$AUD lower on Retail Sales. No love for $GBP. NFP looms

Summary

• A whippy NY session yesterday to say the least as a decent ADP Report (relative to very low expectations for Friday’s NFP) sees USD shorts cover swiftly but the USD backs off again after a very strong services ISM.  US stocks trade to yet another record high.

• AUD and GBP the features overnight as Aussie retail sales misses big (-0.6% vs +0.3% expected) and speculation swirled about how long the UK’s Theresa May will remain in office.  GBPUSD cracks below the 1.3225 and is now 50pts lower scrambling to find support yet again.  EURGBP triggers stops above the 89 handle.  AUDUSD losses all the progress it made during London trading yesterday, now swiftly back below 0.8740.  Bounces have been shallow.  Nothing going on in EURUSD and USDCAD overnight, but the market is now selling EURs on the release of the dovish ECB minutes (7am), especially vs JPY.  USDJPY marginally weaker overnight as hourly support in the 112.60s gives way and US yields start to recede again.  EURJPY selling dragging USDJPY lower here too.

• Quiet day on the calendar today: US claims and trade data, some Fed speakers around the US open, some BOE speakers later in the day.  Tomorrow’s US NFP and Cdn jobs reports now in focus.  Markets expecting just +80k from the US (in the wake of the Hurricanes) and +12k from Canada.

• Lloyds reiterates medium term call of 1.1500 for EURUSD but potentially some short covering first.

• CME open interest changes 10/4: AUD +538, GBP +35, CAD -1556, EUR +1114, JPY +2135

Currency Calendar

Bank holidays and impactful report releases for select countries.

By The Numbers: Daily FX Snapshot

AUD/USD - Australian Dollar

Last night’s sell-off put a real dent on the Aussie charts.  Support 0.7990-7800.  $1bln AUD of expiries at 0.7800 post NFP tomorrow could act as a magnet.  Have to imagine the extended long position is a little demoralized this morning after three days of position accumulation and what, could quickly prove to be, a failed bottoming pattern this week.  

GBP/USD - British Pound

There continues to be no love for Sterling as the market has found another excuse to sell overnight.  The 400pt rally (Sep 14&15) in GBPUSD proved to be an unhealthy move because it was so swift and it came without strong support levels for traders to anchor positions against.  Market is now firmly below July’s high of 1.3268.  Next support level 1.3120-40.  EURGBP still finding buyers on dips and GBPJPY is still looking heavy as we go to print.

USD/JPY - Japanese Yen

Dollar/yen enters NY trading this morning under a little bit of technical pressure.  Support 112.10-20s.  Hearing stops located below.  Resistance 112.70.  Futures traders add yet another 2k contracts yesterday (JPY shorts perhaps getting a little overconfident here).  Longer term charts still constructive after September’s bullish engulfing candle.

Market Analysis Charts

AUD/USD Chart

GBP/USD Chart

USD/JPY Chart

Charts: TWS Workstation

About the Author

Erik Bregar - Trader

Erik works with corporations and institutions to help them better navigate the currency markets. His desk provides fast, transparent, and low cost trade execution; up to the minute fundamental and technical market analysis; custom strategy development; and post-trade services -- all in an effort to add value to your firm’s bottom line. Erik has been trading currencies professionally and independently for more than 12 years. Prior to leading the trading desk at EBC, Erik was in charge of managing the foreign exchange risk for one of Canada’s largest independent broker-dealers.

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