FX News Today
- Japanese shares were under pressure with a number of companies trading without the right to the next dividend payment and as the Yen strengthened. Topix and Nikkei lost 1.9% and 1.4% respectively.
- Other markets across Asia traded mixed, with mainland China benchmarks stabilising after underperforming yesterday. The Hang Seng still slipped -0.30% but CSI 300 and Shanghai Comp were little changed. Indices are heading for a weekly loss on concerns about the pace of trade talks and the impact on the economic outlook with figures today showing that China industrial profits dropped 2%.
- There were also reports that the U.S. is unlikely to extend waivers allowing U.S. companies to supply China’s Huawei technologies and the latest poltical drama in the U.S. may do little to speed up talks.
- USOIL is currently trading at USD 56.11 per barrel and Gold pivots around 1505
- USDJPY rejected 108.00 trades at 107.75
- EURUSD touched 109.03
- GBPUSD 1.2325 – Brexit outlook remains uncertain as ever. Bloomberg’s call is now for a no-deal Brexit in January, triggered by a general elections.
Charts of the day
Technician’s Corner
- EURUSD completed its round trip in N.Y. on Thursday, dropping to 28-month lows of 1.0923 into the open, rallying to 1.0962 highs, then printing fresh trend lows of 1.09o3 overnight. The pairing’s sell-off came as Dollar demand stepped in on safety flows, likely related to the current climate of U.S. political uncertainty. Fundamentally, the Euro should remain under pressure, as yield and economic growth differentials remain decidedly in favor of the USD.
- USDCAD rallied out of 1.3232 lows seen early in the session, later moving to 1.3276 highs into the close. Another downdraft in WTI crude prices prompted buyers to step in, while a general USD recovery, seemingly driven by safe-haven flows on the back of U.S. political concerns, provided support as well. For the most part, USDCAD has been confined between its 200-day moving average at 1.3301, and its 50-day moving average at 1.3236 for the past couple of weeks.
- USDJPY: rallied to near 107.90 from early lows of 107.43 in US trade and then moved to 107.75 overnight. The pairing, and indeed the Dollar in general had been pushed lower after the open on jitters ahead of the release of the whistle blower report, later rallying to highs on perceived safe-haven buying, on the back of U.S. political angst. The pairing has been unable to crack the 108 mark this week, after approaching the level each day since Monday. Between Iran, China, Ukraine, and U.S. politics, USDJPY bull will remain cautious.
Main Macro Events Today
- Personal Consumption Expenditures Prices (USD, GMT 12:30) – A 0.5% gain is anticipated in personal income in August after a 0.1% increase in July, alongside a 0.2% rise in August consumption that followed a big 0.6% July gain.
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Durable Goods (USD, GMT 12:30) – Durable goods orders are expected to fall -1.6% in August, after gains of 2.0% in July and 1.8% in June, thanks to a -5.0% transportation orders drop after two monthly gains. Boeing orders dropped back to just 6 from 31 in July, with continued weakness due to the hit from problems with the Boeing 737 Max that has prompted buyers to delay new orders.
Support and Resistance levels
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Stuart Cowell
Head Market Analyst
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