The Euro is jumping to the highest levels trying to touch the 1.22 area and gold dropped to 1334
The Dollar’s sell-off accelerated on Friday, dropping to 10 month lows against the Yen. US Ten Year yields traded to 2.016%, the lowest this year before settling at 2.05% at the close.
The Dollar Index (USD/DXY) finished 0.23% lower at 91.325. In early Sydney trade, the USD/JPY jumped to 108.25 from Friday’s NY close of 107.85.
UK Manufacturing Production data rose to 0.5% against a forecast of 0.3%
UK Goods Trade Balance: -GBP 11.6 billion against forecast -GBP 11.9 billion
Canadian Employment Change: 22,200 against forecast of 17,800
Canadian Unemployment Rate: 6.2% from previous 6.3%
China CPI: 1.8% against a forecast 1.7% and previous 1.4%
China PPI: 6.3% against forecast 5.7%
Wall Street stocks closed mixed. The S&P 500 ended down 0.15%at 2463.50 (2467 Friday).
USD/DXY – closed at 91.325 from Friday’s 91.527
EUR/USD – ended little-changed at 1.2030 (1.2025 Friday) after trading to 1.20915.
USD/JPY – finished in NY at 107.85 from 108.85 Friday)
GBP/USD – higher close to 1.3197 (from 1.3100 Friday)
AUD/USD – closed little-changed at 0.8053 (0.8048 Friday) after trading to 0.8125.
Outlook: Friday saw the USD/JPY slumping to an overnight low of 107.32. The market’s risk aversion stance prevailed as Hurricane Irma hit landfall while tensions remained high between North Korea and the U.S. The yield on the benchmark US 10 year Treasury bond slumped to 2.016% before climbing to 2.05%. New York Fed President William Dudley said he favoured gradual rate increases.
This week sees policy meetings of the Bank of England and Swiss National Bank. CPI and PPI data releases are also due to be released out of the US and UK. Australia’s Employment data is due Thursday.
There are no major economic data releases today. Tomorrow sees Australia’s National Australia Bank’s Business Conditions and Confidence Index (GMT 1.30 am, 10 Sept/Local Time 11.30 am, 10 Sept). The previous NAB Business Confidence Index was 12.0 while the previous NAB Business Conditions Index was 15.0.
Trading View: Early trade in Sydney this morning saw a good bounce in USD/JPY. The Dollar managed to rally off its multi-month and year lows different Rivals on Friday's close. China is starting to unwind its extraordinary policies which were aimed at bolstering the Yuan. In Europe, French President Macron’s public support is the same as Donald Trump’s. The political landscape in Spain and Italy face headwinds ahead. The Greenback’s sell-off is overdone.
USD/JPY – rallied this morning to a high of 108.49 from 108.25 opening. The Dollar finished at 107.85 in New York on Friday after trading to an overnight low of 107.32. We can expect a verbal protest from Japanese officials if the Dollar continues to drop. The yield on the US Ten Year note finished up at 2.05% in spite of its drop to the lows this year. The Japanese Ten Year JGB bond yield finished at -0.01%, off 1 basis point. USD/JPY has immediate resistance at 108.50 and 108.80.
Support can be found at 108.00 and 107.80. Likely range for USD/JPY today 107.80-108.80.
EUR/USD – jumped to trade to an overnight high of 1.20915 after the ECB left rates unchanged. While Mario Draghi cautioned against the Euro’s strength the market paid scant attention to it. The ECB also made it clear that it is in no rush to exit its extraordinary easy money policies. Traders still expect the ECB to end stimulus to the Euro Zone. Immediate resistance in the EUR/USD lies at 1.2040 and 1.2080. There is short term support found at 1.2000/10 and then at 1.1980. The Euro has gained nearly 15% against the US Dollar this year. Likely range today 1.1980-1.2030. Preference is to sell rallies.
AUD/USD – The Aussie soared to an overnight high 0.81248 traded before slipping to close at 0.8055. After rising for most of the last week, metals prices dropped to close lower on Friday. The PBOC’s move to unwind its policies that were aimed to bolster the Yuan has seen the USD/CNH jump higher this morning to its current 6.5100 from Friday’s close of 6.4950. This should keep both the AUD/USD and NZD/USD capped. The Aussie has immediate resistance at 0.8070/80 and then at 0.8100. Support can be found at 0.8020 and 0.8000. Likely range today 0.7980-0.8060. Sell rallies.
NZD/USD – The Kiwi was sold off this morning following its NY close at 0.7265 to 0.7235. New Zealand holds its general elections on September 23. Latest opinion polls show Labour just ahead with 54 seats for Labour and 48 seats for the Nationals. While the outcome is unlikely to upset the financial markets, election jitters as well as lower commodities prices will keep the Kiwi capped. NZD/USD has immediate resistance at 0.7260/70 while support can be found at 0.7210 and then at 0.7180. Likely range today 0.7200-60.
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