

The week ahead sees the release of the US Non-Farms Payrolls report on Friday. Prior to that, the ADP Private Employment and another estimate of Q2 GDP growth will be released.

• EUR/USD – Broad-based US Dollar weakness lifted the shared currency to 1.0880 at the close of trade in New York. Earlier in the trading day, the Euro slid to an overnight low at 1.0782 before steadying. The overnight high traded was 1.0892.
• AUD/USD – The Aussie Dollar benefitted from broad-based US Dollar weakness, climbing to 0.6482 in late New York, up from Friday’s open at 0.6405. In choppy trade, the Aussie Battler tumbled to an overnight low at 0.6401 before rebounding. The overnight high was at 0.6487.
• USD/JPY – The Dollar slumped against the Japanese currency to finish at 145.82 against Friday’s open at 146.45. In choppy trade of its own, the Greenback soared to an overnight and 2023 peak at 147.38 before easing.
• GBP/USD – Sterling rallied against the overall softer US Dollar to settle at 1.2645 at the New York close, up from Friday’s 1.2585. Overnight, the GBP/USD pair tumbled to a low at 1.2562 before stabilizing. The overnight high recorded was at 1.2656.

On the lookout:

Today’s economic calendar is a light one ahead of a busy week.

New Zealand kicks off with its New Zealand July Building Permits (m/m f/c 0.2% from a previous 3.5% - ACY Finlogix).

Australia follows with its Preliminary July Building Permits (m/m f/c -0.8% from -7.7% - ACY Finlogix), Australian July Monthly CPI (m/m f/c 5.2% from 5.4% - ACY Finlogix), Australia Construction Work Done (q/q f/c 0.8% from 1.8% - ACY Finlogix).

Japan follows with its August Consumer Confidence Index (f/c 37.5 from 37.1 – ACY Finlogix).

Switzerland starts off European data with its August KOF Leading Indicator (f/c 91.5 from 92.2 – ACY Finlogix).

Germany follows with its August Preliminary Inflation Rate (m/m f/c 0.3% from 0.3%; y/y f/c 6% from 6.2% - ACY Finlogix).

The US rounds up today’s economic reports with its August ADP Employment Change (f/c 195k from 324k – ACY Finlogix), US Advance US Trade Balance (f/c -$94.0 billion from -$87.84 billion – ACY Finlogix), US Q2 GDP Growth Rate (f/c 2.4% from 2% - ACY Finlogix), US July Pending Home Sales (m/m f/c -0.6% from 0.3%; y/y f/c -12.0% from -15.6% - ACY Finlogix).

Trading perspective:

After rallying for over a week, the Dollar Index, a popular gauge of the Greenback’s value against a basket of major currencies, reversed, sliding 0.54% lower to 103.47 (104.17 Friday).

Expect more downside pressure on the Greenback today from early Asia.

Lower US bond yields, which dropped more than its rivals will weigh on the Dollar.

Ahead of a busy data week which culminates in the US Non-Farms Payrolls report Friday, expect more unwinding of speculative long Dollar bets.

The DXY (Dollar Index) has strong support at 103.00 followed by 102.50. A softer Dollar will see its Rivals rebound, to varying degrees.

• EUR/USD – The shared currency rallied 0.56% against the US Dollar to finish at 1.0880 in New York. Look for immediate resistance at 1.0900 (overnight high traded was 1.0892). The next resistance level lies at 1.0940 and 1.0970. On the downside, look for immediate support at 1.0850 followed by 1.0820 and 1.0780 (overnight low traded was 1.0782). Look for consolidation today in the EUR/USD pair, likely between 1.0830-1.0930. Trade the range.
• AUD/USD – The Aussie Battler rallied against the Greenback to finish 0.8% higher at 0.6482 from Friday’s open at 0.6405. Look for immediate resistance today at 0.6500 followed by 0.6540. Immediate support can be found at 0.6450, 0.6420 and 0.6390. Look for consolidation in the Aussie today, likely between 0.6430-0.6530. Sell rallies.
• USD/JPY – The Dollar had another roller coaster session against the Japanese Yen, trading between 145.67 and 147.38 before settling to close in New York at 145.82. For today, look for immediate resistance at 146.20, 146.70 and 147.20 to cap any strong rallies. On the downside, immediate support can be found at 145.50, 145.20 and 144.90. Look for more choppy trade, likely between 145.50-147.20. Trade the range, nice and wide.

 

Source: Finlogix.com

• GBP/USD – Sterling benefitted from the overall weaker Greenback, rallying to close at 1.2645 (2.3585 Friday). For today, look for immediate resistance at 1.2685 followed by 1.2715 to cap. Immediate support can be found at 1.2610, 1.2580 and 1.2550. Look for more choppy trade in the British Pound today, likely between 1.2570-1.2670. Trade the range shag on this currency pair as well.

Have a good trading week ahead all, happy Monday.