We mentioned in Dean’s morning Forex report that there was potential market-moving data being released this afternoon in the form of Retail Sales and Jobless claims from the US.
- Retail Sales were below expectations at -0.3% where -0.1% was expected.
- Jobless claims were marginally stronger than expected at 2143k against 2150k
These numbers caused the EURUSD to spike from 1.1250 to 1.1283 within a minute and straight back down again. We have seen a range of 1.1218 to 1.1283 and are currently trading where we opened this morning. FX traders have been whipsawed around a bit today with the market not going anywhere. There seems to very little commitment to take this pair higher or lower ahead of the Fed meeting next week. We have seen a significant narrowing of the Bollinger bands indicating a lack of volatility and liquidity in the two currencies.
Cable too, has had a relatively small trading range today. Top to bottom a 100-point range where the average range (ADR) is a little bigger at 115 pips. With a lot of data out today this seems very light. We saw August Retail Sales come in ahead of expectation at 5.9% increase for the month. This saw GBPUSD trade up briefly on the back of these only to witness it slide back for most of the day. We are now trading around 1.32 the figure which is right in Dean’s support zone. It will be interesting to see how the market reacts from here but a bounce a reasonable possibility.
The Aussie Dollar (AUDUSD) has had a nice rally since the open of Wall Street in the US. The feeling that the recent sell off has been overdone and a nice 40-pip rally in progress. The sell-off was further than was expected at the beginning of the week and Dean was looking for some upward reaction from the lows around 0.7450. Australian unemployment dropped this morning to 5.9% and this could give the recent move some legs. News is light tomorrow for the Australians and should not be affected by New Zealand Consumer Confidence which is out early in the morning (3am SAT).
We saw the NZDUSD trade up marginally throughout the morning as predicted in our opening calls. A bit of a head fake over the US numbers saw the Kiwi rally 40-pips before trading straight back down. Since the US open it has responded in a similar fashion to the Aussie and is now trading near the day’s high of 0.7315. As long as their consumer confidence numbers don’t disappoint we could see a continuation of this rally and possibly target 0.7360 as near term resistance.
As we spoke about this morning, 1.3225 looked like a near term top and one that has been in place since July in the USDCAD. The market drifted lower all morning and really got a nudge when the US data came out. A spike down only to rally back but this was short lived. Currently trading at session lows around 1.3145 so those that followed Dean in this morning should be enjoying a 50+ pip result on their account. I think trailing those stops down a bit to lock in some profit is often a good way to protect the gains.
The Yen (USDJPY) traded in a very small range this morning. Almost as if everyone was enjoying a very hearty breakfast and not going to look at things until the US numbers. The Yen strengthened off the back the US data and traded down to our support line 101.93, almost to the pip. Straight back up and now trading a little off this morning’s open. If you had walked away for the day you would have thought the FX market was closed.
The Rand (USDZAR) has probably had the most impressive day of the lot. Traded strongly all morning and was given an extra boost just after lunchtime. Opened the day at a high of 14.37 and at one point was trading 14.10. A massive move but we have lost a little bit of momentum to trade around 14.19 at the close of the JSE.
Hong Kong (Hang Seng) is closed tomorrow for a Mid-Autumn Festival and so Asian trade might be a little lighter.
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