Asian markets trade broadly lower today, extending the risk-selloff late last week. Dollar, Yen and Swiss Franc are trading higher on risk-aversion, as usual. Aussie is currently worst performer, while Kiwi and Sterling are trailing. Euro is mixed for now, but looks vulnerable too.
Technically, one focus is whether EUR/USD would finally make up its mind and break through 0.9734 minor support firmly, and head back to 0.9534 low. To confirm Dollar’s strength against Europeans, GBP/USD will have to break through 1.1023 minor support while USD/CHF should break through 0.9964 resistance. Or, to confirm Euro’s weakness, EUR/JPY has to break through 140.77 minor support while EUR/CHF should break through 0.9641 minor support. Let’s see.
In Asia, Hong Kong HSI is down -3.03%. China Shanghai SSE is down -1.13%. Singapore Strait Times is down -1.12%. Japan is on holiday.
Australia AiG services dropped to contraction at 48
Australia AiG Performance of Services Index dropped sharply by -5.3 pts to 48.0 in September, back in contraction. Looking at some details, sales tumbled by -10.1 to 41.8. Employment edged down by -0.6 to 52.6. New orders dropped -7.1 to 50.2. Input prices rose 4.7 to 73.4. Selling prices dropped -2.9 to 58.3. Average wages dropped -1.7 to 65.9.
Innes Willox, Chief Executive of Ai Group, said: “The increasingly uncertain economic environment is dragging on service industries. The sector has fallen into contraction in September, and all services activity indicators have worsened in the last month. Low consumer and business confidence – following repeated interest rate rises and persistent inflation – were major factors in this decline. The indicators for sales, new orders, and selling prices all fell, while input prices continued their upward march adding to inflationary pressures.
AUD/JPY downside breakout, targets 90
Australian Dollar falls broadly in Asian session, after release of poor service sector data, and on the back of risk aversion. AUD/JPY’s break of 92.11 temporary low confirms down resumption of decline from 99.32. Near term outlook will stay bearish as long as 94.52 resistance holds, even in case of recovery. Next target is 90.51 support first.
For now, it’s unsure whether fall from 99.32 is corrective the up trend from 78.77 only, or that from 59.85. Reaction to 55 week EMA (now at 89.60) should reveal which case it is. In the bearish case, AUD/JPY could fall further to 38.2% retracement of 59.85 to 99.32 at 84.24 before bottoming.
US CPI and retail sales; UK GDP to highlight the week
US CPI and retail sales are one of the focuses in the week. In particular, consumer inflation data could seal the case for another 75bps Fed hike in early November. FOMC minutes will also be published, but it’s unlikely to reveal more than what the markets know. UK GDP and employment will also be closely watched. They would help shape new economic forecasts of BoE in November, which is the basis for the next policy move.
Here are some highlights for the week:
- Monday: Australia AiG services; Eurozone Sentix Investor Confidence.
- Tuesday: Australia Westpac consumer sentiment, NAB business confidence; Japan current account; UK employment.
- Wednesday: Japan machine orders; UK GDP, production, trade balance, NIESR GDP estimate; US PPI, FOMC minutes.
- Thursday: Japan PPI, Australia inflation expectations; Germany CPI final; Swiss PPI; US CPI, jobless claims.
- Friday: New Zealand BusinessNZ manufacturing; China CPI, PPI, trade balance; Eurozone trade balance; Canada manufacturing sales, wholesales sales; US retail sales, import prices, U of Michigan consumer sentiment, business inventories.
AUD/USD Daily Report
Daily Pivots: (S1) 0.6338; (P) 0.6385; (R1) 0.6416; More…
Intraday bias in AUDUSD stays on the downside this week. Current down trend should target 100% projection of 0.7660 to 0.6680 from 0.7135 at 0.6155 next. On the upside, break of 0.6539 resistance is needed to indicate short term bottoming. Otherwise, outlook will stay bearish in case of recovery.
In the bigger picture, down trend form 0.8006 (2021 high) is expected to continue as long as 0.6680 support turned resistance holds. Next target is 0.5506 low. Medium term momentum will now be closely monitored to gauge the chance of break of 0.5506.
Economic Indicators Update
| GMT | Ccy | Events | Actual | Forecast | Previous | Revised |
|---|---|---|---|---|---|---|
| 22:30 | AUD | AiG Performance of Services Index Sep | 48.0 | 53.3 | ||
| 08:30 | EUR | Eurozone Sentix Investor Confidence Oct | -30.8 | -31.8 |
