The USD remined rather steady in today’s Asian session despite some worries about a possible widening of the US-Sino conflict. Media reported on Friday that the US administration considered a possible delisting of Chinese companies from the US stock markets. The news increased worries in the markets, as the US-Sino trade tension could overspill also to the capital markets, creating a new dimension of frictions. Worries eased somewhat though, as in Saturday a US Treasury official stated that such ideas have not been contemplated “at this time”. However, it should be noted that according to media always, Nasdaq has already started to crackdown on IPOs of small Chinese companies, imposing tighter restrictions and slowing their approval. Should tensions rise we could see safe havens strengthening as a risk off sentiment could flood the markets. USD/JPY maintained a sideways movement on Friday and during today’s Asian session, testing the 107.75 (S1) support line. As the slightly bullish tendencies of the pair in the past week, seem to fade away, we tend to keep a bias towards a sideways movement. Should the pair find fresh buying orders along its path, we could see it aiming if not breaking the 108.35 (R1) resistance line. Should USD/JPY come under the selling interest of the market, we could see it breaking the 107.75 (S1) support line and aim for the 107.20 (S2).
RBA Interest rate decision
Tomorrow during the Asian session (04:30,GMT) RBA’s interest rate decision is to be released. The bank is expected to cut rates by 25 basis points and lower them to +0.75% from current +1.00%. Currently AUD OIS imply a probability of 75.57% for the bank to cut rates as suggested above. Also, the low inflation rate as well as the recent tick up of the unemployment rate may also be suggesting a rate cut. Should the bank cut rates as expected and accompany its decision with a dovish tone in the accompanying statement we could see the Aussie weakening, however please bear in mind that the recent positive Chinese manufacturing data may provide a ray of hope for the bank. AUD/USD maintained a sideways movement on Friday and during today’s Asian session, near the 0.6740 (S1) support line. We tend to keep a bearish outlook for the pair as the market seems to expect RBA to cut rates and trade tensions between the US and China still run high. Should the bears actually take control over the pair’s direction, we could see it breaking the 0.6740 (S1) support line and aim for the 0.6675 (S2) support level. On the flip side, should the bulls be in charge, we could see the pair breaking the 0.6800 (R1) resistance line and aim for higher grounds.
Other economic highlights today and early tomorrow
In today’s European session, we get Germany’s unemployment data for September, the preliminary HICP rate also for September and UK’s final GDP growth rate for Q2. In tomorrow’s Asian session, we get Japan’s Tankan large manufacturers and Tankan’s large non-manufacturers indices for Q3. As for speakers please note that ECB’s Lane is scheduled to speak during tomorrow’s Asian session.
As for the rest of the week
On Tuesday, we get Eurozone’s flash CPI rate for September, Canada’s GDP for July and the US ISM Manufacturing PMI for September. On Wednesday, no important financial releases are expected. On Thursday, we get UK’s Services PMI for September and the US ISM non manufacturing PMI for September. On Friday, we get the US Employment report for September with its NFP figure and Canada’s trade balance for August.
AUD/USD H4
Support: 0.6740 (S1), 0.6675 (S2), 0.6610 (S3)
Resistance: 0.6800 (R1), 0.6860 (R2), 0.6910(R3)
USD/JPY H4
Support: 107.75 (S1), 107.20 (S2), 106.60 (S3)
Resistance: 108.35 (S1), 108.90 (S2), 109.60 (S3)
