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Forex News

Tuesday, September 19, 2017

Following a slide to a fresh session low at 1.2255 in the last hours, the USD/CAD pair reversed course and started to rise toward the 1.23 handle as t

Following a slide to a fresh session low at 1.2255 in the last hours, the USD/CAD pair reversed course and started to rise toward the 1.23 handle as the commodity-linked loonie weakened on a recent crude oil sell-off. As of writing, the pair was trading at 1.2287, still losing 0.1% on the day. Crude oil prices came under pressure on Tuesday ahead of the API data on U.S. inventories, which is expected to show another build up, dragging the barrel of West Texas Intermediate below the $50 mark. At the moment, the barrel of WTI is trading at $49.85, losing 1% on the day. "It feels kind of like positioning ahead of tonight's report, but there's not a lot of action behind the move," Phil Flynn, an analyst at Price Futures Group in Chicago, told Reuters. On the other hand, the greenback is trying to erase its daily losses ahead of the FOMC meeting on Wednesday with the US Dollar Index turning flat at 91.80 in the session, providing an additional boost to the pair. Although today's mixed macro data from the U.S. pushed the DXY down to the mid-91 area, the 10-year US T-bond yield rose to a fresh monthly high at 2.245%, allowing the buck to gather strength against its peers.  "The Fed has already outlined how it intends to start trimming its balance sheet, but it is yet to announce when that will commence. Given that Yellen’s current term is due to end in February next year, the market is expecting that balance sheet reduction will start soon, even if the Fed (as we expect) decides that conditions cannot tolerate a third interest rate hike this year," Rabobank analysts wrote in a recent report.Geopolitics and central banks to take centre stage this week – RabobankTechnical outlookThe pair still needs to make a decisive break above 1.2300 (psychological level/20-DMA) to extend its gains to 1.2410 (Sep. 6 high) and 1.2470 (50-DMA). On the flip side, supports could be seen at 1.2255 (daily low), 1.2185 (10-DMA) and 1.2080 (Apr. 27, 2015, low).BoC is eyeing CAD strength - RabobankToday's data from the U.S.:US: Privately-owned housing starts in August were at 1,180,000, 0.8% below July estimateUS: Import prices increased 0.6 percent in AugustUS: Current-account deficit increased to $123.1 billion in the second quarter of 2017   

GBP/USD was unable to hold on top of 1.3500 and move back toward daily lows amid a rally of the US dollar across the board....

GBP/USD was unable to hold on top of 1.3500 and move back toward daily lows amid a rally of the US dollar across the board.  The greenback gained momentum during the American session ahead of tomorrow’s FOMC decision.  Cable reached 1.3536 following the release of US economic data and then bounced to the downside. During the last hour, it accelerated the decline and at the moment trades at 1.3475/80, slightly above 1.3465/70, where today and yesterday’s low are located.  The slide is taking place as the US Dollar Index moves to test daily highs above 91.75 boosted by US bond yields that continue to rise. The 10-year yield reached 2.243%, the highest in a month. Levels to watch To the downside, the immediate support is the 1.3460 zone (Sep 18 & 19 low), followed by 1.3405 (Sep 14 high) and 1.3330 (Sep 13 high). On the upside, resistance levels might lie at 1.3520 (downtrend line), 1.3550 (Sep 19 high) and 1.3570.

Analysts at UOB Group noted that The Bank of Canada Deputy Governor Tim Lane who was speaking before the Saskatoon Regional Economic Development Autho

Analysts at UOB Group noted that The Bank of Canada Deputy Governor Tim Lane who was speaking before the Saskatoon Regional Economic Development Authority on Monday (18 Sep) said that the central bank will be paying ‘close attention’ to how the economy responds to higher interest rates and stronger CAD. Key Quotes:"The BOC is seeing widespread strength in business investment, exports, along with global economic expansion but the possibility of a material protectionist shift, particularly on possible changes to NAFTA, is a key source of uncertainty for Canada’s economic outlook." "He warned that trade negotiation outcomes could have implications for the economy, which BOC would need to consider in conducting monetary policy and that it will be watching trade developments and implications for exports, business investment very closely." "Lane’s comments sent the CAD surging 0.86% with the USD/CAD to close at 1.2291."

Noting the recent test lower, analysts at Commerzbank explained that AUD/USD has started to erode the 3-month uptrend at 0.7965. Key Quotes: "The ma

Noting the recent test lower, analysts at Commerzbank explained that AUD/USD has started to erode the 3-month uptrend at 0.7965.Key Quotes:"The market should start to ease lower." "Directly overhead lies the 0.8162/66 May 2015 peak and 50% retracement." "Below the uptrend lies the 0.7808 current August low, which guards good support at 0.7748/41...It is where the February and March highs are located and while above here the market will remain bid longer term." 

According to the latest poll results conducted by Forsa, German Chancellor Angela Merkel's CDU/CSU bloc is seen at 36% vs Social Democrats' at 23%.

According to the latest poll results conducted by Forsa, German Chancellor Angela Merkel's CDU/CSU bloc is seen at 36% vs Social Democrats' at 23%. Left 10%, AFD 9%, FDP 9%, Greens 8%More on German ElectionsScenarios:Clear victory by Merkel: This is more of a same kind of situation in Germany and Eurozone. Approving bailout packages will be easy; there will be more room for Eurozone financial integration. The idea of the European monetary fund will gather traction. Finance Minister Wolfgang Schaeuble wants to run fiscal surpluses every year until 2020 and has only vaguely hinted at tax cuts. So there is little scope for fiscal reflation…Impact on EUR/USD: mildly positive, Focus would shift to the ECB.  EUR/USD could rally sharply if Merkel changes her stance following a clear vitory and talks about reflating the economy.Tight victory by Merkel: Polls suggest Merkel will be short of a parliamentary majority in the Bundestag and will need weeks, if not months, to form a new coalition government.
A small majority for Merkel would make her vulnerable during if there’s a new crisis in the Eurozone.Impact on EUR: A minor initial sell-off likely. Next move depends on the sound bites - if in support of reflationary policies, EUR would rally.Schulz win: Schulz has promised to cut taxes for anyone earning less than 60,000 euros - a measure that would benefit nine out of 10 German workers - and to reduce social security contributions for those earning up to 15,000 euros a year. Schulz also wants to spend 30 billion euros more on public investment by 2021. He wants to raise taxes for top earners.Impact on EUR: An Intraday sell-off could be followed by a sharp rebound and rally to 1.24 handle in the subsequent days, especially if the new Chancellor talks about delivering tax cuts and public spending. 

United States 4-Week Bill Auction declined to 0.96% from previous 0.97%

Analysts at Scotiabank noted that cable is sluggish on the day and the GBP is under-performing on some of the key crosses.  Key Quotes: "Governor Ca

Analysts at Scotiabank noted that cable is sluggish on the day and the GBP is under-performing on some of the key crosses. Key Quotes:"Governor Carney’s comments at the IMF yesterday did not perhaps quite reflect the full bore hawkishness for a Nov rate increase that some market participants had wanted or expected to see.  UK politics may be weighting on sentiment amid speculation about a rift between PM May and Foreign Minister Johnson over Brexit which rather highlight’s the PM’s weak leadership position.  Neutral/bearish—Short-term signals looked peakish yesterday and the subsequent slide in the GBP supports the impression that GBP/USD has put in a short-term top at least. We see support at 1.3455/65. Loss of support in the mid/ upper 1.34s will open up the downside for a further correction in the GBP’s recent gains towards 1.3350."

After renewing its highest level in nearly two months at 111.88 in the late Asian session on Tuesday, the USD/JPY pair reversed course and dropped to

After renewing its highest level in nearly two months at 111.88 in the late Asian session on Tuesday, the USD/JPY pair reversed course and dropped to a daily low at 111.20 before recovering its losses. As of writing, the pair was trading at 111.55, virtually unchanged on the day. The pair's upsurge had been triggered by a sharp 2% rise in the Nikkei 225 Index during the Asian session. However, major European equity indexes failed to record the same type of robust gains on Tuesday and made it difficult for the pair to extend this move. Furthermore, Wall Street started the day in a calm manner and is now clinging to small gains, suggesting that the risk appetite, which usually hurts the demand for safe-havens like the JPY, is not a price-driving factor in the NA session. On the other hand, today's mixed macroeconomic data from the U.S. couldn't help the greenback gain traction with the US Dollar Index now losing 0.15% at 91.66 at the moment. Amid a subdued trading action ahead of tomorrow's FOMC meeting, the pair is likely to stay directionless in tight ranges. Commenting on a possible market reaction tomorrow, "“in the absence of any convincing hawkish signal -such as a reference to another rate hike being 'appropriate soon' - we think the USD is likely to follow the historical pattern of moving lower in the aftermath of the FOMC meeting,” Viraj Patel, Foreign Exchange Strategist at ING, wrote in a recent article.Fed will announce that balance sheet reduction will start in Oct - HSBCTechnical levels to consider:The pair is now trading just a couple of pips above the critical 200-DMA at 111.45. With a daily close above that level, it could aim for 112.20 (Jul. 26 high) and 112.85 (Jul. 17 high). On the downside, supports could be seen at 110.80 (100-DMA), 110 (psychological level/50-DMA) and 109.50 (Sep. 14 low). USD/JPY seen at 114.00 in 3-month – Danske BankToday's data from the U.S.:US: Privately-owned housing starts in August were at 1,180,000, 0.8% below July estimateUS: Import prices increased 0.6 percent in AugustUS: Current-account deficit increased to $123.1 billion in the second quarter of 2017

Analysts from Wells Fargo, point out that the US current account deficit rose to its highest level in about 9 years in the second quarter...

Analysts from Wells Fargo, point out that the US current account deficit rose to its highest level in about 9 years in the second quarter, but according to them the country appears to have little difficulty financing this red ink at present.Key Quotes: “The U.S. current account deficit widened from $113.5 billion (revised) in Q1-2017 to $123.1 billion in the second quarter, the most red ink in the overall current account in about 9 years.” “The deficit in trade in goods, which was largely stable between 2014 and 2016 due in part to the collapse in petroleum prices, has widened again this year as oil prices have rebounded from their multi-year lows in early 2016. The surplus in the services balance has trended higher in recent quarters, but not enough to prevent the overall current account deficit from widening.”  “The overall red ink in the current account grew because the income that Americans earn on their overseas investments did not rise as much as the income that foreigners receive on their U.S. investments.” “The current account deficit, which is equivalent to less than 3 percent of GDP at present, is really not that worrying because the United States appears to have little difficulty attracting the net capital inflows that are needed to finance the red ink in the current account.” “As noted above, we do not really worry about the red ink in the current account at present. As a percent of GDP, the current account deficit reached about 6 percent in 2006. It was more challenging for the country to finance its current account deficit a decade ago than it is today.” “Although we look for the dollar to trend lower in coming quarters as foreign central banks begin to tighten their respective policy stances, we believe U.S. assets will remain attractive to foreign investors, which will prevent a sharp decline in the value of the greenback.”

Analysts at UOB Group noted that the Bank of England (BOE) Governor Mark Carney gave a lecture in IMF HQ in Washington DC on Monday (18 Sep). Key Quo

Analysts at UOB Group noted that the Bank of England (BOE) Governor Mark Carney gave a lecture in IMF HQ in Washington DC on Monday (18 Sep).Key Quotes:"Who said while the UK decision to leave the European Union has slowed growth, it has also cut the UK economy’s potential, and that reduced “speed limit” (growth potential) increases the chance of overheating and partly explains why the BOE’s Monetary Policy Committee now says it may need to raise rates soon." "Carney’s comments also added weight to the idea that above-target inflation is, in fact, becoming more entrenched and cannot be ignored, rather than being a short-term spike as a result of the decline in the pound." "Carney also said there are global factors that could justify U.K. policy tightening soon. In his view, the case for such a move is reinforced by the possibility that global equilibrium interest rates may be rising, which according to him, means that UK monetary policy “has to move in order to stand still.”" "However, BOE Governor Carney’s speech in IMF HQ was interpreted as more dovish compared to last week’s MPC statement, with him reinforcing the view that the rate-hike cycle in the UK will be very shallow or in Carney’s words “limited and gradual”."

EUR/JPY pulled back during the American session and erased most of the day’s gains. Price action remains limited ahead of tomorrow’s FOMC decision....

EUR/JPY pulled back during the American session and erased most of the day’s gains. Price action remains limited ahead of tomorrow’s FOMC decision. On Thursday will be the turn of the Bank of Japan. EUR/JPY rejected from above 134.00Earlier today the pair peaked at 134.16, the highest since December 2015. The euro failed to hold above 134.00 and declined, erasing gains. The retreat found support at 133.20/30. It was trading at 133.50/55, up less than 20 pips from Monday’s close, rising for the third day in a row.  EUR/JPY lost momentum amid a retreat of euro in the market, following a Reuters report that suggested that ECB policymakers disagree on whether to set a firm end-date for the bond-buying program in October. ECB policymakers disagree on setting a firm bond buying end-date in October - SourcesLevels to watch To the upside, resistance levels might be located at 134.15/20 (daily high) followed by 134.60 (Dec 2015 high) and 135.00 (psychological). On the flip side, support could be seen at 133.20 (daily low), 132.30 (Sep 18 low) and 132.00 (Sep 13 high). 

Analysts at Nomura offered a full review of US August Housing Starts that edged lower. Key Quotes: "Single-family starts point to continued gradual

Analysts at Nomura offered a full review of US August Housing Starts that edged lower.Key Quotes:"Single-family starts point to continued gradual recovery, but hurricanes to distort view August housing starts came in at an annualized pace of 1180k, down 0.8% m-o-m from an upwardly revised 1190k in July, mostly in line with expectations (Nomura and Consensus: a 1.6% increase to 1174k). Building permits authorized in August increased 5.7% m-o-m, above expectations (Nomura: +1.6%, Consensus: -0.8%). Single-family starts increased 1.6% m-o-m to an annualized pace of 851k and point to continued gradual improvement given steady demand from consumers and lean inventories of homes for sale. Multi-family starts, on the other hand, appear to have peaked. In August, multi-family starts dropped 6.5% to an annualized pace of 329k and materially lowered total housing starts, following an upwardly revised 2.2% decline in July. Note that the rental vacancy rate has picked up recently, reflecting slowing activity in the multi-family housing market. The Census Bureau reported that hurricanes Harvey and Irma did not significantly affect the permit data collection process. However, information on the status (starts or completion) of authorized construction projects in FEMA-designated disaster counties was collected for only about 60% of the cases. The cases for which the information was not collected were considered as “no change” in status (i.e., no starts or completion). Typically, this information is collected for almost 95% of the cases sampled for the Survey of Construction. Indeed, multi-family housing starts in the Southern region declined 35% m-o-m in August, but this metric tends to be volatile. Excluding multi-family structures, singlefamily housing starts in this region rose 1.3% m-o-m. It is possible that increases in housing starts in states that did not sustain heavy damage from Harvey were strong enough to counteract any negative impact from Harvey. By contrast, building permits for single-family homes in the South dropped by 4.6% m-o-m, suggesting the potential disruptions associated with Hurricane Harvey. Those mixed signals increased uncertainty around the impact from hurricanes on housing data in August. Looking ahead, we could see a larger impact from Harvey as more unreported information is gathered. Further, Hurricane Irma, which brought widespread disruptions to construction activity in Florida, may distort the September estimates of housing starts. That said, the impact of Harvey and Irma in September depends on the fraction of cases collected in disaster areas. In addition, as rebuilding activity picks up, there may be gradual boost to spending on residential construction and home improvement in coming months.  GDP tracking update: The annualized pace of single-family housing starts in August was mostly in line with our expectations. After rounding, our Q3 tracking estimate was unchanged at 2.0% q-o-q saar. June single-family housing starts were lowered slightly, but the impact on our Q2 tracking estimate was muted, which remains unchanged at 3.2%."

Currently, NZD/USD is trading at 0.7312, up 0.66% on the day, having posted a daily high at 0.7319 and low at 0.7256. New Zealand GDT Price Index ros

Currently, NZD/USD is trading at 0.7312, up 0.66% on the day, having posted a daily high at 0.7319 and low at 0.7256.New Zealand GDT Price Index rose from previous 0.3% to 0.9%NZD/USD popped a handful of pips higher in the New York morning session on the back of a slight improvement in the latest auction data from Fonterra. The New Zealand GlobalDairyTrade price index arrived at +0.9% vs +0.3% prior. (Whole milk powder prices averaged at $3122/MT while Milk powder was +0.6%).  NZD/USD was struggling to maintain the bid, albeit within a very tight range just above 0.73 the figure and 0.7294 as the 23.6% Fib of 0.7132/0.7344 rally. However, the data gave the Kiwi the extra foundation needed to attract demand and has likely given it a base on the 0.73 handle, in the very near term at least and ahead of 0.7344, Monday's top and NZ current account data due later at 2245GMT in the Asian shift; There are no other data releases scheduled of any real significance ahead of the FOMC showdown tomorrow and NZ GDP later that day. In other news:US Pres. Trump: Iran deal was one of the worst and one-sided transactionsAtlanta Fed: GDPNow model forecast for real GDP growth in Q3 steady at 2.2%US: Homebuilding looked solid prior to the storms - Wells FargoUS: Focus on Sep FOMC meeting - WestpacUS stocks stable near record highs in pre-FOMC cautious tradeGold remains stuck in tight range above $1300AUD/USD edges higher above 0.80 post-US dataNZD/USD levelsTo the upside, a break of 0.7320, then 0.7334/37 recent highs and lastly 0.7370 (9th Aug high), the momentum would solidify a bullish trend back towards 0.7522 and the YTD highs. To the downside, a break of 0.7294, as the 23.6% Fib of 0.7132/0.7344 rally and a subsequent break of o/n support at 0.7280, and then 0.7220 would expose 0.7195 as a recent low. 0.7127 is the June 6th low and 0.7100 is a key psychological level.

According to the latest poll results conducted by Allensbach, German Chancellor Angela Merkel's CDU/CSU bloc is at 36.5% vs Social Democrats' 22%. Mo

According to the latest poll results conducted by Allensbach, German Chancellor Angela Merkel's CDU/CSU bloc is at 36.5% vs Social Democrats' 22%.More on German ElectionsScenarios:Clear victory by Merkel: This is more of a same kind of situation in Germany and Eurozone. Approving bailout packages will be easy; there will be more room for Eurozone financial integration. The idea of the European monetary fund will gather traction. Finance Minister Wolfgang Schaeuble wants to run fiscal surpluses every year until 2020 and has only vaguely hinted at tax cuts. So there is little scope for fiscal reflation…Impact on EUR/USD: mildly positive, Focus would shift to the ECB.  EUR/USD could rally sharply if Merkel changes her stance following a clear vitory and talks about reflating the economy.Tight victory by Merkel: Polls suggest Merkel will be short of a parliamentary majority in the Bundestag and will need weeks, if not months, to form a new coalition government.
A small majority for Merkel would make her vulnerable during if there’s a new crisis in the Eurozone.Impact on EUR: A minor initial sell-off likely. Next move depends on the sound bites - if in support of reflationary policies, EUR would rally.Schulz win: Schulz has promised to cut taxes for anyone earning less than 60,000 euros - a measure that would benefit nine out of 10 German workers - and to reduce social security contributions for those earning up to 15,000 euros a year. Schulz also wants to spend 30 billion euros more on public investment by 2021. He wants to raise taxes for top earners.Impact on EUR: An Intraday sell-off could be followed by a sharp rebound and rally to 1.24 handle in the subsequent days, especially if the new Chancellor talks about delivering tax cuts and public spending. 

"The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2017 is 2.2 percent on September 19, unchange

"The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2017 is 2.2 percent on September 19, unchanged from September 15," the Federal Reserve Bank of Atlanta said on Tuesday.Key takeaways:The forecast of third-quarter real residential investment growth is -2.6 percent, virtually unchanged from last Friday, after this morning's new residential construction release from the U.S. Census Bureau. The forecast of the contribution of net exports to third-quarter real GDP growth declined from -0.11 percentage points to -0.16 percentage points after this morning's Import/Export Price Indexes release from the U.S. Bureau of Labor Statistics.

After refreshing its weekly high at 1.2006 during the early trading hours of the European session, the EUR/USD pair fell back into the negative territ

After refreshing its weekly high at 1.2006 during the early trading hours of the European session, the EUR/USD pair fell back into the negative territory before the NA session went underway, but gained traction on the mixed-macro data from the United States. As of writing, the pair was trading in a tight range around 1.1980, gaining 0.2% on the day. A Reuters report on Tuesday, citing unknown ECB sources, claimed that some elements of the decision regarding the QE tapering could be postponed to December and weighed on the shared currency. Furthermore, the report also noted that concerns over the euro's strength were creating uncertainty and division among the Governing Council.  Despite the retreat triggered by this development, the pair didn't have a difficult time recovering its losses as the poor macroeconomic data from the U.S. didn't allow the greenback to gather strength against its competitors. The US Dollar Index, which tested the 92 handle on Monday, is now moving sideways around the 91.70 mark, losing 0.13% on the day. Ahead of tomorrow's FOMC decisions and the updated economic projections, the pair is likely to remain directionless as investors will look to eliminate the uncertainty regarding another rate hike in December. Valeria Bednarik, Chief Analyst at FXStreet, writes, "unless a surprise rate hike is announced, with doors opened for also a December hike, dollar possible gains won't be sustainable in time. The US administration has hinted that the tax reform will be discussed by the end of September, so a hawkish Fed, plus some positive news on the issue by the end of the month, could be the beginning of the end of dollar's decline, but that's the most it could be said at this point."US: Focus on Sep FOMC meeting - WestpacTechnical outlookAlthough the RSI indicator on the daily graph is rising slowly above the 50 mark, the pair is unlikely to make a sharp move in the short-term. The initial support could be seen at 1.1940 (20-DMA) ahead of 1.1845 (Sep. 14 low) and 1.1800 (psychological level). On the flip side, 1.2000 (psychological level) is the first critical hurdle followed by 1.2090 (Sep. 8 high) and 1.2170 (Dec. 31, 2014, high). Today's data from the U.S.:US: Privately-owned housing starts in August were at 1,180,000, 0.8% below July estimateUS: Import prices increased 0.6 percent in AugustUS: Current-account deficit increased to $123.1 billion in the second quarter of 2017

The Russian currency keeps the soft tone so far this week, now pushing USD/RUB to the area of session peaks near 58.20. USD/RUB firmer on Brent losse

The Russian currency keeps the soft tone so far this week, now pushing USD/RUB to the area of session peaks near 58.20.USD/RUB firmer on Brent lossesRUB is deriving extra downside pressure from the selling mood around the barrel of European reference Brent crude, posting moderate losses in the $55.40/50 band and reverting the initial spike to the $55.90 area. In the data space, Russian retail sales expanded at an annualized 1.9% while the unemployment rate ticked lower to 4.9% during August. On the US data front, building permits and housing starts came in above estimates in August, while export prices and import prices also bettered forecasts during the same period. In the meantime, spot is up for the third session in a row, extending the rebound from recent multi-week lows in the 56.80 area (September 7).USD/RUB levels to watchAt the moment the pair is up 0.14% at 58.19 and a break out of 58.43 (100-day sma) would aim for 58.65 (200-day sma) and finally 58.89 (high Aug.30). On the other hand, the next support is located at 58.02 (21-day sma) followed by 57.59 (10-day sma) and then 57.39 (low Sep.14).

According to analysts from Wells Fargo, the 0.8% decline in August of housing starts (from an upward revised number) was likely only minimall...

According to analysts from Wells Fargo, the 0.8% decline in August of housing starts (from an upward revised number) was likely only minimally impacted by Hurricane Harvey. Key Quotes: “Data for August housing starts were likely only minimally impacted by Hurricane Harvey. The storm hit in the last week of August and may have cut into starts in Houston, which has long been the number one market for single-family starts and also one of the top markets for apartment construction. Overall housing starts fell 0.8 percent, with the entire decline coming in multi-family units, which fell 6.5 percent in August. Most of that drop was in apartments, which have seen a great deal of supply come on the market in many parts of the country, cooling new construction.” “Single family starts rose 1.6 percent in August to an 851,000 unit pace and are continuing to trend higher. Data through the first eight months of 2017 show single-family starts running 8.9 percent ahead of their year-ago pace. By contrast, multi-family starts through August are running 9.9 percent below the pace maintained through the first 8 months of 2016.” “The monthly housing starts data are reported on a seasonally adjusted annualized basis, meaning the monthly figures reflect how many homes would be built in a year if that month’s pace was maintained for the entire year. Single-family starts averaged an 849,000-unit annual rate over the past three months, which is close to the pace averaged this year. We suspect single-family starts are set to slow, however. Permits for new single-family homes have been running at just an 808,000-unit pace for the past three months, or 4.8 percent below single-family starts.” “Hurricanes Harvey and Irma will also likely slow starts in coming months, as resources are redirected toward repairs and rebuilding efforts. Texas and Florida combined account for about 25 percent of the nation’s single-family starts, so any production lost there is likely to weigh heavily on the national data.”
 

New Zealand GDT Price Index rose from previous 0.3% to 0.9%

US President Donald Trump is delivering his speech at the UN, with the key quotes found below: North Korea’s reckless pursuit of nuclear weapons, b

US President Donald Trump is delivering his speech at the UN, with the key quotes found below: North Korea’s reckless pursuit of nuclear weapons, ballistic missiles threatens the entire world Iranian oil profits go to terrorists that kill other Muslims and threaten Israel We cannot abide by the agreement if it allows for the construction of a nuclear program Iran deal was one of the worst and one-sided transactions Iran's government must stop supporting terrorists and start serving its own people We will stop radical Islamic terrorism We must deny terrorist safe-haven and any financial support

The US Dollar Index, which tracks the buck vs. it’s a basket of its main rivals, remains under pressure so far today around the 91.60 area, or session

The US Dollar Index, which tracks the buck vs. it’s a basket of its main rivals, remains under pressure so far today around the 91.60 area, or session troughs.US Dollar consolidative ahead of FOMCThe index remains entrenched into the negative territory on Tuesday, reverting yesterday’s gains although within the recent sideline theme as cautiousness is expected to pick up ahead of tomorrow’s FOMC meeting. USD showed no reaction after US building permits and housing starts came in above estimates in August, while export prices and import prices also bettered forecasts during the same period. In the meantime, the greenback’s stance remains fragile amidst increasing uncertainty in the US political arena, where Trump’s tax reform plans and the ‘debt ceiling’ are in at the top of investors’ attention. Regarding the FOMC gathering, market participants have already ruled out any move on rates by the Federal Reserve tomorrow, although the centre of the debate should gravitate around any clues on the Fed’s plans to start reducing its balance sheet.US Dollar relevant levelsAs of writing the index is retreating 0.09% at 91.67 and a breakdown of 91.58 (low Sep.15) would open the door to 91.01 (2017 low Sep.8) and finally 89.65 (low Dec.25 2015). On the upside, the initial hurdle aligns at 92.20 (high Sep.18) followed  by 92.37 (21-day sma) and then 92.66 (high Sep.14).  

After dropping towards the $1300 handle amid an improved market sentiment and a stronger greenback, the ounce troy of the precious metal is having a d

After dropping towards the $1300 handle amid an improved market sentiment and a stronger greenback, the ounce troy of the precious metal is having a difficult time finding direction on Tuesday. As of writing, the XAU/USD pair was trading at $1310, gaining 0.2% on the day. The pair's small gains today seems to be a product of a modest selling pressure witnessed on the buck. Following a batch of mixed macroeconomic data from the United States, the US Dollar Index is struggling to recover its daily losses. According to the data released by the Bureau of Economic Analysis, the current account deficit in the U.S. rose to $123.1 billion in the second quarter of 2017 from $113.5 billion in the first quarter of 2017. On the other hand,  import prices recorded their biggest monthly increase since January at 0.6%.  The risk sentiment, which usually impacts the price action of the traditional safe-haven gold, is also unclear today. In fact, major equity indexes in the U.S. started the day virtually flat as investors are gearing up for tomorrow's important FOMC meeting.  "Still, over the past week or so, the market has moved to recognize a somewhat greater chance of another Fed hike by the end of the year.  This effectively means the December meeting.  The CME's calculation puts the odds at 55.8%, interpolating from the Fed funds futures strip," analysts at BBH noted in a recent report. A heightened expectation of a December rate hike at the end of tomorrow's meeting could allow the greenback to gather strength against its peers.FOMC meeting gets underway today - BBHTechnical outlookThe CCI indicator on the daily graph recently turned north below the -100 mark, suggesting that the bearish momentum is losing strength. A daily close below the critical $1300 (psychological level) handle could open the door for further losses towards $1292 (Aug. 28 low) and $1284 (Aug. 24 low). On the upside, resistances could be seen at $1319 (Sep. 18 high), $1327 (20-DMA) and $1334 (Sep. 14 low). Today's data from the U.S.:US: Privately-owned housing starts in August were at 1,180,000, 0.8% below July estimateUS: Import prices increased 0.6 percent in AugustUS: Current-account deficit increased to $123.1 billion in the second quarter of 2017

Major US equity indices built on overnight gains to record high closing level and touched fresh all-time highs during the opening hour of trade on Tue

Major US equity indices built on overnight gains to record high closing level and touched fresh all-time highs during the opening hour of trade on Tuesday. Early modest gains, however, lacked any strong momentum as investors preferred to stay on the sideline and waited the start of a two-day FOMC monetary policy meeting. The Fed is widely expected to start reducing its massive $4.5 trillion balance sheet and leave interest rates unchanged. Investors, however, would be looking for clues over possibilities of any additional Fed rate hike move by the end of this year. At the time of reporting, the Dow Jones Industrial Average was up around 20-points to 22,353, while the broader S&P 500 Index held near yesterday's closing level around 2,504. Meanwhile, tech-heavy Nasdaq Composite underperformed a bit and traded lower by 4-points at 6,450. Meanwhile, today's US economic releases - housing market data, trade balance figures and import/export price index, did little to provide any fresh impetus and were overshadowed by pre-FOMC cautious trade.

Morten Helt, Senior Analyst at Danske Bank, believes the pair could climb to the 114.00 area in the near term. Key Quotes “While the combination of

Morten Helt, Senior Analyst at Danske Bank, believes the pair could climb to the 114.00 area in the near term.Key Quotes“While the combination of strong global PMIs and postponement of US debt limit risk is good for risk appetite and has improved the prospect of a higher USD/JPY in the near term, geopolitical uncertainty related to North Korea still represents a substantial downside risk and will continue to weigh on the cross”. “According to the latest IMM data, non-commercial JPY positioning is now back in stretched short territory, suggesting risks are tilted to the downside for USD/JPY from a positioning point of view”. “We still expect USD/JPY to trade within the 108-111 range near term targeting 111 in 1M and 114 in 3M. Fundamentally, we still see a case for a higher USD/JPY over the medium term horizon, driven by Fed-BoJ divergence, higher global yields (eventually) supported by global growth recovery and portfolio outflow out of Japan. We target USD/JPY at 116 in 6-12M”.

The GBP/USD pair reversed an early dip to 1.3470-65 area and spiked back closer to session tops on disappointing US economic data, albeit quickly retr

The GBP/USD pair reversed an early dip to 1.3470-65 area and spiked back closer to session tops on disappointing US economic data, albeit quickly retreated thereafter. Currently trading around the 1.3510-15 region, the pair caught some fresh bids and was being supported by some renewed US Dollar selling bias after data released from the US showed current account deficit jumped to $123.1 billion, marking 2.6% of GDP, during the second quarter of 2017 as compared to previous quarter's deficit of $113.5 billion (revised lower from $116.8 billion reported earlier).  Separately, the disappointing housing starts data was largely negated by surprisingly stronger building permits data. Meanwhile, the market seems to have ignored higher-than-expected rise in the US import and export prices, both rising by 0.6% m-o-m, the fastest pace since June 2016.  The pair, however, lacked any strong follow through momentum in wake of an unconfirmed news that Boris Johnson will resign before the weekend if Theresa May opposes his Brexit demands. Next of relevance for the pair would be the release of UK monthly retail sales data and the much awaited FOMC decision, both due on Wednesday and would help investors determine the next leg of directional move for the major.Technical levels to watchBulls would try and defend the key 1.35 psychological mark, which if broken could drag the pair back towards 1.3470-65 support area. A follow through weakness could get extended towards 1.3435 level. On the upside, immediate resistance is pegged near mid-1.3500s, above which the pair is likely to aim towards conquering the 1.3600 handle before eventually darting towards yearly tops resistance near the 1.3615-20 region.

The greenback stays on the defensive vs. its Canadian peer on Tuesday, now taking USD/CAD to the 1.2285/80 band in the wake of US, CA data releases.

The greenback stays on the defensive vs. its Canadian peer on Tuesday, now taking USD/CAD to the 1.2285/80 band in the wake of US, CA data releases.USD/CAD gains capped around 1.2340The pair is struggling to add to yesterday’s gains, finding quite a tough barrier around 1.2340/50, where sits the 21-day sma. CAD is deriving some buying pressure from the better tone in crude oil prices, with the barrel of West Texas Intermediate hovering over daily highs in the $50.70/80 band. On the opposite direction, the poor performance in yields of the Canadian 10-year reference appears to keep dips shallow. In the data space, US housing starts and building permits rose above estimates to 1.180 million units and 1.300 million units in August. Further data saw export prices and import prices rising at a monthly 0.6%, both prints surpassing prior surveys. In Canada, manufacturing shipments contracted more than forecasted 2.6% inter-month in July.USD/CAD significant levelsAs of writing the pair is retreating 0.11% at 1.2285 facing the next support at 1.2189 (10-day sma) seconded by 1.2119 (low Sep.15) and then 1.2059 (2017 low Sep.8). On the upside, a break above 1.2348 (21-day sma) would expose 1.2469 (23.6% Fibo of the 2017 drop) and finally 1.2541 (55-day sma).

"Manufacturing sales decreased 2.6% to $52.5 billion in July, following a 1.9% decline in June," the Statistics Canada announced on Tuesday. Key high

"Manufacturing sales decreased 2.6% to $52.5 billion in July, following a 1.9% decline in June," the Statistics Canada announced on Tuesday.Key highlights:The decrease was primarily the result of lower sales of motor vehicles and motor vehicle parts. Excluding motor vehicles and motor vehicle parts, manufacturing sales increased 0.2%. Sales were down in 9 of 21 industries, representing 57% of the manufacturing sector. Sales of durable goods decreased 4.6%, while sales of non-durable goods declined 0.2%. In constant dollars, sales were down 1.4% in July, indicating a decline in the volume of manufactured goods sold.

The AUD/USD pair extended its daily gains in the early NA session and rose above the critical 0.80 handle as the mixed macro data from the U.S. put a

The AUD/USD pair extended its daily gains in the early NA session and rose above the critical 0.80 handle as the mixed macro data from the U.S. put a modest pressure on the greenback. As of writing, the pair was trading at 0.8008, gaining 50 pips, or 0.63%, on the day. Today's data showed that the current account deficit in the U.S. increased to $123.1 billion in the second quarter of 2017 from $113.5 billion in the first quarter, missing the market estimate of $115.1 billion and bringing the deficit to GDP ratio to 2.6% from 2.4%. Other data revealed that the import price index rose to 2.1% on a yearly basis in August, meeting the market consensus. Moreover, housing starts contracted by 0.8% despite a 5.7% jump in building permits. The US Dollar Index, which failed to rise above the 92 handle on Monday, remains in the red on Tuesday as investors are staying on the sidelines ahead of tomorrow's important FOMC meeting. Investors will be closely watching the updated economic projections and the 'dot plot' chart. Omkar Godbole, Analyst at FXStreet, writes, "the federal funds futures market at Friday's close showed a slightly less than 50% chance of another rate hike this year. The hint may come through policy statements and/or the dot plot chart."Fed preview: Scope for aggressive balance sheet normalizationA hawkish Fed could allow the DXY to start a more decisive correction than the markets witnessed last week. At the moment, the US Dollar Index was at 91.67, down 0.15% on the day.Technical outlookThe RSI indicator on the daily graph is pushing higher above the 50 handle, suggesting that the bullish momentum is likely to persist. 0.8035 (Sep. 16 high) could be seen as the initial hurdle ahead of 0.8125 (Sep. 8 high) and 0.8200 (psychological level). On the downside, supports could be seen at 0.8000 (psychological level), 0.7950 (50-DMA) and 0.7870 (Aug. 31 low). Today's data from the U.S.:US: Privately-owned housing starts in August were at 1,180,000, 0.8% below July estimateUS: Import prices increased 0.6 percent in AugustUS: Current-account deficit increased to $123.1 billion in the second quarter of 2017

Analysts at Nomura expect the BOJ to keep its policy framework unchanged again this week. Key Quotes “Markets should focus on 1) likely changes in t

Analysts at Nomura expect the BOJ to keep its policy framework unchanged again this week.Key Quotes“Markets should focus on 1) likely changes in the vote composition after board member changes and 2) any comments on the guidelines for JGB purchase operations, but reactions in the FX market will likely be muted. The meeting will also mark the one-year anniversary of the YCC. We thus review YCC’s implications for JPY. We still judge that YCC would not weaken JPY proactively, but it can amplify the impact of external tailwinds, weakening JPY especially under the current low volatility environment.” 

Belgium Consumer Confidence Index climbed from previous 2 to 3 in September

Russia Unemployment Rate registered at 4.9%, below expectations (5.1%) in August

United States Redbook index (MoM) dipped from previous 0.3% to 0.1% in September 11

United States Redbook index (YoY) declined to 3.6% in September 11 from previous 4.5%

Having surrendered early gains to fresh 8-week highs, the USD/JPY pair dropped to fresh session lows post mixed US economic data.  The pair extended

Having surrendered early gains to fresh 8-week highs, the USD/JPY pair dropped to fresh session lows post mixed US economic data.  The pair extended its retracement from the 112.00 neighborhood and dropped below mid-111.00s after data released from the US showed housing starts declined -0.8% m-o-m and came-in at an annualized pace of 1.175 million for August.  The negative impact, however, to some extent was negated by slightly better-than-expected 5.7% m-o-m rise in building permits, which ticked higher to 1.3 million annualized pace during the reported period. Other data showed, US current account deficit unexpectedly jumped to $123.1 billion during the second quarter of 2017, way above previous quarter's $116.8 billion and worse than $115.1 billion expected.  Meanwhile, a sharp spike in import price index, jumping 0.6% m-o-m in August, hinting towards a possible rise in inflationary pressure in coming months also did little to lend any immediate respite for the US Dollar bulls.  With European equity markets reversing early gains and trading on a cautious note, the prevalent cautious environment was seen benefitting the Japanese Yen's safe-haven appeal and further collaborated to the pair's offered tone through early NA session. Technical levels to watchA follow through retracement below the 111.00 handle is likely to accelerate the slide towards 110.70 horizontal level en-route the next major support near the 110.30-25 region.  On the upside, 111.60 level now seems to act as immediate resistance, above which the pair is likely to make a fresh attempt towards conquering the 112.00 handle before heading towards the very important 200-day SMA barrier near the 112.25 region.

"The U.S. current-account deficit increased to $123.1 billion (preliminary) in the second quarter of 2017 from $113.5 billion (revised) in the first q

"The U.S. current-account deficit increased to $123.1 billion (preliminary) in the second quarter of 2017 from $113.5 billion (revised) in the first quarter of 2017," the Bureau of Economic Analysis (BEA) announced on Tuesday.Key takeaways:The deficit increased to 2.6 percent of current-dollar gross domestic product (GDP) from 2.4 percent in the first quarter. The $9.6 billion increase in the current-account deficit reflected a $7.5 billion increase in the deficit on secondary income, a $2.9 billion decrease in the surplus on primary income, and a $0.8 billion increase in the deficit on goods. These changes were partly offset by a $1.6 billion increase in the surplus on services. Exports of goods and services and income receipts increased $2.2 billion in the second quarter to $836.8 billion.

Analysts at Rabobank suggest that for this week, the highlight is the BCB’s 17Q3 inflation report (Thu), but the agenda also includes the IPCA-15 infl

Analysts at Rabobank suggest that for this week, the highlight is the BCB’s 17Q3 inflation report (Thu), but the agenda also includes the IPCA-15 inflation preview for September (Thu) as far as Brazilian markets are concerned.Key Quotes“Mixed feelings for Brazilian assets last week: on one hand, the improved USD momentum helped drive the BRL 0.7% weaker, in line with peer-currencies. The local yield curve has steepened again, with slight upward pressures on the back end. Despite the return of politics to the forefront, after the PGR filed another change against president Temer, the Brazilian (5year) CDS spread has reached another multi-year low and the Ibovespa stock index set a new record. We still believe local asset markets underestimate the execution risks for the pension reform until 2019-2020. The latter is a necessary condition (the most important one) for the sustainability of government finances and the economic recovery.” “Event-wise, the Copom minutes reaffirmed signals of a gradual end to the easing cycle, starting with a moderate reduction (to 75bps) in the speed of cut in next meeting. The IBC-Br grew 0.4% m-o-m in July, topping median economists forecast (+0.1%), consolidating a perception that the recession is ending. The PGR (Prosecutor’s Office) has filed a new charge against President Michel Temer, which could compress (even more) the calendar for congressional debate on the pension-system reform.” “Brazilian markets will also pay close attention to the messages from this week FOMC meeting in the U.S.. In the realm of politics, the Supreme Court will decide on the validity of the new charge against Mr. Temer, and Congress might advance a bit more on the discussions related to the political reform.”

"U.S. import prices increased 0.6 percent in August following declines in the previous 3 months," the U.S. Bureau of Labor Statistics reported on Tues

"U.S. import prices increased 0.6 percent in August following declines in the previous 3 months," the U.S. Bureau of Labor Statistics reported on Tuesday.Key highlights:The price index for U.S. exports also advanced 0.6 percent in August, after increasing 0.5 percent in July.  Import prices rose 0.6 percent in August, the first monthly rise since a 0.2-percent increase in April and the largest advance since the index rose 0.6 percent in January.  The last time import prices recorded a larger increase was a 0.7-percent advance in June 2016. Fuel prices increased 4.2 percent in August, the first monthly advance since the index rose 0.3 percent in February and the largest advance since the index increased 6.1 percent in January. The price index for nonfuel imports advanced 0.3 percent in August, after edging down 0.1 percent in July. 

United States Import Price Index (YoY) meets expectations (2.1%) in August

"Privately-owned housing starts in August were at a seasonally adjusted annual rate of 1,180,000. This is 0.8 percent below the revised July estimate

"Privately-owned housing starts in August were at a seasonally adjusted annual rate of 1,180,000. This is 0.8 percent below the revised July estimate of 1,190,000, but is 1.4 percent above the August 2016 rate of 1,164,000," the U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly announced on Tuesday.Key highlights:Privately-owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 1,300,000. This is 5.7 percent above the revised July rate of 1,230,000 and is 8.3 percent above the August 2016 rate of 1,200,000.  Privately-owned housing completions in August were at a seasonally adjusted annual rate of 1,075,000. This is 10.2 percent below the revised July estimate of 1,197,000, but is 3.4 percent above the August 2016 rate of 1,040,000. 

Canada Manufacturing Shipments (MoM) came in at -2.6% below forecasts (-1.6%) in July

United States Export Price Index (YoY) climbed from previous 0.8% to 2.3% in August

United States Building Permits Change registered at 5.7% above expectations (-0.8%) in August

United States Export Price Index (MoM) came in at 0.6%, above expectations (0.2%) in August

United States Import Price Index (MoM) above forecasts (0.4%) in August: Actual (0.6%)

United States Current Account registered at $-123.1B, below expectations ($-115.1B) in 2Q

United States Housing Starts (MoM) above forecasts (1.175M) in August: Actual (1.18M)

United States Building Permits (MoM) registered at 1.3M above expectations (1.22M) in August

United States Housing Starts Change registered at -0.8%, below expectations (1.7%) in August

In view of FX Strategists at UOB Group, spot keeps its bullish outlook unchanged for the time being. Key Quotes 24-hour view: “We highlighted yester

In view of FX Strategists at UOB Group, spot keeps its bullish outlook unchanged for the time being.Key Quotes24-hour view: “We highlighted yesterday that “a retest of 111.30/35 would not be surprising but odds for a clear move beyond 111.65 are not high”. USD touched a high of 111.66 before settling just below the high. While upward momentum is beginning to show signs of tiring, it is too early to expect a significant pullback. Only a move back below 111.10 would indicate that a temporary top is in place. Until then, USD could grind higher even though the major level of 112.15/20 is not expected to come into the picture, at least not for today. However, a challenge of the minor resistance at 111.90 would not be surprising”. Next 1-3 week: “We highlighted yesterday that despite the strong up-move, “upward momentum is not as impulsive as preferred and the next resistance at 111.65 may not be easy to crack”. USD touched an overnight high of 111.66 but has since eased off. We continue to hold the same as mentioned above but do not ruled out an intraday move above 111.65 (next resistance is at 112.20). All that said, the bullish phase that started last Wednesday (13 Sep, spot at 110.15) is deemed as intact until 110.40 is taken out (stop-loss adjusted higher from 110.00)”.

FX Strategists at UOB Group noted spot should remain well underpinned on occasional dips. Key Quotes “EURUSD is firmer but intraday patterns suggest

FX Strategists at UOB Group noted spot should remain well underpinned on occasional dips.Key QuotesEURUSD is firmer but intraday patterns suggest some resistance developing around the 1.20 area through the European morning session”. “Broader patterns are constructive, with the underlying trend well established and supported by bullish trend signals across a range of timeframes”. “Charts suggest the EUR should remain well supported on dips and that the market is shaping up for another push on to 1.21. Support is 1.1955 and 1.1850/55”.

In view of analysts at Nomura, while the ECB is likely to announce its tapering plan in October, its assessment of EUR appreciation will be important

In view of analysts at Nomura, while the ECB is likely to announce its tapering plan in October, its assessment of EUR appreciation will be important for EUR.Key Quotes“As Mr. Cœuré said, the recent EUR appreciation is quicker than rate spreads suggest, and EUR sensitivity to rate spreads is at a historically high level. This means EUR appreciation is consistent with the direction of rate spreads, but the reaction may be amplified by “exogenous factors.” After the likely tapering announcement in October, market interest in ECB policy may decline, which could also lower EUR sensitivity to rate markets. Thus, an adjustment in the speed of EUR appreciation is possible, but we judge the direction of EUR is right. Another factor we need to consider is broader movement of financial conditions, which remains accommodative (and President Draghi said “they (financial conditions) remain broadly supportive of the non-financial companies and enterprises”).  We thus judge there is further room for EUR appreciation, maintaining a bullish stance on EUR.”

Donald Kohn, External member, Financial Policy Committee, Bank of England, delivered his speech titled "Cooperation and coordination across policy dom

Donald Kohn, External member, Financial Policy Committee, Bank of England, delivered his speech titled "Cooperation and coordination across policy domains," with key headlines found below: We need to implement and fine tune the post-crisis regulatory reforms. And in many places monetary policy interest rates remains extremely accommodative As we transition toward a more normal and sustainable posture for regulatory and monetary policies some of the tensions that called for policy coordination in recent years will abate. Monetary policy can contribute to financial stability by acting as gradually and as predictably as allowed by the evolving economic circumstances. A resilient financial system will enable monetary policy to continue to unwind the unconventional policies previously put in place. 

EUR/USD receded extra ground following ECB news, coming down to test the 1.1960/50 band after briefly piercing the psychological 1.2000 handle earlier

EUR/USD receded extra ground following ECB news, coming down to test the 1.1960/50 band after briefly piercing the psychological 1.2000 handle earlier in the session.EUR/USD weaker on ECB, looks to US dataSpot lost some upside momentum after news agency Reuters cited that some elements of ECB decision could be put off until December. In addition, concerns and division appeared to have emerged in response to the recent and strong appreciation of the exchange rate. Furthermore, ECB policymakers disagree on whether to set firm end-date for the current bond-purchasing programme at the next meeting in October, while some members want to be able to extend or expand the QE programme in case of need. In the data space, the German ZEW survey came in above expectations for the current month, while July’s current account widened more than initially forecasted. In the US docket, housing starts, building permits and export/import prices are next on tap.EUR/USD levels to watchAt the moment, the pair is up 0.11% at 1.1968 and a break above 1.2006 (high Sep.19) would target 1.2041 (high Sep.11) and finally 1.2092 (2017 high Sep.6). On the flip side, the immediate support aligns at 1.1949 (low Sep.19) seconded by 1.1919 (21-day sma) and then 1.1851 (5-month support line).

The USD/CHF pair trimmed some of its early gains and retreated around 20-pips from session tops, albeit has managed to hold with modest gains for the

The USD/CHF pair trimmed some of its early gains and retreated around 20-pips from session tops, albeit has managed to hold with modest gains for the second consecutive session  The pair seemed struggling at higher levels amid a modest pickup in safe-haven demand. European equity markets surrendered early strong gains and have now drifted into negative territory, which eventually extended some support to the Swiss Franc's safe-haven appeal.  Adding to this, a subdued US Dollar price action, led by weaker US Treasury bond yields, also did little to help the pair to decisively break through its immediate supply zone near mid-0.9600s. Looking at the pair's movement over the past one week, bulls seemed non-committed at higher level amid lack of fresh catalysts and ahead of the next big event risk - a two-day FOMC meeting. Today's US economic docket, featuring the release of housing market data, current account numbers and export/import price index, would be looked upon for short-term trading impetus. The key focus, however, would remain on the much awaited Fed decision, due to be announced during NY trading session on Wednesday.    •  US: Focus on Sep FOMC meeting - WestpacTechnical levels to watchMomentum beyond mid-0.9600s is likely to confront fresh supply at 100-day SMA near the 0.9680 region. A convincing break through the mentioned hurdle is likely to help the pair towards conquering the 0.9700 handle and lift its further towards next major hurdle near the 0.9725-30 region. On the flip side, the 0.9600 handle now seems to have emerged as immediate support, which if broken is likely to accelerate the fall towards 0.9555-50 strong horizontal support ahead of 0.9525 level.

According to the analysts at Westpac, the two particular areas of note in the forthcoming FOMC meet will be the forecasts for inflation and for the fe

According to the analysts at Westpac, the two particular areas of note in the forthcoming FOMC meet will be the forecasts for inflation and for the fed funds rate, which recent communications indicate might come under pressure.Key Quotes“It has been a tumultuous month for the US economy and indeed the FOMC, with Vice Chair Fischer announcing his resignation effective October 2017.” “This decision will have no impact on the September meeting, the formal starting point for balance sheet normalisation. At the end of this meeting, a specific date will be given at which time the already outlined plan of the FOMC will be put into action. It is intended that this will reduce the balance sheet by around USD2trn over the next five or so years.” “For the outlook, the more important output of the September meeting will be revised forecasts. We retain our December 2017; June and December 2018 rate hike view.”

Analysts at Nomura explain that ECB officials’ comments suggest that differentiating the reason behind the EUR appreciation is crucial. Key Quotes “

Analysts at Nomura explain that ECB officials’ comments suggest that differentiating the reason behind the EUR appreciation is crucial.Key Quotes“Mr. Cœuré said recent divergence between EUR and rate differentials could be evidence that the EUR’s appreciation is in response to an exogenous shock, not to positive growth. The sensitivity of EUR to rate spreads is indeed at historically high levels. The trend in EUR appreciation is consistent with the direction of rate spreads, but the reaction may be amplified by exogenous factors.” “After a likely tapering announcement in October, the FX market’s interest in ECB policy may decline, which could reduce EUR sensitivity to rate markets. An adjustment in the speed of EUR appreciation is possible, but EUR’s high sensitivity to rates shows the direction of EUR is correct, especially as fundamental divergence suggests rate spreads are likely to catch up. We thus see further room for EUR appreciation.”

Analysts at Westpac expect the NZ’s annual current account deficit to remain around 3.1% of GDP. Key Quotes “In seasonally adjusted terms, last quar

Analysts at Westpac expect the NZ’s annual current account deficit to remain around 3.1% of GDP.Key Quotes“In seasonally adjusted terms, last quarter’s deterioration in the goods balance is set to reverse, with the goods deficit expected to narrow from $1bn to $400m. Underpinning this recovery has been a lift in dairy exports volumes and prices following weakness in the previous two quarters.” “The services balance is expected to continue rising from already firm levels. This mainly reflects ongoing strong growth in tourism exports, with a record inflow of international visitors over the past year. Tourism exports are likely to be particularly strong in the June quarter as a result of the boosts to spending from the Masters Games and Lions tour.” “The investment income deficit is expected to remain stable.”  

According o he CFTC data which covers up to Tuesday September 12 & were released Friday September 15, speculative positioning is little changed in agg

According o he CFTC data which covers up to Tuesday September 12 & were released Friday September 15, speculative positioning is little changed in aggregate, with speculative sentiment on the USD deteriorating marginally, notes the analysis team at Scotiabank. Key Quotes“Aggregate positioning does reflect a small increase in the broader bearish bet on the USD, which rose to USD15.8bn, surpassing fractionally the early August peak bear bet of USD15.7bn.  The bearish bet on the USD overall is the largest now since 2013.”        “Significant positioning changes were highly concentrated this week, reflecting a sharp drop in net EUR longs (down USD1.47bn, driven mainly by an increase in gross shorts) as investors fade the EUR’s recent gains to 1.20.  Offsetting this (in terms of the impact on aggregate USD positioning) was a hefty bout of JPY short covering, equating to USD1.88bn.”            “Net GBP positioning reflected a cut in bearish bets on the pound— a situation we expect will develop further following the hefty GBP gains this week.  In the week through Sep 12th, gross GBP shorts rose but gross GBP longs increased at double the rate, prompting a USD485mn drop in the net GBP short bet.”    “Net CAD longs fell USD191mn in the week, accounted for entirely by a cut in gross longs. Net AUD and net NZD longs were reduced modestly.  NET CHF positioning remains relatively flat and was little changed.  Net MXN longs rose slightly in the week (gross longs added a little over 2k contracts while gross shorts fell by around 1k contracts) as sentiment remains generally bullish.”  

According to the latest news headlines hitting the wires, citing reliable sources, ECB policy makers disagree on whether to set a firm end-date for bo

According to the latest news headlines hitting the wires, citing reliable sources, ECB policy makers disagree on whether to set a firm end-date for bond-buying program in October. Key quotes:    •  Some elements of ECB decision could be put off until Dec.
   •  Concerns over Euro strength is leading to uncertainty and divides within ECB council
   •  Some ECB rate setters want to be able to extend or expand buys if needed Meanwhile, the EUR/USD pair quickly eroded around 30-pips on the new headline but has still managed to hold with minor daily gains around the 1.1965-70 region.

Analysts at BBH point out that the FOMC meeting gets underway today with the outcome announced tomorrow and will be keenly ached b investors.   Key Q

Analysts at BBH point out that the FOMC meeting gets underway today with the outcome announced tomorrow and will be keenly ached b investors.  Key Quotes“Ahead of that, today the US reports August housing starts, which should recover a bit from July's unexpectedly large 4.8% decline.  The impact of the hurricanes will likely distort the time series starting in Q4.  The Fed's challenge of setting the appropriate monetary policy for the economy is all the more difficult if the economic data becomes distorted.”  “Still, over the past week or so, the market has moved to recognize a somewhat greater chance of another Fed hike by the end of the year.  This effectively means the December meeting.  The CME's calculation puts the odds at 55.8%, interpolating from the Fed funds futures strip.  This is up from around 37.5% a month ago and 41.3% a week ago.  Bloomberg's calculation puts the odds at 49.1% up from 35.2% a week ago.”  “The increase perceived likelihood has not done the dollar much good against the euro, where the single currency traded above $1.20 today for the first time since September 11.  The euro recorded the recent high on September 8 near $1.2090. The next key retracement target is near $1.2165, which is 50% of the single currency's drop from mid-2014.  The dollar's gains against the yen were extended toward JPY111.85.  The next level of resistance is seen near JPY112.00-JPY112.20.”  “Besides August housing starts and building permits, the US reports Q2 current account and August import price data.  The Fed speaking embargo remains in place until this Friday due to the FOMC meeting on Wednesday.”          

The ounce troy of the precious metal is navigating a narrow range so far on Tuesday, hovering over the $1,310 area ahead of the FOMC meeting due tomor

The ounce troy of the precious metal is navigating a narrow range so far on Tuesday, hovering over the $1,310 area ahead of the FOMC meeting due tomorrow.Gold attention to FedThe yellow metal is alternating gains with losses amidst a broad-based absence of a clear direction and following two consecutive daily pullbacks.Bullion should stay under pressure in light of the key FOMC gathering tomorrow, although expectations for a Fed’s move stay close to zero. In fact, and according to CME Group’s FedWatch tool, the probability of the Fed staying ‘on hold’ at Wednesday’s meeting is almost at 99%. However, market participants should closely follow the FOMC’s statement looking for any clues regarding the Fed’s plans to reduce its balance sheets, which could turn out to be a catalyst for some appreciation in the greenback, as well as any hint on a potential rate hike by year end. Additionally, geopolitical tensions stemming from the Korean peninsula appears diminished for the time being, collaborating with the metal’s downside.Gold key levelsAs of writing Gold is gaining 0.02% at $1,311.06 facing the immediate hurdle at $1,322.60 (21-day sma) followed by $1,325.02 (23.6% Fibo of the July-September up move) and finally $1,331.57 (10-day sma). On the other hand, a breach of $1,301.89 (38.2% Fibo of the July-September up move) would open the door to $1,282.61 (55-day sma) and then $1,281.30 (low Aug.25).

Analysts at TDS suggest that the housing starts will serve as the highlight amidst a number of lower tier releases in the upcoming US session. Key Qu

Analysts at TDS suggest that the housing starts will serve as the highlight amidst a number of lower tier releases in the upcoming US session.Key Quotes“The markets expects housing starts to rise a modest 1.7% m/m to an annualized 1174k in August while the consensus forecast is for a 0.8% m/m decline in building permits issuance. The Q2 current account deficit is forecast to narrow slightly to $116.0bn from $116.8bn, mirroring the $800m improvement in the international trade balance, while import prices are forecast to rise by 0.4% m/m in August. Import prices will receive a sizeable tailwind from energy prices and the market looks for a 0.2% m/m print in the ex-energy index.”

Having posted a session high near mid-1.3500s, the GBP/USD pair turned lower and retested previous session's swing lows support near the 1.3470-65 reg

Having posted a session high near mid-1.3500s, the GBP/USD pair turned lower and retested previous session's swing lows support near the 1.3470-65 region. The pair, however, has managed to bounce off lows and is currently hovering around the key 1.35 psychological mark as traders now look forward to the US data dump for some fresh impetus.    •  GBP/USD bullish, probable surpass of 1.3655 – UOBThe BoE Governor Marc Carney's reluctance to further reinforce last week's hawkish BoE MPC meeting minutes has failed to provide any fresh bullish impetus, with bulls now struggling to retake the 1.36 handle.    •  BoE: Carney’s speech was a bit more of a mixed bag - RabobankMeanwhile, the prevalent weaker tone around the US Dollar, backed by retracing US Treasury bond yields, helped limit deeper losses, at least for the time being. Today's US economic docket, featuring the release of housing market data, current account numbers and export/import price index, would be looked upon for short-term trading opportunities. Investors, however, are likely to wait for the UK monthly retail sales data and the much awaited FOMC decision, both due on Wednesday, before committing for the next leg of directional move. Technical levels to watchValeria Bednarik, Chief Analyst at FXStreet writes: "Technical readings in the 4 hours chart shows that the price is back below the 23.6% retracement of the BOE-linked rally from late last week, at 1.3505, with a strong support now at 1.3440. A break below the mentioned 1.3440 level will signal further slides ahead, with the 1.3380 region as the next probable bearish target." "The pair would need to recover above the 1.3550 level to turn intraday bullish, and attempt to regain the 1.3600 mark" she added further.

According to ‘people familiar with the matter’, the Chinese central bank is looking at opening up the financial sector to foreign investors, notes the

According to ‘people familiar with the matter’, the Chinese central bank is looking at opening up the financial sector to foreign investors, notes the analysis team at Rabobank. Key Quotes“Whilst details are still unknown, Bloomberg’s sources suggest that the PBoC proposal may include permission for foreign financial institutions to control their Chinese joint ventures and may raise the ownership cap on Chinese banks from 25%. This could be a major reform, and may smooth the relationship with the US, with President Trump still looking at “fair play” in overseas investments. While Chinese institutions have access to the US market, US institutions have always been restricted in their operations in China. This has been a thorn in Trump’s side.” “Of course, the question remains how much of these rumoured reforms will actually be implemented, and in what shape or form. Moreover, if such reforms are indeed being discussed, one can only ponder whether this also leads to other reforms on capital restrictions and China’s FX regime. After all, why would money flow in if it can’t get out of the country? Though we remain sceptics, such reforms could have a meaningful impact on the position of CNY in global markets, more so than Venezuela’s recent decision to shun the US dollar and price its oil in terms of the Chinese renminbi.”  

NZD/GBP’s break below a multi-month sideways range accelerated last week, after BoE officials signalled rate hikes eventually and Imre Speizer, Resear

NZD/GBP’s break below a multi-month sideways range accelerated last week, after BoE officials signalled rate hikes eventually and Imre Speizer, Research Analyst at Westpac suggests that it is likely to target 0.53 multi-week.Key Quotes“The UK event calendar this week includes retail sales & BoE Agents’ Report (20th), Public finances (21st), CBI trends (22nd), and Brexit talks (25th).” “3 months ahead: Medium term direction depends largely on whether the uncertainty from Brexit eventually causes a slowdown in activity. If so, NZD/GBP is likely to trade in the high 0.50s by year end. Alternatively, should the economy shrug off Brexit, then NZD/GBP could test the low 0.50s.”

TD and the wider market both expect Canadian manufacturing sales to fall 1.5% m/m in July, building on a 1.8% decline the prior month. Key Quotes “N

TD and the wider market both expect Canadian manufacturing sales to fall 1.5% m/m in July, building on a 1.8% decline the prior month.Key Quotes“Nominal output will be constrained by lower factory prices, a pullback in real exports and the impact of British Columbia wildfires, which shuttered lumber mills in the province for a portion of the month. While the risks around our forecast are arguably tilted to the downside, the decline in real manufacturing sales should be more subdued than the nominal print.”

Analysts at Rabobank note that the Bank of Canada is eyeing CAD strength as since May, the Canadian dollar has been on an appreciating trend, from nea

Analysts at Rabobank note that the Bank of Canada is eyeing CAD strength as since May, the Canadian dollar has been on an appreciating trend, from near-1.38/USD before the summer to under 1.22 in early September.Key Quotes“BoC Governor Lane explained that the earlier decision to hike rates was made in the context of strong exports and investments. He added however that they will continue to monitor the impact of higher BoC rates. CAD strength resulting from the BoC’s recent hikes could have significant impact on export demand. Lane therefore warned that “as the Canadian dollar is strengthening, we’re certainly wathing that closely and we’ll be taking that into account pretty strongly in making our decisions”.The market has cut its expectations for another hike in October from around 53% to approximately 41%.”

After Monday’s sharp pull-back from near 6-week tops, the NZD/USD pair regained positive traction and is currently placed at session tops around the 0

After Monday’s sharp pull-back from near 6-week tops, the NZD/USD pair regained positive traction and is currently placed at session tops around the 0.7300 handle. A fresh wave of US Dollar selling bias, backed by a modest retracement in the US Treasury bond yields was seen benefitting higher-yielding currencies - like the Kiwi. Adding to this, the prevalent positive trading sentiment around commodity-space remained supportive of the bid tone surrounding commodity-linked currencies, including the NZ Dollar. It, however, remains to be seen if the momentum is strong enough to lift the pair beyond an important supply zone near the 0.7335-40 region, which has been capping the pair's up-move since August 11. Looking at the broader picture, the pair has been oscillating within a broader trading range between 50-day SMA hurdle and 100-day SMA support over the past two weeks. Hence, it would be prudent to wait for a decisive break through the mentioned band before positioning for the next leg of directional move, amid uncertainty over the outcome of NZ national election.    •  NZD/USD capped by election uncertainty - WestpacToday's US economic docket features the release of housing market data, current account numbers and export/import price index, would be looked upon for short-term trading impetus ahead of the key event risk - FOMC monetary policy decision on Wednesday.Technical levels to watchMomentum above the 0.73 handle might find some resistance at 50-day SMA around 0.7315 level. The key hurdle, however, remains near the 0.7335-40 region, above which the pair is likely to rally towards 0.7370 level en-route the 0.7400 handle. On the flip side, any retracement back below 0.7275 level might continue to find some support near mid-0.7200s, which if broken could drag the pair towards the 0.7210-0.7200 region (100-day SMA)ahead of the very important 200-day SMA support near 0.7140-35 zone.

According to Imre Speizer, Research Analyst at Westpac, NZD/EUR found a bottom at 0.60 and this corrective rebound is expected to target 0.62 area. K

According to Imre Speizer, Research Analyst at Westpac, NZD/EUR found a bottom at 0.60 and this corrective rebound is expected to target 0.62 area.Key Quotes“The event calendar this week includes GE & EZ ZEW (19th) and Markit flash PMI surveys (22nd), EZ final CPI (18th), cons. conf. and ECB bulletin (21st). The German election is on the 24th. Germany’s general election is likely to see Merkel’s CDU/ CSU lead a coalition once again.” “3 months ahead: European economic data is improving, witness sentiment surveys at multi-year highs. However, after easing recently, political tensions in the EU could still resurface, with Austria calling early elections in 4Q, and a chance of early elections in Italy. Barring political shocks, NZD/EUR should gravitate lower to the high 0.50s.”

A survey released by the European Union Chamber of Commerce in China, revealed that the European business firms want China to open up its markets, as

A survey released by the European Union Chamber of Commerce in China, revealed that the European business firms want China to open up its markets, as they see a significant need for a level playing field and an opaque regulatory environment, when it comes to China. Mats Harborn, president of the EU Chamber of Commerce in China, told CNBC: "We don't know if China will implement its promises. As business people we have to be accountable for our business today, we can't build our future plans on only dreams. We need to have tangible measures from the Chinese state to show that China is going down the path of more openness." Meanwhile, the EU Chamber wrote in its latest paper, “European business "is suffering from accumulated 'promise fatigue,' having witnessed a litany of assurances over recent years that never quite materialized. It appears that in many areas, China is no longer opening up, but selectively closing up."

Morten Helt, Senior Analyst at Danske Bank, noted the cross could move higher in the near term. Key Quotes “The NOK fended off oil price weakness ye

Morten Helt, Senior Analyst at Danske Bank, noted the cross could move higher in the near term.Key Quotes“The NOK fended off oil price weakness yesterday. The key event this week is Thursday’s Norges Bank (NB) meeting where we – like markets and consensus – expect rates to be kept unchanged. Focus will therefore be on NB’s rhetoric and not least the rate path which currently does not pencil in a positive rate hike probability before Q1 19”. “We expect the rate path to be kept unchanged, in which case we expect a modest move higher in EUR/NOK of three-four figures”. “During the summer we argued that the downside potential for EUR/NOK was increasingly limited on the back of positioning and the oil price reaching the high end of its short-term trading range. In addition, over the past months, two factors have now also made relative rates a less likely factor to send EUR/NOK lower. First, it has become less likely that Norges Bank will send a hawkish signal to markets. Second, the postponement of the US debt ceiling issue means Nibor fixings are less likely to weigh on EUR/NOK in Q4 this year”. “We maintain EUR/NOK as a near-term range play but the risk of a correction higher has increased. On Friday we raised our 1M and 3M forecasts to 9.40 (from 9.30) and 9.50 (9.30), respectively. The higher 3M forecast primarily reflects the usual December seasonality supporting the cross. We left our 6M and 12M forecasts unchanged at 9.10 and 9.00, respectively”.

Cable’s bullish outlook remains firm, allowing a potential test of the mid-1.3600s in the near term, according to FX Strategists at UOB Group. Key Qu

Cable’s bullish outlook remains firm, allowing a potential test of the mid-1.3600s in the near term, according to FX Strategists at UOB Group.Key Quotes24-hour view: “While GBP ‘retested’ last Friday’s peak of 1.3615/20 as expected, the subsequent sharp and rapid drop from a high of 1.3618 was unexpected. A temporary top is likely in place and the current movement is viewed as the early stages of a consolidation phase. In other words, GBP is expected to trade sideways from here, likely within a 1.3460/1.3560 range”. Next 1-3 weeks: “The sharp pull-back yesterday is viewed as part of a short-term consolidation phase that may last for a couple of days. Until the stop-loss at 1.3440 is taken out, another push higher to take out 1.3655 is not ruled out just yet”.

In light of the recent price action, the cross could attempt a test of the 134.30 area, suggested Karen Jones, Head of FICC Technical Analysis at Comm

In light of the recent price action, the cross could attempt a test of the 134.30 area, suggested Karen Jones, Head of FICC Technical Analysis at Commerzbank.Key QuotesEUR/JPY continues to see a strong rebound from the 55 day ma and cloud support, and uptrend which currently lies at 130.91/129.72 The move above 132.24/45 (August 2015 low and January 2016 high) has re-introduced scope to the 134.32/61.8% of the move down from 2014. Above here would target the 1979-2017 resistance line at 139.12”. “A move below the 55 day moving average is needed to alleviate upside pressure and retarget the 127.57 August low”.

United Kingdom 30-y Bond Auction up to 1.87% from previous 1.827%

After the Bank of England’s hawkish shift last week sent sterling substantially higher, Governor Carney’s speech yesterday was a bit more of a mixed b

After the Bank of England’s hawkish shift last week sent sterling substantially higher, Governor Carney’s speech yesterday was a bit more of a mixed bag, explains the analysis team at Rabobank.Key Quotes“There was definitely some hawkish rhetoric in his words, as Carney stated that “spare capacity is being absorbed a bit faster than anticipated” and “some tightening may be needed in coming months”. That said, Carney’s speech also had a dovish side to it, as he warned that there are still “considerable risks to the outlook”, whilst also noting that the UK’s growth rate is underperforming the average of the G7 economies.” “This slower growth was framed in a similar way as the outlook painted in BoE’s August Quarterly Inflation Report, which noted that capacity constraints would probably be hit sooner due to reduced investment spending. – Suggesting that the Bank may have to accept a lower growth rate as even a lower growth rate is more likely to drive up inflation. In August, these remarks were largely ignored by the market.”“Yesterday Carney’s remarks were on balance again interpreted as dovish, with sterling sliding during his speech.Given the “considerable risks” to the growth outlook, the market continues to observe the BoE’s warnings of a potential rate hike with a pinch of salt. Moreover Carney continues to hint at a very slow hiking cycle if the Bank starts one. However, we would argue that if the BoE is only trying to bolster the currency with some verbal intervention, it could be forcing its own hand – or put its credibility at risk. Hence, a single rate hike to back its words, could be in the cards relatively soon; such a move would basically undo the post-referendum emergency cut but would, by no means, signal that there are necessarily more hikes to follow. Our FX Strategist Jane Foley has upped her GBP forecast somewhat to GBP/USD 1.32 over a 12-month horizon (was 1.30), which also translates into a slightly lower EUR/GBP target of 0.95 (was 0.96).”

After China’s crackdown on the growth of cryptocurrencies, Switzerland’s financial watchdog, Financial Market Supervisory Authority (FINMA) has closed

After China’s crackdown on the growth of cryptocurrencies, Switzerland’s financial watchdog, Financial Market Supervisory Authority (FINMA) has closed down the provider of a fake cryptocurrency, in the latest clamp-down on the risks involving virtual money, Reuters reports. FINMA said in a statement on Tuesday: The QUID PRO QUO Association shut down by FINMA had provided so-called E-Coins for more than a year and had amassed funds of at least 4 million Swiss francs ($4.2 million) from several hundred users. “This activity is similar to the deposit-taking business of a bank and is illegal unless the company in question holds the relevant financial market license,” FINMA noted.

NZD/JPY found a bottom at 78, the subsequent rebound retaining potential to reach the 82 area during the weeks ahead, according to Imre Speizer, Resea

NZD/JPY found a bottom at 78, the subsequent rebound retaining potential to reach the 82 area during the weeks ahead, according to Imre Speizer, Research Analyst at Westpac.Key Quotes“Demand for the safe-haven yen has waned as tensions between the US and North Korea have eased slightly. Much of the focus this week will be on the BoJ meeting Thursday but given it is a non ‘outlook’ meeting expectations are low. August trade data Wednesday is the other major risk event.” “3 months ahead: The BOJ’s defacto tapering of its asset purchases should be yen supportive. In addition, the Japanese economy is seeing a pickup in consumer activity, mitigating any slippage in external demand. The 82-84 area should cap this cross during the quarter ahead.”

The buying interest stays firm around the European currency following the release of the German ZEW survey, with EUR/USD hovering over the 1.1990 area

The buying interest stays firm around the European currency following the release of the German ZEW survey, with EUR/USD hovering over the 1.1990 area.EUR/USD bid on upbeat ZEWSpot remains in the upper end of the daily range after the German ZEW survey surprised to the upside for the current month. In fact, both current conditions and economic sentiment rose to 87.9 and 17.0, respectively. On the not-so-bright side, the economic sentiment in the euro area disappointed estimates for the same period, coming in at 31.7 vs. 32.4 forecasted. The reading, however, represent an improvement from the August print. Earlier in the session, EMU’s current account rose to a seasonally adjusted €25.1 billion in July, surpassing both prior surveys and the previous reading. In the meantime, the pair’s upside stays well underpinned by the continuation of the selling bias around the greenback, which continues to navigate the area of daily lows when tracked by the US Dollar Index (DXY).EUR/USD levels to watchAt the moment, the pair is up 0.27% at 1.1987 and a break above 1.2006 (high Sep.19) would target 1.2041 (high Sep.11) and finally 1.2092 (2017 high Sep.6). On the flip side, the immediate support aligns at 1.1919 (21-day sma) followed by 1.1851 (5-month support line) and finally 1.1837 (low Sep.14).  

Spain 9-Month Letras Auction: -0.368% vs -0.404%

The EUR/JPY cross failed to sustain early move beyond the 134.00 handle, the highest level since Dec. 2015, and retreated to 133.60 level, albeit rebo

The EUR/JPY cross failed to sustain early move beyond the 134.00 handle, the highest level since Dec. 2015, and retreated to 133.60 level, albeit rebounded few pips post German ZEW survey. The pair's quick retracement of nearly 60-pips from session tops stalled after the latest German ZEW economic sentiment index rebounded sharply from a 10-month reading of 10.0 in August to 17.0 in September. The ZEW current situation index also improved to 87.9 during the reported period, up from previous month's 86.7 and 86.6 expected.    •  German Sept ZEW Surveys: Upbeat across all indicatorsToday's better-than-expected ZEW economic survey results provided a minor boost to the shared currency and held the cross within striking distance of the 134.00 handle. Meanwhile, the prevalent risk-on environment coupled with the latest political developments in Japan continued weighing on the Japanese Yen and remained supportive of the strong bid tone surrounding the cross.Technical levels to watchOn a sustained move beyond the 134.00 handle, the cross is likely to surpass 134.20-25 intermediate hurdle and head towards testing Nov. 2016 swing high resistance near the 134.60 region. Meanwhile, on the downside, any retracement below mid-133.00s now seems to find support near 133.30-25 area, which if broken could drag the cross below the 133.00 handle towards its next support near the 132.40-35 region.

Spain 3-Month Letras Auction fell from previous -0.449% to -0.485%

After a brief test of daily highs near 111.90, USD/JPY has now lost some upside momentum and is now receded towards the 111.60 area. USD/JPY focus on

After a brief test of daily highs near 111.90, USD/JPY has now lost some upside momentum and is now receded towards the 111.60 area.USD/JPY focus on US data, FOMC, BoJSpot keeps the march north unabated so far today, extending the rally for the third consecutive session to fresh 8-week tops in levels just below the critical 112.00 limestone. The sharp rebound in yields of the key US 10-year reference is giving extra oxygen to the pair’s uptick, all coupled with increasing selling bias surrounding the Japanese safe haven currency. USD/JPY is expected to come under pressure, however, in light of the imminent monetary policy meetings of the Federal Reserve and the Bank of Japan on Wednesday and Thursday, respectively. Later today, US building permits, housing starts and export/import prices are due later, while August’s trade balance figures in Japan are expected early on Wednesday.USD/JPY levels to considerAs of writing the pair is gaining 0.05% at 111.62 and a breakout of 111.88 (high Sep.19) would open the door to 112.25 (200-day sma) and then 112.82 (76.4% Fibo of 114.51-107.32). On the other hand, the immediate support emerges at 111.14 (100-day sma) seconded by 110.70 (55-day sma) and finally 110.07 (38.2% Fibo of 114.51-107.32).

The German ZEW headline numbers for September, showed that the headline economic sentiment ended four straight month of deterioration and rebounded sh

The German ZEW headline numbers for September, showed that the headline economic sentiment ended four straight month of deterioration and rebounded sharply in Sept, coming in at 17.0 versus 12.5 expectations and 10.0 seen last. While the sub-index current conditions unexpectedly rose to 87.9 versus 86.6 expected and 86.7 booked previously.

European Monetary Union Construction Output s.a (MoM) increased to 0.2% in July from previous -0.5%

European Monetary Union Construction Output w.d.a (YoY) unchanged at 3.4% in July

Germany ZEW Survey - Current Situation above expectations (86.6) in September: Actual (87.9)

Germany ZEW Survey - Economic Sentiment above forecasts (12.5) in September: Actual (17)

European Monetary Union ZEW Survey - Economic Sentiment registered at 31.7, below expectations (32.4) in September

The Asian recovery in GBP/USD ran into stiff resistances located near 1.3550 levels, knocking-off the rate sharply lower to test Monday’s low struck a

The Asian recovery in GBP/USD ran into stiff resistances located near 1.3550 levels, knocking-off the rate sharply lower to test Monday’s low struck at 1.3466.GBP/USD losing sight of 1.35 handle?         Monday’s corrective slide in the spot appears to have regained poise, after a temporary pullback, as the European traders continue to assess the implications of the BOE Governor Carney’s speech at the IMF event, where he reiterated that any rate hikes are expected to be ‘gradual’ and ‘limited’. The less hawkish tone from the BOE Chief Carney is well reflected upon the UK Gilt yields, which are seen in a sea of red across the curve, especially with the 2-year rates diving almost 5%. The shorter duration UK yields usually mimic the interest rate expectations. On the other hand, the US rates trade more or less steady, lending some support to the US dollar versus its major peers, while adding to the renewed weakness in the major. Looking ahead, the next major event for Cable remains the UK retail sales and FOMC decision due on the cards tomorrow. In the meantime, markets look forward to the US housing and current account data for fresh signals.GBP/USD levels to consider              Slobodan Drvenica at Windsor Brokers Ltd. writes: “Violation of Monday’s low would generate stronger bearish signal, while extension below pivot at 1.3439 (Fibo 38.2% of 1.3148/1.3618 upleg) is needed to confirm correction. Alternatively, sustained break above very thick hourly cloud (spanned between 1.3551 and 1.3383) will be bullish signal. However, the pair may remain within extended consolidation while pivotal boundaries stay intact Res: 1.3551; 1.3582; 1.3618; 1.3646 Sup: 1.3487; 1.3465; 1.3439; 1.3383.”

The EUR/GBP cross traded with some positive bias for the second consecutive session and was seen building on previous session's recovery move from nea

The EUR/GBP cross traded with some positive bias for the second consecutive session and was seen building on previous session's recovery move from near two-month lows. With the British Pound consolidating its post-BoE upsurge, a modest pickup in the EUR/USD major has been one of the key factors helping the pair's recovery move from sub-0.88 level, the lowest level since mid-July touched last Friday. The shared currency's relative outperformance could also be attributed to higher-than-expected Euro-zone current account surplus, coming in at €25.1 billion for July as compared to €22.3 billion expected and previous month's €22.8 billion (revised higher from €21.2 billion surplus reported earlier).  There are no macroeconomic releases due from the UK and hence, focus would remain on the release of German ZEW Economic Sentiment Index for September, due for release in a short while from now.   •  Volatility is expected to increase around EUR/GBP – Danske BankTechnical levels to watchCurrently trading around the 0.8875-80 region, immediate resistance is pegged at the 0.8900 handle, above which a bout of short-covering could lift the cross towards 0.8935 horizontal resistance.  On the flip side, 0.8850-45 area now seems to protect immediate downside, which if broken would turn the pair vulnerable to head back towards retesting the 0.8800 handle ahead of 0.8775-70 support area.

In light of preliminary figures for GBP futures from CME Group, open interest decreased by more than 1.5K contracts on Monday vs. Friday’s final readi

In light of preliminary figures for GBP futures from CME Group, open interest decreased by more than 1.5K contracts on Monday vs. Friday’s final reading at 271,867 contracts, recording at the same time the third consecutive drop. Volume followed suit, decreasing significantly by more than 107K contracts, the second drop in a row.GBP/USD could have carved a top around 1.3600Cable’s recent price action has been accompanied by diminishing open interest as well as volume, hinting at the likeliness that further downside could be on the cards, while occasional bullish attempts could be as well considered as selling opportunities.

After yesterday's brief pause, the GBP/JPY cross regained some positive traction on Tuesday and touched fresh post-Brexit highs near 151.60 level.  O

After yesterday's brief pause, the GBP/JPY cross regained some positive traction on Tuesday and touched fresh post-Brexit highs near 151.60 level.  On Monday, a combination of diverging factors, ranging from less hawkish comments from the BoE Governor Mark Carney and fading safe-haven demand, did little to provide any fresh impetus to the pair's post-BoE strong upsurge.  The cross, however, managed to hold its neck above the key 150.00 psychological mark amid prevalent risk-on environment, which continued denting the Japanese Yen's safe-haven appeal.  With the British Pound catching some fresh bids on Tuesday, the latest political developments in Japan, with Japan's PM Shinzo Abe reportedly looking to call for a snap election as early as next month, was also seen weighing on the Japanese Yen and helped the cross to inch higher through early European session.   •  Sources: Japan's Abe to pledge something for all generations in snap election - RTRSIt would now be interesting to see if the bulls are able to maintain their dominant stance amid absent fundamental driver, in terms of any major market moving economic releases. Moving ahead, traders would now focus on Wednesday's release of UK monthly retail sales data and the BoJ monetary policy decision, due to be announced during Asian session on Thursday. Technical levels to watchA strong follow through buying interest beyond mid-151.00s has the potential to lift the cross beyond the 152.00 handle towards its next hurdle near the 152.20-25 region. On the flip side, any retracement back below the 151.00 handle might continue to find support near 150.55-50 zone ahead of the key 150.00 psychological mark.

European Monetary Union Current Account s.a above expectations (€22.3B) in July: Actual (€25.1B)

European Monetary Union Current Account n.s.a: €32.5B (July) vs €28.1B

Senior Analyst at Danske Bank Morten Helt assessed the prospects for the Sterling, the BoE and EUR/GBP in the next months. Key Quotes “EUR/GBP bounc

Senior Analyst at Danske Bank Morten Helt assessed the prospects for the Sterling, the BoE and EUR/GBP in the next months.Key Quotes“EUR/GBP bounced a bit overnight as BoE governor Mark Carney’s speech was interpreted as slightly dovish although he did signal that a rate hike is warranted”. “The market is currently pricing in an accumulated 19bp rate hike from the BoE in November, suggesting that there should still be some GBP appreciation potential in store ahead of the next BoE meeting on 2 November. We expect the BoE to hike in November and look for EUR/GBP to decline towards 0.87 around the meeting”. “Near-term risks are more balanced from a positioning point of view. Moreover, we note that political uncertainty related GBP is likely to increase in the coming weeks as Theresa May is scheduled to speak in Florence on Friday 22 September ‘to update on Brexit negotiations so far’. The speech will attract a lot of attention in the financial markets, as it was the main reason why this week’s Brexit negotiations was cancelled”. “Furthermore, political uncertainty and Brexit concerns could also become a theme again in connection with the Conservative Party congress running from 1-4 October. Hence, while we are moderately bearish EUR/GBP in 1-3M, we stress that some GBP selling pressure driven by rising uncertainty is likely to emerge in coming weeks”. “Finally, we stress that a November hike from the BoE is still conditioned on incoming labour market and inflation data. Hence, expect mo re two-way volatility in the coming months”.

In a quiet EZ calendar, current account data and the ZEW surveys may offer the EUR some direction, according to Viraj Patel, Foreign Exchange Strategi

In a quiet EZ calendar, current account data and the ZEW surveys may offer the EUR some direction, according to Viraj Patel, Foreign Exchange Strategist at ING.Key Quotes“We continue to see risks of a more sustained move above the 1.20 level on a dovish Fed and some constructive EZ data could help to fuel this. As for EUR/GBP, we’re starting to see the narrative shift back to Brexit and PM May’s speech, while Governor Carney injected a bit of realism into any BoE hiking cycle with his IMF. We now look for consolidation in the 0.88-0.90 range.”

In opinion of FX Strategists at UOB Group, the pair’s outlook should stay neutral in the short term horizon. Key Quotes 24-hour view: “In line with

In opinion of FX Strategists at UOB Group, the pair’s outlook should stay neutral in the short term horizon.Key Quotes24-hour view: “In line with expectation, EUR traded sideways yesterday albeit at a narrower range than anticipated. The daily closing is largely unchanged and indicators are mostly ‘flat’ which suggests further sideway-trading from here. Expected range for today; 1.1925/1.1.1995”. Next 1-3 weeks: “EUR hit a high of 1.1985 last Friday, holding below the key short-term resistance of 1.1995. As highlighted in recent updates, the current weak undertone is deemed as intact unless there is a move above 1.1995. In other words, another leg lower towards 1.1820 is not ruled out just yet but the odds for such a move have diminished”.

The US dollar decline has stalled but it remains under a cloud amid concerns about low inflation, according to Imre Speizer, Research Analyst at Westp

The US dollar decline has stalled but it remains under a cloud amid concerns about low inflation, according to Imre Speizer, Research Analyst at Westpac.Key Quotes“The US event highlight this week is the FOMC on Thu, including a press conference and a fresh set of dots and projections. The FOMC is sure to announce balance sheet tapering but they likely cut PCE and neutral rate forecasts too and the dots likely migrate in a dovish direction. Base effects ensure ongoing easing in the annual CPI/ PCE prints into Q1 next year while US activity data will look spotty at best until the hurricane disruptions are worked through.” “3 months ahead: Trump’s tax overhaul is enjoying some renewed limelight but the path to success continues to narrow. Congress is sure to balk at the sheer size of the package, with personal and corporate tax cuts amounting to more than $5trn, while repealing very popular deductions as offsets will prove tough.”

Spot keeps pushing higher and is now eyeing the key 200-day sma in the 112.20 area. Noted Karen Jones, Head of FICC Technical Analysis at Commerzbank.

Spot keeps pushing higher and is now eyeing the key 200-day sma in the 112.20 area. Noted Karen Jones, Head of FICC Technical Analysis at Commerzbank.Key QuotesUSD/JPY continues to see a strong rebound from its previous downtrend, which is currently acting as support circa 109.23. It has reached the cloud, which extends to 111.61, and this guards the 112.25 200 day ma and the top of the range at 114.38/49”. “The previous downtrend guards the 108.13 April low and the recent low at 107.32”. “Below 107.32 will target then 106.50, the 61.8% retracement of the move 2016-2017. There is scope for the 2012-2017 uptrend at 105.48, but we look for this to hold the downside”.

Viraj Patel, Foreign Exchange Strategist at ING, suggests that they expect the NBH to cut the O/N deposit rate by 5 to 10bp, cut the 3M deposit facili

Viraj Patel, Foreign Exchange Strategist at ING, suggests that they expect the NBH to cut the O/N deposit rate by 5 to 10bp, cut the 3M deposit facility cap by HUF100-150bn and further postpone the date of reaching the CPI target.Key Quotes“Delivering such a dovish set of measures would send a strong signal to the market that the NBH means business, with EUR/HUF breaking above the 311.00 level. While we recognize that recent HUF weakness may see the NBH to keep its powder dry, we note that by not delivering what is expected by the market the forint would likely strengthen sharply – and force the NBH to eventually ease policy by more than is currently needed.”

According to the IMM net speculators’ positioning as at September 12, 2017, speculators’ net USD positions were a little less short last week, notes t

According to the IMM net speculators’ positioning as at September 12, 2017, speculators’ net USD positions were a little less short last week, notes the analysis team at Rabobank. Key Quotes“The forthcoming September FOMC meeting and expected news regarding US tax reform appear to have been the triggers for short covering, which may have a little further to run. USD net positions have been in negative territory for eight consecutive weeks.” “Having stretched to their highest level since May 2011 the previous week, EUR longs have given up some ground which is coincident with the waning of USD shorts. The next few weeks could be testing for French President Macron given union strike action.” “After the abnormality of the previous week’s direction, net JPY shorts have re-embarked on their declining trend. Net shorts have now dropped to their lowest level since June suggesting that investors are still motivated by the safe haven plight triggered by N. Korean related tension. BoJ policy meeting this week set to reiterate a dovish stance.” “GBP shorts dropped back from their recent levels ahead of last week’s BoE policy meeting. The hawkish sentiments expressed by the MPC indicate that shorts are set to fall again in the next set of data. That said, political risk still complicates the outlook for GBP.” “CHF positions remained in negative territory for a sixth consecutive week. The improvement in the Eurozone economy and rotation into the EUR should over time reduce safe haven demand for the CHF. However, this outlook is now complicated by tension between the US and N. Korea which could be supportive for the CHF.” “CAD longs dropped moderately though positions remained broadly consolidative. Speculation regarding the next BoC policy decision has been supportive. AUD longs softened a little further having reached their strongest level since April 2013 last month. Chinese economic data and prices of iron ore and coal remain in focus.”  

According to Viraj Patel, Foreign Exchange Strategist at ING, while usually the New Zealand’s GDT dairy auction today would be the highlight of most w

According to Viraj Patel, Foreign Exchange Strategist at ING, while usually the New Zealand’s GDT dairy auction today would be the highlight of most weeks, stealing the spotlight is the build-up to this weekend's general election (23 Sep).Key Quotes“Conflicting polls suggest that the outcome still remains too close to call; while the spot price may not show it, there is an air of nervousness around the NZD in the options market. We think the only clear positive NZD election outcome remains the incumbent National Party gaining a sizeable majority and forming a coalition with one of the smaller parties – but not NZ first. All other scenarios, and namely a Labour Party majority, would be NZD negative to varying degrees.” “We see the election risks to NZD as asymmetric; greater downside potential on a Labour win  (NZD/USD falling towards 0.7000) versus limited upside potential in the event of a National minority government (NZD/USD relief rally to 0.7350). In either case, a working government may not be in place by the time markets open on Monday morning. Ahead of this, 2Q NZ GDP (Thu) may offer some election distraction.”

The NZD/AUD cross found a short-term bottom just below 0.90, and could reach 0.92 during the week ahead, although much will depend on the outcome of t

The NZD/AUD cross found a short-term bottom just below 0.90, and could reach 0.92 during the week ahead, although much will depend on the outcome of the NZD election, suggests Imre Speizer, Research Analyst at Westpac.Key Quotes“The event calendar this week goes very quiet, with no major releases. RBA Sep minutes are due Tue. RBA’s Ellis speaks to economists on Wed.” “3 months ahead: Fair value for the cross is around 0.89. We see that as a fair target for the remainder of 2017. Supportive of the AUD are the rebound in iron ore prices and positive Chinese economic data, while the RBNZ’s on-hold stance (arguably even more entrenched than the RBA’s) is chipping away at NZ’s yield advantage.”

According to CME Group’s preliminary data for EUR futures markets, open interest dropped by more than 1.8K contracts on Monday vs. Friday’s final read

According to CME Group’s preliminary data for EUR futures markets, open interest dropped by more than 1.8K contracts on Monday vs. Friday’s final reading at 526,088 contracts. In the same line, volume decreased sharply by over 172K contracts.EUR/USD cautious ahead of FOMCEUR/USD is advancing firmly for the fourth straight session so far, although the recent activity in open interest and volume (both shrinking) suggests that the up move could be running out of steam, particularly ahead of the FOMC meeting due tomorrow.

Ahead of the Fed tomorrow, President Trump’s speech at the UN today may well dictate the headlines, suggests Viraj Patel, Foreign Exchange Strategist

Ahead of the Fed tomorrow, President Trump’s speech at the UN today may well dictate the headlines, suggests Viraj Patel, Foreign Exchange Strategist at ING.Key Quotes“There has been a limited fallout in global markets to flaring North Korea-related geopolitical risks and we attribute this to investors viewing a diplomatic solution as a highly likely outcome. With the President’s speech set to test this assumption, we wouldn’t be surprised to see caution in markets today.” “Turning our attention to the Fed meeting, we are now seeing the typical ‘buy the hawkish rumour, sell the dovish fact’ type of USD price action and we still expect the dollar to resume its weakening trend once this week’s Fed noise dissipates. Indeed, we have only seen the USD rally on 2 out of 15 occasions post Fed meetings – both of which involved some form of the signal that a rate hike was ‘appropriate soon’. This may be the only phrase that we think could unlock further USD gains; given the uncertain inflation backdrop, it just seems too early for a firm commitment to a December rate hike. Tactically, we prefer to fade this USD corrective rally.”

NZD/USD has ranged between 0.7200 and 0.7350 during the past few weeks, capped by election uncertainty, and supported by the downward trend in the US

NZD/USD has ranged between 0.7200 and 0.7350 during the past few weeks, capped by election uncertainty, and supported by the downward trend in the US dollar, notes Imre Speizer, Research Analyst at Westpac.Key Quotes“A breakout next Monday is possible, the direction depending on the election outcome. Recently, the NZD has fallen on polls showing Labour gains, and risen on National gains.” This week’s NZ data highlight will be the Q2 GDP release (Thu). There’s also the Q2 BoP (Wed), Westpac consumer confidence (Tue), and a GDT dairy auction (Tue) to watch. The election on Sat will set the tone for Monday morning. “Three months ahead: Our medium term outlook for NZD/USD is largely dependent on the outlook for the US dollar. A persistent rebound in the US dollar by year end is needed to pull NZD/ USD back to the 0.70 area.”

Typically, it is difficult for the dollar to rally on Fed meetings and this time may not be any different, according to Viraj Patel, Foreign Exchange

Typically, it is difficult for the dollar to rally on Fed meetings and this time may not be any different, according to Viraj Patel, Foreign Exchange Strategist at ING.Key Quotes“Hawkish Fed cries could fall on deaf ears again given the lack of convincing economic evidence. Fading the USD corrective rally may be a wise tactic ahead of the Fed meeting. We fear markets could still shift to the idea that any 'pause' in the Fed’s tightening cycle will be somewhat lengthy (if not permanent) and the risks are that the recent front-end flattening of the US yield curve has further to run.” “In the absence of any convincing hawkish signal -such as a reference to another rate hike being 'appropriate soon' - we think the USD is likely to follow the historical pattern of moving lower in the aftermath of the FOMC meeting.”

USD/JPY continued to trend up as risk appetite returned and safe haven demand ebbed and if geopolitical tension remain under control, there is scope f

USD/JPY continued to trend up as risk appetite returned and safe haven demand ebbed and if geopolitical tension remain under control, there is scope for the carry trade to continue guiding USD/JPY higher, according to analysts at Rabobank.Key Quotes“After all the BoJ is expected to confirm later this week that it remains committed to its enormous QQE programme while the Fed could provide guidance as to when its balance sheet reduction will commence.  That said, given the precedent that has been set this year it can be assumed that politics are likely to outdo the simple carry trade as an influence on both the USD and the JPY.  Newswires are suggesting that Abe may be prepared to call a snap election to take advantage of the bounce back of his popularity; the shock of having N. Korean missiles flying overhead has re-enforced demand for a strong leader.”  

The USD/CAD pair held with minor gains and was now looking to extend overnight strong gains, above the 1.2300 handle. On Monday, the pair built on Fr

The USD/CAD pair held with minor gains and was now looking to extend overnight strong gains, above the 1.2300 handle. On Monday, the pair built on Friday's modest recovery move from the 1.2100 handle and gained some positive traction after the Bank of Canada Deputy Gov. Timothy Lane said that the rise in protectionist sentiment could hurt the Canadian economy. The pair touched an intraday high level of 1.2338 but additional gains were capped by the prevalent bullish sentiment around crude oil prices, which tends to benefit the commodity-linked currency - Loonie. Meanwhile, a fresh wave of US Dollar selling bias on Tuesday was further seen keeping a lid on any further up-move for the major, at least for the time being.  Later during the NA session, the Canadian manufacturing sales data, along with the US data dump, would now be looked upon for some fresh impetus ahead of the next big event risk - FOMC monetary policy decision, due to be announced on Wednesday.    •  Fade rallies in USD/CAD – ScotiabankTechnical levels to watchA follow through buying interest beyond 1.2340 level is likely to pave way for extension of the pair's near-term recovery trend towards the 1.2400 handle en-route 1.2425 resistance area.  On the flip side, any retracement from higher levels now seems to find fresh buying interest near 1.2250-45 area, below which the pair could drift back below the 1.2200 handle towards testing its next support near the 1.2175-70 region.

Oil futures on NYMEX broke its overnight range-trade to the upside and now makes another attempt to regain $ 51 mark, as sentiment remains underpinned

Oil futures on NYMEX broke its overnight range-trade to the upside and now makes another attempt to regain $ 51 mark, as sentiment remains underpinned amid decreasing production levels in Saudi Arabia and Iraq.Iraqi Oil Minister Luaibi said earlier today that the country’s current output levels stand at 4.32m bpd, slightly lower from that seen in May and June, while on Monday, the JODI reported that Saudi‘s oil output dropped to 10.013 million bpd in July, when compared to 10.070 million bpd seen in June. However, traders continue to remain wary, after the latest US EIA report showed on Monday that US shale production is set to rise for a tenth month in a row in October. Moreover, increased nervousness ahead of the weekly US crude stockpiles report due to be published by the API later today, could keep the gains in check. At the time of writing, WTI trades +0.42% higher at $ 50.56, while Brent steadies at $ 55.65 levels.WTI technical levels  To the topside, resistances are aligned at $ 51.00 (round number), followed by $ 52 (week ended May 20 high) and $ 52.50 (psychological levels). Supports are located at $ 50.18 (5-DMA), 49.17/48.98 (10 & 200-DMA) and 48.45/36 (50 & 20-DMA).

In view of FX Strategists at UOB Group, the Aussie Dollar stays under pressure unless it can regain the mid-0.8000s. Key Quotes “We have held the sa

In view of FX Strategists at UOB Group, the Aussie Dollar stays under pressure unless it can regain the mid-0.8000s.Key Quotes“We have held the same view since last Thursday (14 Sep 17) wherein we believe that AUD is “under increasing downward pressure unless can it reclaim 0.8045”. “AUD staged another feeble attempt to move higher yesterday but succumbed to selling pressure and dropped sharply after touching a high of 0.8035. While the price action is in line with our expectation, the decline was checked by the strong support highlighted previously at 0.7940 (overnight low has been exactly 0.7940)”. “Downward pressure has increased considerably and the risk is clearly greater on the downside but we prefer to wait for a NY closing below 0.7940 (minor rising trend-line support) before adopting a bearish stance. This scenario would not be surprising unless AUD can move and stay above 0.8010 within these 1 to 2 days. Looking further ahead, a shift to a bearish stance would have a target of 0.7870 followed by last month’s low near 0.7805/10”.

German ZEW surveys Overview The ZEW will release its Economic Sentiment Index for the next six months for Germany, as well as the Current Situation I

German ZEW surveys OverviewThe ZEW will release its Economic Sentiment Index for the next six months for Germany, as well as the Current Situation Index at 0900GMT in the EU session later today, reflecting institutional investors’ opinions. The headline economic sentiment index is seen edging higher for the first time in five months to 12.5 in September after a 10.0 reading registered in August. While the current situation sub-index is expected to tick lower to 86.6 versus 86.7 booked previously.How could affect EUR/USD?A positive headline reading may offer fresh impetus to the EUR bulls, sending the EUR/USD closer towards 1.2050 levels. However, if the readings disappoint, the rate could drop back towards mid-1.19s. Haresh Menghani, Analyst at FXStreet noted: “On a sustained break through the 1.20 mark, the pair is likely to accelerate the up-move towards 1.2030 intermediate resistance before eventually darting towards the 1.2100 round figure mark.” “On the flip side, immediate downside now seems to be cushioned by a support near 1.1930 level, marking 38.2% Fibonacci retracement level of 1.1662-1.2092 recent up-move. Subsequent drop below the 1.1900 mark could get extended towards 1.1870 level, 50% Fibonacci retracement level and also coinciding with the ascending trend-channel support,” Haresh added.Key notesGerman ZEW expectations to show a small decline to 9.5 – Danske Bank EUR/USD near 1.2000 ahead of ZEWAbout German ZEW SurveysThe Economic Sentiment published by the Zentrum für Europäische Wirtschaftsforschung measures the institutional investor sentiment, reflecting the difference between the share of investors that are optimistic and the share of analysts that are pessimistic. Generally speaking, an optimistic view is considered as positive (or bullish) for the EUR, whereas a pessimistic view is considered as negative (or bearish).  

Gold ticked higher through early European session on Tuesday and recovered part of previous session's slump to the lowest level in over two-weeks.  C

Gold ticked higher through early European session on Tuesday and recovered part of previous session's slump to the lowest level in over two-weeks.  Currently trading around $1308-09 area, the precious metal's modest uptick on Tuesday was being supported by some renewed greenback selling bias. In fact, the key US Dollar Index has now eroded all of its previous session's gains and dropped to session lows near 91.60 area, which was eventually seen benefitting dollar-denominated commodities - like gold.   •  US Dollar sinks to daily lows near 91.60Apart from the greenback weakness, the prevalent risk-on environment, on easing geopolitical tensions over the Korean peninsula, has not been supportive of traditional safe-haven assets and did little to provide any additional boost to the yellow metal's modest recovery move.  Adding to this, growing market conviction that the Fed would eventually move towards raising rates by the end of this year and begin shrinking its massive $4.5 trillion balance sheet was also seen keeping a lid on any strong up-move for the non-yielding metal.  With investors' focus glued to a two-day FOMC meeting starting today, broader market risk sentiment and the USD price dynamics would remain key determinants for the commodity's move through Tuesday's trading session.   •  Geopolitics and central banks to take centre stage this week – RabobankTechnical levels to watchImmediate resistance is pegged near $1312 level, above which the metal is likely to dart towards $1320 hurdle en-route its next resistance near the $1325 region. On the flip side, $1305 level is likely to protect immediate downside, which if broken is likely to accelerate the slide even below the $1300 handle towards its next support near $1297 level. 

Analysts at Rabobank suggest that geopolitics and central banks meet are going to be the crucial market moving events for this week with focus mainly

Analysts at Rabobank suggest that geopolitics and central banks meet are going to be the crucial market moving events for this week with focus mainly on Fed meet.Key Quotes“Thankfully there were no further provocations from North Korea over the weekend. That said, the threat from Pyongyang is expected to be the primary focus of President Trump’s address to the United Nations tomorrow.  Earlier this month The UN Security Council unanimously voted in favour of adopting tougher sanctions against N.Korea over its nuclear and ballistic missile programmes.  Haley, the US ambassador to the UN, has reported that N.Korea was beginning to feel the impact of these sanctions which include a restriction of oil shipments to the country.  However, Haley added that she would be prepared to hand over the matter to the US military to deal with the crisis if need be.  She stated that ““we all know that if North Korea continues with this reckless behaviour and if the United States has to defend itself or its allies in any way, North Korea will be destroyed.”  Trump tweeted that he had discussed the matter over the weekend with S.Korea President Moon Jae-in, asking him how “Rocket-Man is doing”.  The President also reported that there were “long gas lines forming in North Korea”.”  “Assuming the market can keep its focus away from geopolitical risk, there is a lot of central bank activity to contend with this week. The FOMC meets on Tuesday and Wednesday and the BoJ is due to make a policy decision on Thursday.”  “The Fed has already outlined how it intends to start trimming its balance sheet, but it is yet to announce when that will commence. Given that Yellen’s current term is due to end in February next year, the market is expecting that balance sheet reduction will start soon, even if the Fed (as we expect) decides that conditions cannot tolerate a third interest rate hike this year.  On Friday, US retail sales for August reported a surprisingly weak -0.2% m/m, suggesting that consumption in the current quarter has likely slowed from Q2.  Over the weekend the BIS warned about the risks to growth of higher interest rates.”   “The German election will finally take place this coming weekend. As it stands it appears that the leadership is Chancellor Merkel’s to lose on September 24, with opinion polls suggesting that her party stands to win around 37% of the vote.  There could, however, be some re-working of the governing collation.  Elections are also scheduled to take place in New Zealand this week.  If the main opposition Labour Party wins victory, there could be a change to the RBNZ’s mandate to include full employment along with its price stability goal.”  

According to Karen Jones, Head of FICC Technical Analysis at Commerzbank, a test of the 1.2170 area still remains on the cards. Key Quotes “EUR/USD

According to Karen Jones, Head of FICC Technical Analysis at Commerzbank, a test of the 1.2170 area still remains on the cards.Key QuotesEUR/USD continues to hold over the 5 month uptrend at 1.1831. While this holds we remain unable to rule out an extension to the 50% retracement from the move down from the 2014 high at 1.2168 and the 1.2372 200 month ma, but if seen, that is expected to hold. It should be noted that we consider this to be the end phase of the bull trend. It should also be noted that we consider the chance of a trend break as high”. “Failure at the five month uptrend line will negate the up move and trigger losses initially to the 1.1662 August low and the mid-June high at 1.1296 and the more important 1.1110 end of May low”.

Chair Yellen’s future is likely to come up in the press briefing of upcoming Fed meet, especially after Vice-Chair Fischer's earlier-than-scheduled re

Chair Yellen’s future is likely to come up in the press briefing of upcoming Fed meet, especially after Vice-Chair Fischer's earlier-than-scheduled resignation announcement, suggests Viraj Patel, Foreign Exchange Strategist at ING.Key Quotes“We think uncertainty over the Fed's future leadership, as well as the broader policy framework, maybe keeping front-end US rates flat - with investors sceptical about making wholesale changes to Fed policy assumptions, until there is greater clarity.” “The most market-friendly outcome at this stage is if Chair Yellen stays on beyond her term scheduled to expire in February 2018 - even if it is a temporary arrangement.”

Imre Speizer, Research Analyst at Westpac suggests that the NZD has responded negatively to polls indicating a change of government while past electio

Imre Speizer, Research Analyst at Westpac suggests that the NZD has responded negatively to polls indicating a change of government while past elections have seen the NZD fall beforehand, and rise afterwardsKey Quotes“NZD market reactions to election polls started in August, when surveys started revealing a sharp jump in Labour’s popularity. NZD fell sharply immediately after releases of the 6pm Colmar Brunton polls which indicated gains by Labour. The Reid poll on 12 September was an exception, showing gains by National, to which the NZD responded by rising.” “Observation of market behaviour around polls tells us there has been an inverse relationship between the NZD and Labour’s popularity during the past month. However, it says nothing about the reasons why. For example, is the NZD pricing in expected policies from a Labour government, or is it simply pricing in the uncertainty from any change of government?” “NZD/USD was trading around fair value in early-August, just before the first surprise poll from Colmar Brunton on 17 August. It has since moved to an undervalued state. Similarly, NZD/AUD has shed much of its significant overvaluation.” “Whether the NZD follows the previous pattern of a postelection rise remains to be seen.”

The July FOMC minutes pointed to two members expressing contrasting views on another major issue: the interpretation of easier financial conditions an

The July FOMC minutes pointed to two members expressing contrasting views on another major issue: the interpretation of easier financial conditions and what the appropriate policy response should be, notes Viraj Patel, Foreign Exchange Strategist at ING.Key Quotes“Though one member noted that easier financial conditions might warrant tighter monetary policy (the conventional wisdom), another floated the more avant-garde view that elevated risky asset prices were a response to markets adjusting to structurally lower neutral interest rates - a factor which the Fed cannot control.” “This implies that in the absence of inflation, there may be little need for additional Fed rate hikes to tighten financial conditions. We tend to agree, particularly since broader US financial conditions are now clearly becoming less responsive to adjustments in the short-term policy rate. This may well be the same conclusion that Yellen articulates in the press briefing this week, which on its own shouldn't prompt any major re-pricing of Fed policy expectations.”

Reuters out with comments from the Iraqi oil minister Jabar al-Luaibi, noting the following: Iraq is now producing 4.32m or 4.35m bpd of oil Has ful

Reuters out with comments from the Iraqi oil minister Jabar al-Luaibi, noting the following: Iraq is now producing 4.32m or 4.35m bpd of oil Has fully complied with OPEC supply cuts, exceeded its share in cuts Has exceeded its share in cuts It is premature to reach a conclusion over extension to supply cuts beyond March 2018 Some producers want extension until end 2018

The Japanese Yen continued losing ground against the greenback, now pushing the USD/JPY pair closer to the 112.00 handle and fresh 8-week tops. The p

The Japanese Yen continued losing ground against the greenback, now pushing the USD/JPY pair closer to the 112.00 handle and fresh 8-week tops. The pair built on Friday's sharp recovery move from the vicinity of mid-109.00s and was being supported by fading safe-haven demand on abating concerns over North Korea.  With no new aggressions over the weekend, easing geopolitical tensions remains supportive of improving investors' appetite for riskier assets and dented the Japanese Yen's safe-haven appeal.   •  Wall Street extends gains, closes at fresh record highsBesides the latest risk-on environment, reports that Japan's PM Shinzo Abe might call a snap election as early as next month was also seen weighing on the Japanese Yen and further collaborated to the pair's strong up-move to its highest level since July 27.   •  Sources: Japan's Abe to pledge something for all generations in snap election - RTRSIt, however, remains to be seen if the pair is able to extend the ongoing bullish trajectory amid some repositioning trade ahead of the much awaited FOMC rate decision on Wednesday.  Apart from the political developments in Japan and Fed meeting, the BoJ announcement on Thursday would also play a major role in determining the pair's next leg of directional move. Technical levels to watchMomentum above the 112.00 mark could get extended towards the very important 200-day SMA hurdle near the 112.25 region. A follow through buying interest has the potential to continue lifting the pair towards reclaiming the 113.00 handle with some intermediate resistance near the 112.50-60 region. On the flip side, retracement back below mid-111.00s, leading to a subsequent break below 111.35 level (session low), now seems to drag the pair below the 111.00 handle towards its next support near the 110.85-80 region.

The greenback, gauged by the US Dollar Index (DXY), stays on the defensive so far today and is currently testing the lower bound of the range in the 9

The greenback, gauged by the US Dollar Index (DXY), stays on the defensive so far today and is currently testing the lower bound of the range in the 91.65/60 band.US Dollar attention to data, FedThe index remain unable to gather some upside traction so far this week, all against the backdrop of uncertainty over Trump’s tax reform plans and rising scepticism among investors. The greenback is expected to keep the familiar range for the time being in light of tomorrow’s FOMC gathering. Market consensus sees the Federal Reserve sticking to its monetary status quo this time. This scenario is also reinforced by CME Group’s FedWatch tool, which places the probability of a ‘no move’ by the Fed at nearly 99%, always based on Fed Funds futures prices. The down move in DXY seems to have decoupled from US yields dynamics, particularly the key 10-year benchmark, which are so far navigating the area of 5-week tops around 2.23%. In the US data space, housing starts, building permits and August’s import/export prices are next on tap seconded by the usual weekly report on crude oil supplies by the American Petroleum Institute (API).US Dollar relevant levelsAs of writing the index is retreating 0.14% at 91.68 and a breakdown of 91.58 (low Sep.15) would open the door to 91.01 (2017 low Sep.8) and finally 89.65 (low Dec.25 2015). On the upside, the initial hurdle aligns at 92.20 (high Sep.18) followed by 92.37 (21-day sma) and then 92.66 (high Sep.14).

French Finance Minister Le Maire crossed the wires now, via Reuters, speaking to France 2 TV on the 2018 Budget. Key Points: Sees 2017 budget defi

French Finance Minister Le Maire crossed the wires now, via Reuters, speaking to France 2 TV on the 2018 Budget.Key Points:Sees 2017 budget deficit at 2.9% of GDP, 2018 at 2.6% Wealth must be created before it can be distributed 2018 budget will support French economy Public spending will be cut from 54.6% to 50% of GDP in 5 years Spending likely to be cut by EUR16bln in 2018

Today, German ZEW expectations data is the major economic release from the Eurozone and overall, analysts at Danske Bank expect the ZEW expectations t

Today, German ZEW expectations data is the major economic release from the Eurozone and overall, analysts at Danske Bank expect the ZEW expectations to show a small decline to 9.5.Key Quotes“In August, the figure dropped to 10.0, due to weaker exports and the growing scandal in Germany's automobile sector. Together with the appreciating euro's pressure on exports, this could cause economic sentiment to deteriorate. However, both business expectations (Ifo) and German PMIs increased in August, signalling still increasing optimism on the part of business.” “The Central Bank of Hungary will hold its monetary policy meeting today, where it might expand liquidity further by lowering the cap of the three-month deposit and/or cutting the O/N interest rate, despite inflation starting to pick up recently.”

FX option expiries for Sept 19 NY cut at 10:00 Easter Time, via DTCC, can be found below. - EUR/USD: $1.1775(E407mn), $1.1800(E302mn), $1.1890(E478mn

FX option expiries for Sept 19 NY cut at 10:00 Easter Time, via DTCC, can be found below. - EUR/USD: $1.1775(E407mn), $1.1800(E302mn), $1.1890(E478mn), $1.1910(E317mn),   $1.1950(E648mn), $1.2000(E509mn), $1.2045(E308mn), $1.2100(E731mn)  - USD/JPY: Y109.00($358mn), Y109.40(530mn), Y110.00($290mn), Y110.40($300mn),   Y111.00($277mn), Y111.50($382mn)  - AUD/USD: $0.7975(A$401mn), $0.8020-25(A$365mn), $0.8040(A$229mn)  - NZD/USD: $0.7295-0.7300(NZ$489mn)  - EUR/GBP: Gbp0.8750(E1.3bn), Gbp0.9000(E901mn)  - EUR/SEK: Sek9.5000(E320mn) 

Satish Ranchhod, Senior Economist at Westpac explains that while NZ’s consumer confidence has eased a little, households remain in good spirits as the

Satish Ranchhod, Senior Economist at Westpac explains that while NZ’s consumer confidence has eased a little, households remain in good spirits as the Westpac McDermott Miller Consumer Confidence softened to a level of 112.4 in September, down from 113.4 last quarter.Key Quotes“Given normal quarter-to-quarter volatility, that’s a fairly small fall. And following gains earlier in the year, household confidence remains at firm levels.” “The slight fall in confidence this quarter was mainly due a little less optimism about the economic outlook over the next year. That may reflect concerns about the continuing slowdown in the housing market.” “But while households may be a little less optimistic, they’re certainly not pessimistic. In fact, the proportion of households reporting that they are in better shape financially than they were last year is at its highest level in a decade.”

The AUD/USD pair gained some positive traction during Asian session on Tuesday and recovered part of previous session's drop to over two-week lows. T

The AUD/USD pair gained some positive traction during Asian session on Tuesday and recovered part of previous session's drop to over two-week lows. The pair got a minor boost from today's better-than-expected house price index for the second quarter, though showed prices rising at a slightly slower pace of 1.9% q-o-q as compared to previous quarter's rise of 2.2%.  Meanwhile, the market seems to have digested a rather neutral RBA September meeting minutes, revealing central bank's steady policy views for some time and a need to balance risks of high household debt against low inflation.   •  RBA minutes: Bank is still balanced around the policy risks - WestpacDespite of the up-move, the pair remained capped below the key 0.80 psychological mark amid growing conviction that the Fed would stick to its plan and raise at least once by the end of this year.    •  Fed will announce that balance sheet reduction will start in Oct - HSBCHence, investors' attention would remain glued to the outcome of a two-day FOMC meeting and rate decision on Wednesday, which would help investors determine the next leg of directional move for higher-yielding currencies - like the Aussie. In the meantime, today's second-tier US economic data - housing market data, current account numbers and export/import price index, would be looked upon to grab some short-term trading opportunities ahead of the key event risk. Technical levels to watchImmediate upside resistance remains near the 0.80 handle, above which the pair is likely to head back towards 0.8035 supply zone. On the downside, 0.7960-55 area seems to have emerged as immediate support, which if broken could drag the pair towards 50-day SMA support near the 0.7930 region en-route the 0.7900 handle.

The bid tone around the shared currency stays well and sound during the first half of the week, with EUR/USD now edging higher to the 1.1980 region.

The bid tone around the shared currency stays well and sound during the first half of the week, with EUR/USD now edging higher to the 1.1980 region.EUR/USD focus on ZEW, FOMCThe pair is extending its upside momentum for the fourth consecutive session so far on Tuesday and is trading at shouting distance from the psychological barrier at 1.12000 the figure. The selling bias around the greenback remains the sole driver of the up move to fresh 6-day peaks, while the US Dollar Index stays entrenched below the 92.00 hanlde amidst rumours and counter-rumours on the potential tax reform by the Trump administration. The up tick in spot comes in spite of the solid rebound of US 10-year yields, which are trading beyond the 2.22% level so far. Data wise today, the German ZEW survey is expected to improve a tad for the current month, while EMU’s current account is seen ticking higher during July. Across the pond, housing starts, building permits and export/import prices are also due.EUR/USD levels to watchAt the moment, the pair is up 0.27% at 1.1987 and a break above 1.1995 (high Sep.13) would target 1.2041 (high Sep.11) and finally 1.2092 (2017 high Sep.6). On the flip side, the immediate support aligns at 1.1919 (21-day sma) followed by 1.1851 (5-month support line) and finally 1.1837 (low Sep.14).

Reuters quoted the Japanese government sources, citing that Japan’s PM Shinzo Abe is likely to pledge spendings on education and child care, stay toug

Reuters quoted the Japanese government sources, citing that Japan’s PM Shinzo Abe is likely to pledge spendings on education and child care, stay tough on North Korea and revise the pacifist constitution in his campaign for the snap election next month.            

Analysts at TDS explain that the September RBA minutes saw no real changes in RBA thinking with measured optimism as the recurring theme. Key Quotes

Analysts at TDS explain that the September RBA minutes saw no real changes in RBA thinking with measured optimism as the recurring theme.Key Quotes“Recent data has been consistent with a pickup in growth but the RBA cautions the need to balance risks of high household debt and low CPI. Just last week RBA board member Ian Harper played down the chances of a rate hike given economic growth was too weak to justify a hike.” “However, we do note a slightly more positive take on the RBA’s outlook for jobs in today’s minutes as opposed to August. In the August minutes, members noted there was some uncertainty about the effect any decline in spare capacity in the labour market would have on wage and price inflation., while in the today’s minutes,“a gradual increase in growth in wages and inflation was expected as the spare capacity in the labour market was reduced and the economy continued to strengthen, supported by the low level of interest rates.”.” “So while slightly more upbeat, the RBA highlighted that a higher AUD would result in a slower pick-up in growth and inflation. At the same time, the Bank runs the risk that housing slows more sharply, which could be a problem given high levels of debt which the Bank has mentioned. As such there is nothing in today’s minutes to suggest the Bank is looking to hike rates and right now it is content with current policy settings.” “The ABS measure of house prices for Q2 rose 1.9%/qtr, better than the 1.3%/qtr gain the market pencilled with prices on the year up 10.2%/yr. Looking through the split, the data confirms the two speed nature of Australia’s property market, with Sydney +2.3%, Melbourne +3 but prices in Perth were –0.8% and Darwin –1.4%. If auction clearance data is a guide, we may have seen a peak in house price inflation.”

Having stalled its corrective slide near 1.3465 region, the GBP/USD pair extends its steady recovery path above 1.35 handle into early Europe, as the

Having stalled its corrective slide near 1.3465 region, the GBP/USD pair extends its steady recovery path above 1.35 handle into early Europe, as the US dollar comes under fresh selling pressure against its main competitors.GBP/USD: Will it sustain the bounce above 1.3500?         The bulls now look to take-out 1.3.550 resistance in a bid to reclaim 1.36 mark, as cautious market sentiment weighs down on the US yields, dragging the US dollar broadly lower. Meanwhile, the latest reports of the US Senate mulling over a $1.5 trillion tax cut for a budget also left the USD bull unimpressed, as all eyes now remain on the FOMC monetary policy decision due out tomorrow for fresh hints on the interest rates outlook. Markets are widely expecting the Fed to announce the start of balance sheet normalization from next month, while keeping the bias for a rate hike this year intact. On Monday, Cable reversed a part of last week’s rally on a broad based US dollar strength and on less hawkish-than expected comments from the BOE Governor Carney, as he reiterated that any rate hikes are expected to be ‘gradual’ and ‘limited’. Calendar-wise, there is nothing of note for the major from the UK, and hence, attention turns towards the US building permits, housing starts and current account data due later in the NA session.GBP/USD levels to consider              Haresh Menghani, Analyst at FXStreet, writes: “Immediate resistance is pegged near mid-1.3500s, above which the pair is likely to head towards retesting the 1.3600 round figure mark. On the downside, any weakness back below the 1.35 handle and a subsequent drop below 1.3465 level seems more likely to find strong buying interest at a short-term ascending trend-channel resistance break-point, now turned support, near the 1.3440 region. Only a decisive break below the mentioned support would negate near-term bullish bias and trigger additional near-term corrective slide.”

Analysts at ANZ explain that Kiwi’s foray higher yesterday afternoon proved relatively short-lived, as it became clear that it wasn’t really justified

Analysts at ANZ explain that Kiwi’s foray higher yesterday afternoon proved relatively short-lived, as it became clear that it wasn’t really justified up at those levels.Key Quotes“As the key FOMC meeting creeps closer, US yields are ticking higher (despite some mildly softer data overnight), and that is lending support to the USD. Together with what is still a highly fluid domestic political scene, we retain a mild downward bias for kiwi.” “Support 0.7230 Resistance 0.7330

Forex today was driven by the sentiment around the US dollar and Treasury yields, as major fx pairs eagerly awaited fresh clues from Wednesday’s Fed p

Forex today was driven by the sentiment around the US dollar and Treasury yields, as major fx pairs eagerly awaited fresh clues from Wednesday’s Fed policy outcome. Among the Asia-pac currencies, the Yen remained near multi-week lows against its American counterpart, while the Kiwi remained strongly bid, in the wake of repositioning ahead of the NZ GDT price index and national election. Meanwhile, the Aussie rallied to test 0.80 handle on an unexpected rise seen in the Aus HPI gauge. However, the spot failed to sustain at higher levels, as the RBA minutes cautioned on rising household debt and lower price pressures.Main topics in AsiaRBA minutes: Further rise in AUD would result in slower pickup in growth, inflation The Reserve Bank of Australia (RBA) minutes from Sept 5th monetary policy meeting is out, highlighting that a further rise in AUD could lead to slower pickup in growth and inflation. Australia House Price Index (QoQ) dipped from previous 2.2% to 1.9% US Senate Republicans weight $1.5 Trillion tax cuts for budget News is crossing the wires this Tuesday morning that US Senate Republicans are considering a $1.5 trillion tax cut for a budget. China Foreign Minister - North Korea issue must be resolved peacefully Comments from China Foreign Minister crossing the wires via Reuters… US Senator Gardener wants North Korea out of the UN In a letter seen by Reuters that will be sent to ambassadors from China and 20 other countries, Republican Senator Cory Gardner, the US Senate’s East Asia subcommittee chairman, urged to cut off ties with North Korea …Key Focus aheadHeading into Europe, all eyes remain on the Eurozone current account and German ZEW economic surveys, while the UK docket remains data-empty for the second straight session today. The NA session remains quite eventful, with plenty of risk events on the cards, including the Canadian manufacturing sales, NZ GDT price index, US housing and current account data. EUR/USD: 1.2000 still on sight ahead of German ZEW? The EUR/USD pair remained better bid in the Asian trades this Tuesday, having found some support from weaker Treasury yields, while investors eagerly await the German ZEW surveys for fresh impetus. GBP/USD: Two-year yield spread ignores less hawkish Carney, dips to be short lived? GBP/USD pair dropped nearly 1% on Monday to an intraday low of 1.3465 after Bank of England [BOE] Governor Mark Carney said any increases in UK interest rates in the coming months will be "gradual" and "limited". UK PM May calls special Brexit cabinet meeting The UK Times reported overnight that the UK PM Theresa May has called a special Brexit cabinet meeting, Livesquawk cites. PBOC to meet Tuesday to discuss preliminary plan of big financial liberalisation measures Reuters quoting people familiar with the matter, citing that People's Bank of China (PBOC) is likely to hold a meeting on Tuesday to discuss preliminary plan of the big financial liberalization measures.  

Over the past few months we’ve seen a greater number of central banks talk about the removal of monetary policy stimulus as the Fed is set to announce

Over the past few months we’ve seen a greater number of central banks talk about the removal of monetary policy stimulus as the Fed is set to announce plans for balance sheet reduction shortly and the ECB is inching closer to the QE exit door, explains the analysis team at ANZ.Key Quotes“The BoC has hiked and the BoE is talking about the prospects of that “in the coming months”. Even the RBA has turned a little more hawkish recently, and our Australian colleagues will no doubt be perusing the Board minutes today for any more clues on that. While in most cases this reflects cyclical forces, as demand conditions have improved, it also reflects growing financial stability concerns too. But BoE Governor Carney raised an interesting idea in a speech overnight regarding the possibility that the global neutral interest rate (r*) may be rising. This premised on the idea that major economies are rotating away from consumption and towards investment and as fiscal policy becomes less contractionary.” “All else equal, that means that a “static monetary policy stance becomes more expansionary”. To be fair, he still talked about secular forces holding down long-run global equilibrium rates, meaning “that policy rates can be expected only to rise a limited extent at what can be expected to be a gradual pace”, but the bottom line is that central banks are unlikely to be sitting still and a turn in the global liquidity cycle is knocking louder on the door.”  

Bill Evans, Research Analyst at Westpac, explains that as expected, the minutes of the monetary policy meeting of the Reserve Bank Board showed that t

Bill Evans, Research Analyst at Westpac, explains that as expected, the minutes of the monetary policy meeting of the Reserve Bank Board showed that the Bank has been somewhat encouraged by recent developments in the economy.Key Quotes“In particular, conditions in the labour market have continued to improve with employment growth being described as “broadly based across the states”. Solid employment growth is expected to continue given the current forward indicators in the labour market, although “spare capacity remains”.” “On the other hand, the Board continues to be concerned about wages. Wage growth is described as stable at a low rate, and the forecast is for “growth in wages to remain low for some time, before picking up gradually in response to a strengthening labour market”. Evidence to support that view is that those industries with stronger employment growth are showing higher wage outcomes.” “Another encouraging sign is around non-mining business investment, where forward looking indicators such as capacity utilisation and investment intentions from business surveys suggest a further pick-up. The Bank is reasonably cautious on this, forecasting that non-mining investment will “strengthen gradually”. It notes that non-residential investment is also improving although the data from the capex survey still pointed to modest growth at best, with sectors not covered by capex such as education and health looking stronger.” “The dark side of the construction cycle centres around residential construction. The Bank appears to be considerably more optimistic here than Westpac. It accepts that construction has passed its peak but is still expecting a strong pipeline while continuing to note that “a considerable number of new apartments were scheduled to be completed in the period ahead”.” “In the Governor’s statement following this board meeting, he pointed out that conditions in the housing market had eased, notably in Sydney. The minutes flesh out this point, and in particular note that conditions “had remained strong in Melbourne”. Overall, the minutes indicate a less comfortable assessment of developments in the housing market than was implied in the statement.” “The issue of concern for the Bank is growth in housing debt continuing to outpace income growth. That summarises why the Bank is most concerned about wages, employment and house price growth.” “As with the Governor’s statement, there is no attempt to “jawbone” the Australian dollar. It is accepted that weakness in the US dollar is a key contributor to AUD strength, but it also noted that the rise in the AUD “was weighing on domestic growth and contributing to subdued inflationary pressure”. The warning from the minutes in August is repeated, “a further appreciation of the Australian dollar would be expected to result in a slower pick-up in growth and inflation”.” “The discussion on international economic conditions once again centres on China. It appears apparent that the Bank expects growth in the Chinese economy to slow over the course of the next few years, with the key challenge being balancing a commitment to short-term growth targets with the need to address high debt levels.” “The implication is that Australia’s commodity prices can be expected to fall over the course of the next few years.” “Commentary around the US Federal Reserve has changed somewhat. In previous minutes, the Board seemed to accept that the Federal Reserve would continue its tightening program. In these minutes, market pricing is noted to indicate that a rate hike was not expected until the second half of 2018. Given the Bank’s clear comfort with a lower AUD, this observation might indicate recognition of AUD holding higher for longer than had been anticipated previously.”“ConclusionThe minutes are not quite as upbeat as the Governor’s statement indicated. The improved labour market conditions are recognised but clearly qualified by an expected slow response from wages and ongoing spare capacity. Improving prospects for non-mining investment are noted, but the peak in the residential construction cycle has been reached, and prospects for non-residential investment are mixed. The easing of conditions in the housing market, especially in Sydney, are noted, but the qualification that the Melbourne market remains strong is added. The policy conundrum of rising household debt in an environment of low inflation is emphasised. While, the commentary notes that financial markets are giving “some expectation of an increase in the cash rate by mid-2018”, there is no signal in these minutes to suggest that the Board sees any urgency around interest rates. Westpac expects that concerns with weak income growth weighing on consumer spending and eventually the jobs market will dominate the policy debate in 2018. The sustained application of macro-prudential policies is likely to continue to ease conditions in housing markets precluding any need for the Bank to raise rates next year.” 

Livesquawk reports the latest headlines published by the Financial Times (FT), citing that the EU is said to seek more powers over hedge funds after B

Livesquawk reports the latest headlines published by the Financial Times (FT), citing that the EU is said to seek more powers over hedge funds after Brexit.

The US-based ratings agency, Moody’s Investors Service, published a latest review on China’s Belt and Road Initiative, noting that the latest initiati

The US-based ratings agency, Moody’s Investors Service, published a latest review on China’s Belt and Road Initiative, noting that the latest initiative is credit positive overall, but challenges are evident.

In a letter seen by Reuters that will be sent to ambassadors from China and 20 other countries, Republican Senator Cory Gardner, the US Senate’s East

In a letter seen by Reuters that will be sent to ambassadors from China and 20 other countries, Republican Senator Cory Gardner, the US Senate’s East Asia subcommittee chairman, urged China and 20 other nations to cut off ties with North Korea and remove the North out of the United Nations (UN).Key Quotes:“Maintaining official diplomatic relations with a regime that continues to defy international law and threaten nations across the globe only serves to reward nefarious behaviour.” “In addition to cutting off bilateral ties, I urge your government to support expelling the DPRK from the United Nations.”

Having posted fresh two-month tops of 111.66 in the overnight trades, the USD/JPY pair has entered a phase of consolidation, as the bulls await the ne

Having posted fresh two-month tops of 111.66 in the overnight trades, the USD/JPY pair has entered a phase of consolidation, as the bulls await the next catalysts in the US dataflow for fresh impetus.USD/JPY back below 200-DMA of 111.50The spot stalled its bullish run and now gathers pace for further upside, as renewed weakness in Treasury yields restrict further gains in USD/JPY. The US rates weakened across the curve amid the latest reports of the US military spending backed by the Senate, which is believed to trigger a battle over government spending levels later this year. However, the bulls continue to fight for control on the back of a sharp rally seen in the Japanese stocks. The Nikkei 225 index surged to fresh two-month tops, as the Japanese traders returned to markets and played a catch-up with the global equities. Later today, the sentiment on the global equities combined with a fresh batch of US macro data will play a key role in driving the prices, as investors prepare for the FOMC and BOJ policy decision due later this week.USD/JPY Technical levels                  To the topside, a daily close above 111.50 (200-DMA) would shift risk in favor of a re-test of 111.73 (July 27 high) beyond which 112 (round number) would be back on sight. A break below 111.14 (daily pivot) would open doors for 110.86/83 (5 & 100-DMA). A break lower would yield a test of 110.50 (psychological levels). 

In the view of analysts at HSBC, the FOMC Committee is expected to announce the start of the balance sheet contraction at its two-day monetary policy

In the view of analysts at HSBC, the FOMC Committee is expected to announce the start of the balance sheet contraction at its two-day monetary policy meeting concluding on Wednesday.Key Quotes:“We expect the FOMC to announce the commencement of balance sheet contraction  For several months now, the FOMC has been preparing financial markets for the advent of quantitative tightening. Fed officials have not used that term; they prefer "policy normalization" to describe the planned process of reducing the size of the Fed's balance sheet. But just as the expansion of the Fed's balance sheet through quantitative easing provided some monetary policy accommodation to the economy, shrinking the Fed's balance sheet should be regarded as a step in the direction of tighter monetary conditions. Fed officials have thoroughly prepared financial markets for this event; we anticipate little market reaction  In June, the FOMC announced that it intended to start reducing the size of the Fed's balance sheet sometime "this year," by gradually decreasing its reinvestment of principal payments received from its holdings of Treasury securities and agency MBS. We expect the FOMC will announce that balance sheet reduction will start in October. The latest Summary of Economic Projections, including projections for future rate hikes, may attract more attention  We expect that the median projection for 2017 will still be for one more 25bp rate hike in December The median projection is for an additional three 25bp rate hikes in 2018 and again in 2019”  

Comments from China Foreign Minister crossing the wires via Reuters- North Korea issue must be resolved peacefully Vicious cycle needs to be broken

Comments from China Foreign Minister crossing the wires via Reuters- North Korea issue must be resolved peacefully Vicious cycle needs to be broken China will continue to strictly follow UN resolutions and assume its international obligations Other parties must assume their responsibilities, play their own role  

Analysts at National Bank of Australia (NAB) offer insights on the impact of the upcoming New Zealand election on the domestic currency. The New Zeal

Analysts at National Bank of Australia (NAB) offer insights on the impact of the upcoming New Zealand election on the domestic currency. The New Zealand election is scheduled on September 23Key Quotes:“Fade any knee-jerk reaction to the NZD from political developments. No clear implications for the NZD from a change of government  Awful performance during August, the NZD appears to be in a consolidation mode this month Support for the NZD is around the 200-day moving average of 0.7140 with resistance around 0.7330. Judged by recent market movements, the market sees a Labour-led government as negative for the NZD Sees a National-led government as positive We see this as an overly simplistic market reaction, and the reality is that the NZD will be driven over coming weeks and months by global forces, likely swamping any domestic political factors.A Labour-led government creates a more uncertain economic outlook, but what we do know is that fiscal policy will be modestly easier versus a National-led government.Notably, Labour's fiscal projections still show modestly growing fiscal surpluses over the years ahead. Thus, we certainly don't believe that the NZD will necessarily track lower on a change of government.”

GBP/USD pair dropped nearly 1% on Monday to an intraday low of 1.3465 after Bank of England [BOE] Governor Mark Carney said any increases in UK intere

GBP/USD pair dropped nearly 1% on Monday to an intraday low of 1.3465 after Bank of England [BOE] Governor Mark Carney said any increases in UK interest rates in the coming months will be "gradual" and "limited". However, the two-year US-UK government bond yield spread is not buying Carney's less hawkish talk.Spread chartThe chart above shows head and shoulders topping pattern, which indicates the spread could narrow further in favor of the British Pound. Despite Carney's less hawkish comments, the two-year yield spread remained largely unchanged at 96-97 basis points. The two-year yields are sensitive to the short-term rate hike expectations, thus resilient two-year yield spread could be an indication that markets are not buying Carney's gradual rate hike call, hence the dip in the GBP/USD could be short lived. The UK economic calendar is thin, thus focus remains on the bond yield differential. Across the pond, housing data, current account number and export and import price index could influence the demand for the US dollar.GBP/USD Technical LevelsFXStreet Chief Analyst Valeria Bednarik writes- "From a technical point of view, the pair has broken below the 23.6% retracement of the BOE-linked rally from late last week, with a strong support now at 1.3440, in where the pair has the 38.2% retracement of the same rally, and a bullish 20 SMA in the 4 hours chart. In the same chart, technical indicators head sharply lower within positive territory, correcting extreme overbought readings, and supporting additional slides on a break below the mentioned Fibonacci support."

The outcome of latest Reuters Corporate survey of Japanese companies reveal: 64% of Japan firms expect US economy to keep growing at current pace, 19

The outcome of latest Reuters Corporate survey of Japanese companies reveal: 64% of Japan firms expect US economy to keep growing at current pace, 19% see it expanding further 51% expect China economy to keep growing at current pace, 14% see it expanding further Many firms see politics as risk to growth under President Trump More firms cautious about China outlook than US outlook Some 40% face delay, problems in US business plans  

The EUR/USD pair remained better bid in the Asian trades this Tuesday, having found some support from weaker Treasury yields, while investors eagerly

The EUR/USD pair remained better bid in the Asian trades this Tuesday, having found some support from weaker Treasury yields, while investors eagerly await the German ZEW surveys for fresh impetus.EUR/USD rises to test 1.1975, what next?After a brief phase of consolidation around 1.1950 levels seen in the overnight trades, the EUR/USD pair caught a fresh bid-wave and headed northwards in a bid to reclaim 1.20 handle. The recovery in the spot was mainly driven by broad based US dollar weakness, in response to tumbling Treasury yields, as uncertainty weighed-in over the US military spending and its impact on overall government spending. However, over the last hour, the US dollar makes minor recovery attempts against its major peers, following the WSJ headlines that cited the US Senate Republicans mull USD1.5 trillion tax cut for budget. As a result, the major is seen receding gains and heads back towards the 10-DMA resistance-turned support of 1.1964. Further, risk-on rally seen in the Asian equities also keep the gains in the funding currency Euro limited. Despite, the latest leg down, the sentiment around the main currency pair remains buoyed amid expectations of a solid improvement in the German ZEW economic sentiment.Also of note for the major remains the US dataflow due on the cards later in the NA session, which includes the housing, current account and import prices data.EUR/USD Technical Set-up   Valeria Bednarik, Chief Analyst at FXStreet noted: “For the upcoming hours, the immediate support comes at 1.1910, with a break below the level exposing the 1.1860/70 region, ahead of a more relevant support at 1.1825. Selling interest has surged on approaches to the 1.2000 figures, which means that the pair would need to accelerate through the next resistance, at 1.2030, to confirm further gains ahead.”

News is crossing the wires this Tuesday morning that US Senate Republicans are considering a $1.5 trillion tax cut for a budget.

News is crossing the wires this Tuesday morning that US Senate Republicans are considering a $1.5 trillion tax cut for a budget.

The UK Times reported overnight that the UK PM Theresa May has called a special Brexit cabinet meeting, Livesquawk cites.

The UK Times reported overnight that the UK PM Theresa May has called a special Brexit cabinet meeting, Livesquawk cites.

AUD/USD failed to take out resistance at 0.7993 [trend line sloping upwards from the June 2 low and July 7 low] after the RBA minutes stressed the nee

AUD/USD failed to take out resistance at 0.7993 [trend line sloping upwards from the June 2 low and July 7 low] after the RBA minutes stressed the need to balance the risk of high household debt and low CPI. At press time, the spot was trading at 0.7975 levels. Despite the failure at the trend line hurdle, the currency pair is still up 0.20% on the day.RBA does the balancing actThe minutes said the solid employment growth is expected to continue, and talked about the need to balance risk of high household debt and low CPI. It added further that growth and wages low but stable. The policy makers reiterated the disinflationary impact of the strong Aussie dollar. Clearly, the central bank has done the balancing act, although markets are not particularly impressed, which is evident from the failure to retake the rising trend line hurdle. The gains in the AUD/USD pair are also being capped by expectations that the Fed would hike rates in December. Also released this Tuesday morning was the Aussie house price index, which cooled to 1.9% y/y from the previous figure of 2.2%. The decline in house prices is AUD bearish.AUD/USD Technical OutlookFXStreet Chief Analyst Valeria Bednarik writes- The 4 hours chart shows that the pair may continue sliding over the upcoming sessions, as the decline gained momentum once the price broke below its 20 SMA, bearish around 0.7995, whilst in the same chart, the RSI indicator maintains a strong downward momentum around 35, while the Momentum holds  within negative territory, with limited directional strength. There's a strong static support around 0.7920, with further declines below the level favoring a downward continuation for this Tuesday.  

Reuters quoting people familiar with the matter, citing that People's Bank of China (PBOC) is likely to hold a meeting on Tuesday to discuss prelimina

Reuters quoting people familiar with the matter, citing that People's Bank of China (PBOC) is likely to hold a meeting on Tuesday to discuss preliminary plan of the big financial liberalisation measures.Key Details:PBOC to draft a package of reforms to give foreign investors greater access to China's financial services industry Tuesday's meeting is to discuss its proposals, get feedback from Chinese institutions, and discuss a timetable Plan details not yet final Proposals include: Permission for foreign institutions to control their local finance-sector joint ventures Raising the current 25% limit on foreign ownership in Chinese banks Allow foreign firms to provide Yuan-denominated bank card clearing services

The Reserve Bank of Australia (RBA) minutes from Sept 5th monetary policy meeting is out, highlighting that a further rise in AUD could lead to slower

The Reserve Bank of Australia (RBA) minutes from Sept 5th monetary policy meeting is out, highlighting that a further rise in AUD could lead to slower pickup in growth and inflation.Main Headlines via Reuters:Need to balance risks of high household debt against low inflation Rise in A$ driven by fall in US$, weighing on domestic growth and inflation Further rise in a$ would result in slower pick-up in growth, inflation Economy had grown below trend in 2016/17, recent data mostly positive RBA meeting started with discussion on labour market, which had continued to improve Leading indicators suggested jobs pick up was likely to continue Jobs growth to support household incomes and spending, but high debt a risk Labour market still has spare capacity, wage growth to remain low for some time Clear signs housing market in Sydney had eased, less so in Melbourne Outlook for non-mining investment had improved, public infrastructure spending strong RBA discussed china impact on iron ore, expected prices to fall as new supply came on stream Growth in China had been stronger than expected, high debt still a threat

Australia House Price Index (QoQ) dipped from previous 2.2% to 1.9%

Australia House Price Index (YoY) remains at 10.2%

The People's Bank of China [PBOC] set the Yuan reference rate at 6.5530 vs. Monday's fix of 6.5419.

The People's Bank of China [PBOC] set the Yuan reference rate at 6.5530 vs. Monday's fix of 6.5419.

Despite failing to hold above 0.80 handle, the AUD/USD is mildly bid this Tuesday morning ahead of the RBA minutes release. Read - When are the RBA

Despite failing to hold above 0.80 handle, the AUD/USD is mildly bid this Tuesday morning ahead of the RBA minutes release.Read - When are the RBA minutes and how could they affect AUD/USD? The spread or the difference between the Australia 10-year government bond yield and the US 10-year Treasury yield currently stands at 59bps. Over the last few days, the spread has widened from 47bps to 59bps, but still remains largely restricted to a narrow range of 60bps to 48bps . This explains the bullish exhaustion in the AUD/USD pair around 0.80 handle. The yield spread may break higher in favor of the AUD if the RBA minutes focus more in the positives - strong labor market, improvement in business conditions and downplays risks arising out of household debt and strong Aussie dollar.  

AUD/JPY daily chart carries a Doji candle, which indicates indecision in the marketplace ahead of the RBA minutes release. The currency pair hit a hi

AUD/JPY daily chart carries a Doji candle, which indicates indecision in the marketplace ahead of the RBA minutes release. The currency pair hit a high/low of 89.34/88.56 on Monday before ending the day on a flat note at 88.79 levels.RBA minutes release - watch for AUD jawboningThe RBA minutes are due today at 01:30 GMT. The policy statement released on September 4 carried a neutral tone. Thus, minutes are unlikely to offer a major hawkish/dovish surprise. Nevertheless, the minutes may attempt direct/indirect AUD jawboning. That RBA sees strong Aussie as a threat to economic rebalancing is well known, hence, it may not move the AUD pairs. The AUD/JPY may feel the pull of gravity if the minutes stress the risks to household debt and weak wage growth numbers. Currently, the AUD/JPY is bid around 88.90 levels. The Yen remains on the back foot with the US stocks at record highs and the strength in the US Treasury yields.AUD/JPY Technical LevelsA break above 89.00 would expose 89.42 [July 27 high]. An end of the day close above the same would open doors for 90.00 [zero levels]. On the downside, an end of the day close below 88.56 [previous day's low] would confirm bearish Doji reversal and could yield a sell-off to 87.55 [Friday's low] and 87.00 [zero levels].Key notesAUD/USD analysis: Aussie down, hit from multiple frontsAUD/USD Forecast: Cautiously bullish, focus on RBA and Fed 

Analysts at ANZ noted all of the market action from overnight. Key Quotes: "Global equities rose, yields bear steepened, the USD strengthened, and c

Analysts at ANZ noted all of the market action from overnight.Key Quotes:"Global equities rose, yields bear steepened, the USD strengthened, and commodities were lower.  Central bank speakers were the highlight, with a speech by BoE’s Carney driving a drop in GBP and BoC’s Lane noting that the Bank would be “paying close attention” to how the economy responds to a stronger CAD and higher rates.  President Trump also opened the UN General Assembly, with his prepared remarks relatively measured.  European bourses finished up 0.3-0.5%, while US indices are currently 0.1-0.3% higher. The US yield curve bear steepened, with front-end rates up about 2bps and the 10-year up 3bps (2.23%).  Gold prices were down and closing in on USD1300/oz support.  Oil prices were largely steady." 

Analysts at Nomura offered their projection for today;s USD/CNY fix. Key Quotes: "Our model1 projects the fix to be 251 pips higher than the previou

Analysts at Nomura offered their projection for today;s USD/CNY fix.Key Quotes:"Our model1 projects the fix to be 251 pips higher than the previous fix (6.5670 from 6.5419) and 52 pips higher than the previous official spot USD/CNY close of 6.5618. The basket implied change is 60 pips higher than the previous official spot USD/CNY close (6.5678 from 6.5618)."

Comments from Japanese Finance Minister Aso crossing the wires- Would have to maintain fiscal discipline if the government changes use of sales tax r

Comments from Japanese Finance Minister Aso crossing the wires- Would have to maintain fiscal discipline if the government changes use of sales tax revenue  

RBA minutes overview The RBA minutes are due today at 0130GMT after the RBA, as widely expected, left the official cash rate at 1.50% at its latest m

RBA minutes overviewThe RBA minutes are due today at 0130GMT after the RBA, as widely expected, left the official cash rate at 1.50% at its latest meeting, unchanged yet again.  However, the market expects a hawkish rhetoric this time around when more information will be provided on the Board’s expectations. Although, it should be noted that the meeting took place before the Q2 GDP release, as analysts at Westpac explained and added that in a post-meeting speech, Governor Lowe reiterated that balancing support for the labour market and risks to household debt remain front of mind.  "He also noted that this month’s meeting special discussion was on the Chinese economy," the analysts pointed out. With respect to the strength of the Aussie, RBA's Lowe explained last month that they are prepared to intervene in the currency, but just not at the moment.How could the minutes affect AUD/USD?On a daily close below the 20-day sma at 0.7971 and a subsequent follow-through below the 3-month uptrend at 0.7957 with additional daily closes, the bears would be on track to target the 50-day SMA level around the 0.7920 regions. On the wide, 0.7808 is the 14th August low, guarding previous levels of resistance in Feb and March highs at 0.7750.  Should the bullish trend remain intact throughout the forthcoming major risk events, (RBA minutes and FOMC later in the week), on a break of the 0.80 handle and beyond 0.81 the figure, overhead lies the 0.8162/66 May 2015 peak and a 50% retracement level. On the wide, 0.8295 is the January 2015 high. Key notes:AUD/USD analysis: Aussie down, hit from multiple frontsAUD/USD Forecast: Cautiously bullish, focus on RBA and FedAbout the RBA minutesThe minutes of the Reserve Bank of Australia meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee. Generally speaking, if the RBA is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the AUD.

Analysts at Westpac offered their outlook for the antipodean cross and rates. Key Quotes: "AUD/NZD 1 day: Eyeing the 1.0930 area in this correction

Analysts at Westpac offered their outlook for the antipodean cross and rates.Key Quotes:"AUD/NZD 1 day: Eyeing the 1.0930 area in this correction of the June-Aug rally. AUD/NZD 1-3 month: A retest of the 1.1200 area seen in April is possible if iron ore’s rally since mid-June continues and global risk sentiment remains elevated. (4 Sep) AU swap yields 1 day: The 3yr should open around 2.22%, the 10yr around 2.99%. AU swap yields 1-3 month: Our RBA outlook (on hold for some time) is anchoring short-maturity interest rates and should keep 3yr swap rates in a 1.8% to 2.3% range, as long as core inflation remains below 2%. Longer maturity rates will largely follow US rates. (8 Aug). NZ swap yields 1 day: NZ 2yr swap rates should open up 1bp at 2.23%, the 10yr up 2bp at 3.26%, in response to US interest rates movement overnight. NZ swap yields 1-3 month: Our RBNZ outlook (on hold throughout 2018) is anchoring short-maturity interest rates and should keep 2yr swap rates in a 2.1% to 2.6% range, as long as inflation remains below 2%.  Longer maturity rates will largely follow US rates."

Analysts at ANZ explained that over the past few months we’ve seen a greater number of central banks talk about the removal of monetary policy stimulu

Analysts at ANZ explained that over the past few months we’ve seen a greater number of central banks talk about the removal of monetary policy stimulus. Key Quotes:"The Fed is set to announce plans for balance sheet reduction shortly and the ECB is inching closer to the QE exit door. The BoC has hiked and the BoE is talking about the prospects of that “in the coming months”. Even the RBA has turned a little more hawkish recently, and our Australian colleagues will no doubt be perusing the Board minutes today for any more clues on that.  While in most cases this reflects cyclical forces, as demand conditions have improved, it also reflects growing financial stability concerns too. But BoE Governor Carney raised an interesting idea in a speech overnight regarding the possibility that the global neutral interest rate (r*) may be rising. This premised on the idea that major economies are rotating away from consumption and towards investment and as fiscal policy becomes less contractionary.  All else equal, that means that a “static monetary policy stance becomes more expansionary”. To be fair, he still talked about secular forces holding down long-run global equilibrium rates, meaning “that policy rates can be expected only to rise a limited extent at what can be expected to be a gradual pace”, but the bottom line is that central banks are unlikely to be sitting still and a turn in the global liquidity cycle is knocking louder on the door." 

Currently, NZD/USD is trading at 0.7257, down -0.08% on the day, having posted a daily high at 0.7265 and low at 0.7256. Overnight, NZD fell from yes

Currently, NZD/USD is trading at 0.7257, down -0.08% on the day, having posted a daily high at 0.7265 and low at 0.7256. Overnight, NZD fell from yesterday’s peak of 0.7344 to 0.7248 while the dollar picked up a bid in a pre-Fed flush-out and dovish commentary from BoC's Lane who expressed concerns over higher rates and the Loonie.Forex today: US dollar marginally better-off on pre-Fed flushout and return of risk appetiteUS 10yr yields rose from 2.20% to 2.24% (a one-month high) and the Fed's fund futures yields continued to price the chance of a December rate hike at 56%, supporting demand for the US dollar and hitting the higher betas such as the antipodeans.  Domestic risk events are limited now that Westpac's consumer survey has been released at 112.4 vs 113.4 prior. However, tonight, we have the GDT dairy auction that is priced by NZX futures to result in little change in the key whole milk powder price, according to analysts at Westpac. Broadly speaking, the RBA minutes could offer some activity in the commodity sector and the Kiwi, but the main event ahead stays with the FOMC in the middle of the week before the NZ elections on Friday, (or weekend, time zone dependent). NZD/USD 1-3 month: Analysts at Westpac explained that if the RBNZ remains firmly on hold, as we expect, and the US dollar rises on tighter Fed policy, then NZD/USD could fall as far as 0.70 by year end. "Pre-election jitters may also weigh on the NZD,' the analysts added.NZD/USD levelsTo the upside, 0.7280 guards the 0.73 handle. However, a break of 0.7320, then 0.7337 recent highs and lastly 0.7370 (9th Aug high) that are the next targets in the near term would solidify a bullish trend back to 0.7522 YTD highs.To the downside, 0.7220 guards 0.7195 as the recent low. 0.7127 is the June 6th low and 0.7100 is a key psychological level.

Analysts at Nomura Review the only US data from overnight being the NAHB Housing market index. Key Quotes: "The NAHB housing market index fell to 64

Analysts at Nomura Review the only US data from overnight being the NAHB Housing market index.Key Quotes:"The NAHB housing market index fell to 64 in September, down from 67 in August, weaker than expectations (Nomura: 66, Consensus: 67). Both the present and future single-family sales indices fell moderately.  The index for prospective buyers traffic only declined slightly, with much of the decline concentrated in the Midwest and South regions. The NAHB chairman noted that the hurricane season was exacerbating home builders’ concerns about the availability of labor and building material costs.  However, consumer fundamentals remain strong for the housing market and we expect home builder sentiment to remain elevated in coming months as temporary effects from Hurricanes Harvey and Irma wane."

Analysts at Westpac offered a market wrap and a snapshot of the event risks ahead today and tonight. Key Quotes: "Global market sentiment: Amid litt

Analysts at Westpac offered a market wrap and a snapshot of the event risks ahead today and tonight.Key Quotes:"Global market sentiment: Amid little major news flow for markets, the US dollar and US interest rates rose, and equities nudged to fresh record highs. Interest rates: US 10yr yields rose from 2.20% to 2.24% (a one-month high), 2yr yields rose from 1.38% to 1.40% (a two-month high). Fed fund futures yields continued to price the chance of a December rate hike at 56%. Currencies: The US dollar index is up 0.2% on the day. EUR ranged sideways between 1.1920 and 1.1970. USD/JPY rose from 111.15 to 111.66 – a two-month high. AUD fell from the Sydney peak of 0.8035 to 0.7940 – a two-week low. NZD fell from yesterday’s peak of 0.7344 to 0.7248. AUD/NZD ranged sideways between 1.0950 and 1.0985.Economic WrapUS homebuilder sentiment (NAHB) slipped from 67 to 64 (vs 67 expected), probably influenced by Hurricane Harvey.Event RiskAustralia: The RBA minutes will provide more information on the Board’s expectations but note that the meeting took place before the Q2 GDP release. In a post meeting speech, Governor Lowe reiterated that balancing support for the labour market and risks to household debt remain front of mind. He also noted that this month’s meeting special discussion was on the Chinese economy. NZ: GDT dairy auction tonight is priced by NZX futures to result in little change in the key whole milk powder price. Consumer confidence (Westpac) was sitting at a two-year high in June. Euro Area: Sep ZEW survey of expectations were last at 29.3, a second monthly drop but it is still indicating continued optimism in the European economy. US: Aug housing starts are expected to bounce 1.7% from a 4.8% fall in Jul, and building permits are seen to drop 0.8% following -3.5% last month. Multi-family housing permits and particularly starts have fallen over the year while those for single-family dwellings have lifted."

New Zealand Westpac consumer survey fell from previous 113.4 to 112.4 in 3Q

South Korea Producer Price Index Growth (YoY) rose from previous 3% to 3.2% in August

South Korea Producer Price Index Growth up to 0.3% in August from previous 0.1%