Easy-Forex Daily Outlook
AUD/USD Europe rallied AUD/USD off s-t support in the 0.8925/30 area and had it near 0.8965 into NY's open. A slide in USD/JPY in early NY aided AUD/USD's further along. The pair reached 0.8995 but ran out of gas. Offers touted above 0.9000 and a recovery for the USD prevented further gains. Intra-day profit taking then took hold and the pair slide. The slide's pace accelerated and volumes increased into Europe's close as longs looking to exit on rallies came to market. A new trend low of 0.8920 was then hit. Stops below that level remained untouched. A slight bounce late in the day had the pair near 0.8930 and poised to close below the 61.8 Fib of 0.8660-0.9505. The limited bounces for this pair have those that are still long on edge. CFTC stats are only being marginally reduced. If the reduction persists the March low (0.8891) will be tested. If that level breaks there is little support until the 2014 low at 0.8660. There is no major Oz data due next week so traders will focus on Stevens' speech on Sep 25 and the US durable goods orders & GDP reports for their next cue.
EUR/USD The reversal in GBP/USD from its high saw a large rally in EUR/GBP from below 0.7820 towards 0.7880. The rally was of no use to EUR/USD after another try at breaking the 200-HMA overnight failed. EUR/USD plunged during Europe's morning to sit near 1.2865 as NY got going. Some USD weakness inspired by USD/JPY's slide saw EUR/USD lift near 1.2880 early in NY but bears emerged. From the NY high (1.2877) the pair steadily slid, cleared the Sep 17 low & made a new trend low of 1.2831. Little bounce was seen for the pair as the USD remained firm even as US bond yields traded on their lows for the day. EUR/USD sat just above 1.2835 late in the day. The rotten price action for the pair suggests lower levels are due as do techs & spreads. A weekly bearish engulfing candle is in place, day/week RSIs resume their bear bias and yield spreads remains at recent wides. Immediate support sit at 1.2800 followed by the 61.8 Fib of 1.2042-1.3995 but they're only likely to slow the slide. Bears seem intent on testing major support near 1.2740 for now.
USD/JPY The Asia stop-run above 109 barriers stopped shy of the 109.50 defense. Recently heavily bought yen crosses, such as GBP/JPY & EUR/JPY, also came in for corrections, weighing on USD/JPY and making the yen one of the strongest ccys on the day. GBP/JPY was ripe for sell-the-news after the Sottish vote counts came in, while EUR/JPY had completely ignored Thur's poor TLTRO uptake and was thus a bit vulnerable, particularly after today's spike high at 141.21 ran into offers by the upper 21-week Bolli and historical resistance by 141. The cross retreated to the 200-DMA, dn TL off the Dec '13 peak and the weekly Kijun line in the 139.60-80 range; levels it just cleared on Thur, running buy stops in the process. GBP/JPY's high Thur nipped past the 2002-03 lows in the lower 179.00s and the 180 handle. Some taking long W/Es in Japan into Tues's holiday, which may have brought forward yen selling today ahead of Gotobi Saturday. USD/JPY's NorAm dip was bought ahead of the o/n lows, though gains were ltd due to small S-T Tsy yld and stock gains. Japan's Sep PMI and Aug/Sep CPIs are out on the 25th.
Looking Ahead - Economic Data (GMT)
• No Significant Data
Looking Ahead - Events, Other Releases (GMT)
• No Significant Events
EQUITIES & COMMODITIES
US equity markets had a fairly quiet day, with the S&P500 fluctuating around record highs. The main news was the launch of Alibaba Group Holding Ltd, which surged 38% on debut from a USD68.00 IPO price to a USD92.70 open.
Moves in European equity markets were also muted. Despite early gains, markets softened into the close, although they still generally finished the week on a positive note, with the Euro Stoxx 50 finishing 0.2% higher.
Iron ore fell a further 1.6% on Friday, closing the week at USD81.7/t. Chinese steel mills offering to sell long term cargoes into the spot market have further exacerbated the problem of excess near term supply. Australian coal futures closed unchanged despite rising stocks in China. Inventories at key port Qinhuangdao were up to 6.23mt from last week’s 5.96mt.
Oil markets were mixed. Brent futures crept back toward USD100/bbl, while WTI eased 0.7%. Fresh concerns about Libyan supply were the main factor for Brent. The El Sahara oil field pared output last week after violence escalated near a major refinery.
Agricultural markets were weaker across the board. Wheat futures were again the worst performing, retreating another 3.5%. The theme of global ample supply and soft US exports continues. US wheat exports this year are running at less than half of the pace of last season. Corn (-2%) and soybeans (-1.5%) were next on the list of falls.
Base metal markets were range bound on Friday, with no major moves of note. Across the week metals were generally weaker, as a stronger US dollar reduced investor interest. Chinese stimulus announcements also appear to have had little impact on demand sentiment.
Gold continued to track lower on Friday thanks to broader USD strength. With key market risk events of the FOMC and Scottish referendum now passed, markets will look to USD moves and physical buying to drive direction.