The dollar is easing slightly ahead of the Non-Farm Payrolls report on Friday and Catalonia is preparing for independence from Spain
The Dollar retreated as traders adjusted their positions into the month and quarter end. While details were revealed by President Trump on his tax plan, traders were doubtful on the administration’s ability to deliver them. After rising for three straight days, a pause for the Greenback was inevitable.
US Q2 GDP growth lifted to 3.1% against analysts forecast of 3.0% and the previous quarter’s 3.0%.Weekly
Jobless Claims, however, were higher, at 272,000 from the previous week’s 260,000 and a forecast of 269,000.
Euro Zone Economic Confidence Index rose to 113.00 against a forecast of 112.00.
German GFK Consumer Confidence Climate fell to 10.8 against a forecast of 11.0
The US Trade Deficit improved to -US$62.9 billion from the previous -US$63.9 billion
Global stocks were mostly higher led by Wall Street. The US S& P 500 finished up 0.16% at 2,510.80, near its all time high.
USD/DXY – The Dollar Index slipped to 93.12 from 93.443 yesterday, off 0.36%
EUR/USD – rallied off its lows, closing at 1.1785 (1.1748 yesterday)
USD/JPY – falls to 112.36 from 112.80 yesterday mainly on position adjustments
GBP/USD – higher close to 1.3440 (1.3389 yesterday).
AUD/USD – climbs off lows to end at 0.7856 from 0.7849 yesterday.
Outlook: The Dollar Index (USD/DXY) pulled back from its resistance at the 93.70 level, slipping 0.36% to 93.12. This coincided with the currencies bouncing off good bases like the Australian Dollar at 0.7799. The case is there for the Dollar to build a medium term base and yesterday’s retreat was a pause in that build. Market’s don’t seem to be convinced of that and want to see more data ahead. Let’s not forget there is the risk of more political uncertainty in Europe and the rest of the world.
Events and economic data releases for today:
Japan Tokyo and National Core CPI, Household Spending and Unemployment Rate: (GMT 11.30 pm, Sept 28/Local Time 9.30 am Sept 29) forecast for Tokyo Core CPI: 0.5% against previous 0.4%; forecast for National Core CPI: 0.7% against previous 0.5%; forecast for Household Spending (Annual): 1.0% against the previous -0.2%; forecast for Unemployment Rate: 2.8% against previous 2.8%
Japan Retail Sales and Preliminary Industrial Production (GMT 11.50 pm, Sept 28/Local Time 9.50 am, Sept 29): forecast for Annual Retail Sales: 2.5% against 1.8%: forecast for August Industrial Production: 1.8% against -0.8%
China Caixin Manufacturing PMI: (GMT 1.45 am, Sept 29/Local Time 11.45 am Sept 29) forecast: 51.5 from previous 51.6
Germany Retail Sales: (GMT 6 am, Sept 29/Local Time 4 pm, Sept 29) forecast: 0.5% from previously adjusted upwards 0.6%
UK Nationwide House Price Index: (GMT 6 am, Sept 29/Local Time 4 pm, Sept 29): forecast: -0.1% from 0.1%
UK Current Account and Final Q2 GDP (GMT 6.30 am, Sept 29/Local Time 4.30 pm, Sept 29) forecast: -GBP 15.8 billion from -GBP 16.9 billion; forecast for UK GDP: 0.3% from 0.3%
Euro Zone Headline and Core CPI: (GMT 9 am, Sept 29/Local Time 7 pm, Sept 29): forecast for Headline CPI: 1.6% against previous 1.5%; forecast for Core CPI:1.2% against previous 1.2%
Canada August GDP (GMT 12.30 pm, Sept 29/Local Time 10.30 pm, Sept 29) forecast: 0.1% against previous 0.3%
US Core PCE Price Index and Personal Spending (GMT 12.30 pm, Sept 29/Local Time 10.30 Sept 29): forecast Core PCE: 0.2% against previous 0.1%; forecast Personal Spending: 0.1% against previous 0.3%
Spanish Catalan Independence Vote (Sunday all day)
Trading View: It’s a Friday today and there are a bit of data for traders to get through later. Expect consolidation around the levels established in the last 24 hours to dominate trade. Next week sees the release of US Non Farms Payrolls data. And this Sunday’s political event is the Spanish Catalan Independence referendum.
EUR/USD – had a good bounce off the lows at 1.1721 to finish at 1.1785. There is immediate resistance at 1.1800 and 1.1820. Immediate support can be found at 1.1750 and then at 1.1720. Likely range today 1.1740-1.1800. Euro is still a sell on rallies. ECB officials have said that a good amount of stimulus is still needed at this time. Which is telling us that the Euro is too still too high for their liking. Let’s not forget the political risks with the focus on Sunday’s Catalan Independence referendum which has been outlawed by Spain’s Madrid central government.
USD/JPY – traded lower as the differential between the Ten Year US and Japanese yields narrowed. US Ten Year yield was flat at 2.31%, however, the Japanese ten year yield rose 3 basis points to 0.06%. USD/JPY closed at 112.26 from 112.80 yesterday. There is resistance around the 112.60 and then 112.80 levels. Immediate support can be found at 112.00 and 111.90. Likely range today 112.00-70.
GBP/USD – had a good bounce off lows at 1.3343. Sterling closed at 1.3440. Brexit negotiations remain a headwind for the Pound. GBP/USD has immediate resistance at 1.3460-70. Short term support lies at 1.3400 and then at 1.3380. Likely range today 1.3390-1.3450.
AUD/USD – closed little-changed at 0.7856 from 0.7850 yesterday after trading to an overnight low of 0.7799. Copper futures were up 1.6% and this should be Aussie supportive. AUD/USD has immediate support at 0.7820 and then at 0.7800. Immediate resistance lies at 0.7870 and 0.7890. The speculative market is still long Aussie so look to sell rallies ideally to 0.7890.
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