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USD gains momentum as equity sell-off resumes

Arnaud Masset

Market Brief

G10 Advancers and Decliners vs USD
JPY 0.22
GBP 0.09
CHF 0.02
DKK 0.01
EUR 0.01
AUD -0.01
NOK -0.02
SEK -0.10
CAD -0.17
NZD -0.21
Global Indexes Current Level % Change
Nikkei 225 Index 16405.01 -1.26
Hang Seng Index 23341.63 0.65
FTSE futures 6662.5 -0.35
DAX futures 10360.5 -0.32
CAC futures 4362.5 -0.16
SMI Futures 8149 -0.12
S&P future 2120.2 -0.4
Global Indexes Current Level % Change
Gold 1320.79 -0.16
Silver 18.95 -0.08
VIX 18.14 1.62
Crude wti 43.64 0.14
USD Index 95.43 0.11

It was a quiet session in the FX market as investors impatiently await the upcoming BoJ and Fed meetings. The single currency was little changed against the dollar and traded range-bound between 1.1239 and 1.1251. The Japanese yen was the best performer amongst the G10 complex as it advanced 0.22% against the greenback, with USD/JPY easing at 102.21 after moving as low as 101.95 overnight. In spite of the fact that the Fed should stay on the sidelines at next week's FOMC meeting, which would prevent the USD from extending gains, the bias should remain on the upside in USD/JPY as investors seem reluctant to load on long JPY positions, preferring instead to continue seeking out higher returns. On the upside a resistance can be found at 104.32 (high from September 2nd), while on the downside a support lies at 101.21 (low from September 7th).

The New Zealand dollar was the worst performing currency amongst the G10 complex as it fell 0.21% against the US dollar, down to 0.7265 amid worse than expected GDP figures and faltering business confidence. Data showed that the Kiwi economy grew 0.9%q/q (seasonally adjusted) in the second quarter, missing estimates of 1.1%, while the first quarter’s figure was revised to 0.9% from 0.7%. All in all, the growth figures are rather encouraging and show that the economy continued to adjust effectively to the strong Kiwi and weak global demand environment. However, we cannot rule another rate cut from the RBNZ as inflationary pressures and more specifically inflation expectations remain desperately low. The possibility of another easing move from the RBNZ should keep pressure on the Kiwi or at least it should prevent it from strongly appreciating. From a technical point of view, NZD/USD has tumbled on the long-term 0.7335 resistance implied by the 38.2% Fibonacci level (on 2009-2014 rally). In the short-term, the pair has successfully broken the bottom line of its uptrend channel, suggesting that the bullish momentum is coming to an end.

In the equity market, Asian returns were mixed on Thursday. Japanese equities moved further into negative territory with the Nikkei and the Topix index down 1.26% and 1.04% respectively. Chinese markets were closed for the Autumn Festival. In Hong Kong, the Hang Seng was up 0.65%. In Europe, equity futures were broadly trading in negative territory, pointing to a lower open.

 

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Today's Calendar Estimates Previous Country / GMT
DE Aug PPI MoM - -0,70% DKK / 07:00
DE Aug PPI YoY - -0,70% DKK / 07:00
SW Aug Unemployment Rate 6,10% 6,30% SEK / 07:30
SW Aug Unemployment Rate Trend - 6,90% SEK / 07:30
SW Aug Unemployment Rate SA 6,80% 7,00% SEK / 07:30
SZ sept..15 SNB 3-Month Libor Lower Target Range -1,25% -1,25% CHF / 07:30
SZ sept..15 SNB 3-Month Libor Upper Target Range -0,25% -0,25% CHF / 07:30
SZ sept..15 SNB Sight Deposit Interest Rate -0,75% -0,75% CHF / 07:30
NO Aug Trade Balance NOK - 14.0b NOK / 08:00
UK Aug Retail Sales Ex Auto Fuel MoM -0,70% 1,50% GBP / 08:30
UK Aug Retail Sales Ex Auto Fuel YoY 4,80% 5,40% GBP / 08:30
UK Aug Retail Sales Inc Auto Fuel MoM -0,40% 1,40% GBP / 08:30
UK Aug Retail Sales Inc Auto Fuel YoY 5,40% 5,90% GBP / 08:30
IT Jul General Government Debt - 2248.8b EUR / 08:30
EC Jul Trade Balance SA 22.0b 23.4b EUR / 09:00
EC Jul Trade Balance NSA 29.6b 29.2b EUR / 09:00
EC Aug CPI MoM 0,10% -0,60% EUR / 09:00
EC Aug F CPI YoY 0,20% 0,20% EUR / 09:00
EC Aug F CPI Core YoY 0,80% 0,80% EUR / 09:00
SW Bloomberg Sept. Sweden Economic Survey - - SEK / 09:00
NO Bloomberg Sept. Norway Economic Survey - - NOK / 09:05
UK sept..15 Bank of England Bank Rate 0,25% 0,25% GBP / 11:00
UK Sep BOE Asset Purchase Target 435b 435b GBP / 11:00
BZ Sep FGV Inflation IGP-10 MoM 0,40% -0,27% BRL / 11:00
US Sep Empire Manufacturing -1 -4,21 USD / 12:30
US 2Q Current Account Balance -$121.0b -$124.7b USD / 12:30
US Aug Retail Sales Advance MoM -0,10% 0,00% USD / 12:30
US Aug Retail Sales Ex Auto MoM 0,20% -0,30% USD / 12:30
US Aug Retail Sales Ex Auto and Gas 0,30% -0,10% USD / 12:30
US Aug Retail Sales Control Group 0,40% 0,00% USD / 12:30
US sept..10 Initial Jobless Claims 265k 259k USD / 12:30
US sept..03 Continuing Claims 2150k 2144k USD / 12:30
US Aug PPI Final Demand MoM 0,10% -0,40% USD / 12:30
US Aug PPI Ex Food and Energy MoM 0,10% -0,30% USD / 12:30
US Aug PPI Ex Food, Energy, Trade MoM 0,10% 0,00% USD / 12:30
US Aug PPI Final Demand YoY 0,10% -0,20% USD / 12:30
US Aug PPI Ex Food and Energy YoY 1,00% 0,70% USD / 12:30
US Aug PPI Ex Food, Energy, Trade YoY - 0,80% USD / 12:30
US Sep Philadelphia Fed Business Outlook 1 2 USD / 12:30
RU sept..09 Gold and Forex Reserve - 394.3b RUB / 13:00
CA Aug Existing Home Sales MoM - -1,30% CAD / 13:00
US Aug Industrial Production MoM -0,20% 0,70% USD / 13:15
US Aug Capacity Utilization 75,70% 75,90% USD / 13:15
US Aug Manufacturing (SIC) Production -0,30% 0,50% USD / 13:15
US sept..11 Bloomberg Consumer Comfort - 44 USD / 13:45
US Jul Business Inventories 0,10% 0,20% USD / 14:00
RU Aug Industrial Production YoY 0,60% -0,30% RUB / 22:00
PO Portugal's Centeno, Bank of Portugal Governor at Conference - - EUR / 22:00
IN 2Q BoP Current Account Balance $2.65b -$0.30b INR / 22:00
IN Aug Trade Balance -$7000.0m -$7761.4m INR / 22:00
IN Aug Imports YoY - -19,00% INR / 22:00
IN Aug Exports YoY - -6,80% INR / 22:00
Currency Tech
EURUSD
R 2: 1.1616
R 1: 1.1428
CURRENT: 1.1226
S 1: 1.1046
S 2: 1.0913

GBPUSD
R 2: 1.5018
R 1: 1.3534
CURRENT: 1.3230
S 1: 1.3024
S 2: 1.2851

USDJPY
R 2: 107.90
R 1: 104.32
CURRENT: 102.43
S 1: 99.02
S 2: 96.57

USDCHF
R 2: 0.9956
R 1: 0.9885
CURRENT: 0.9761
S 1: 0.9522
S 2: 0.9444
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