The latest statement is out from the Chinese Foreign Ministry on the Hong Kong violence, citing that the crimes in Hong Kong must be punished.

Earlier today, Hong Kong’s leader Carrie Lam said that the protesters 'paralysing' the city are extremely selfish.

The Chinese Foreign Ministry’s comments will do little to ease the Hong Kong tensions, as the Asian equities trade mostly mixed, with both the Japanese and Hong Kong equity markets recovering some early lost ground.

  • AUD/NZD recovers the previous day’s losses.
  • A recent high, seven-month-old rising trend line acts as near-term key resistances.
  • An ascending support line since late-August can question sellers below 21-day SMA.

With the 21-day SMA limiting the AUD/NZD pair’s immediate declines, the quote takes the bids to 1.0810 while heading into the European session on Tuesday.

The monthly high around 1.0870 is likely to target of the short-term buyers while an upward sloping trend line since April 17, at 1.0900, could lure bulls afterward.

Should there be increased upside beyond 1.0900, October 2018 high close to 1.1000 will return to the chart.

Meanwhile, pair’s declines below 21-day Simple Moving Average (SMA) level of 1.0760 can take rest on a rising support line since August 26, at 1.0700 now.

If sellers refrain from respecting 1.0700 mark, August 22 high close to 1.0620 may entertain them ahead of 1.0565/50 confluence including 200-day SMA and 50% Fibonacci retracement of the latest rise since August.

AUD/NZD daily chart

Trend: Bullish

Analysts at ANZ notes that Australia’s ANZ-Roy Morgan Consumer Confidence index made a U-turn last week, falling 2.1% as all the subindices were in the negative, except future economic conditions.

Key Quotes

“After two weeks of strength, the financial conditions subindices faltered. Current finances fell 3.2%, while future finances declined 1.6%.”

“Economic conditions subindices were mixed, with current economic conditions declining 1.6%, while future economic conditions rose a marginal 0.3%.”

“The ‘Time to buy a household item’ continued with its see-saw pattern, falling 3.9% after a gain of 1.3% last week. The four-week moving average of inflation expectations (IE) remained stable at 4.0%, though the weekly reading saw an increase to back above 4%.”

  • GBP/USD seesaws near one-week high as increasing odds of Tory leadership favor bulls.
  • Sluggish risk-tone, overall USD strength tame recovery around 21-day SMA.
  • British jobs report, US President Trump’s comments and Fedspeak in the spotlight.

Despite benefiting from the UK’s political optimism, the GBP/USD pair awaits fresh clues from monthly employment numbers while taking the bids to 1.2865 ahead of the London open on Tuesday.

The Brexit party leader Nigel Farage’s step back from 317 constituencies earlier won by Tories increase the odds of another Conservative leadership and smooth Parliament functioning after the United Kingdom’s (UK) departure from the bloc. However, the Times suggests that the Tories want extra safety while urging Mr. Farage to pull candidates from marginal Labour constituencies out of his earlier mentioned 300 polls to contest.

Elsewhere, the US-China trade tension keeps the spotlight while the United States’ (US) meddling in Hong Kong protests awaits China’s response for fresh risk-off.

That said, the market’s risk-tone remains sluggish with the US 10-year treasury yields being around 1.92% with most Asian stocks flashing mixed signals.

Given the presence of monthly employment data on the economic calendar, traders are less likely to look for anywhere else ahead of the release. UK’s September month Average Earnings and Unemployment Rate will join October month’s Claimant Count Change to move the British pound at 09:30 AM GMT. Forecasts suggest mild weakness in Claimant Count numbers amid no change in Unemployment Rate and Average Earnings.

Following the data, speech from the US President and Fedspeak will be closely observed to determine the fate of US-China trade relations and the US Federal Reserve’s future moves respectively.

Technical Analysis

A sustained break above the 21-day Simple Moving Average (SMA) level of 1.2875 could trigger pair’s rise to a three-week-old falling trend-line, around 1.2945 now. On the downside, 1.2770 and 200-day SMA level of 1.2700 limit immediate declines.

Catherine Birch, senior economist at ANZ, notes that Australian business conditions recorded another small improvement in October, hitting a three-month high of +3.0, but it is too early to tell if this will be sustained.

Key Quotes

“Confidence also rose slightly to +1.7. Forward orders (up 5.1pts), profitability (up 1.6pts) and trading (up 2.4pts) all rose. Capacity utilisation recorded a slight decline to 81.7%, while the employment index and labour cost growth were largely flat.”

“Most states recorded improved business conditions during the month; Queensland was the only state to deteriorate. Most states are running well below their long-run averages, with Queensland, Victoria, and Tasmania in the weakest positions (smoothed using three-month averages). New South Wales has improved over the past few months to just below its long-run average.”

“Mining, construction, finance, and recreation services all contributed to the monthly gain in business conditions. Manufacturing and transport were the largest detractors. Retail business conditions have been stable for the past few months but remain deep in negative territory. Mining business conditions are marginally above their long-run averages but all other industries are in negative territory (smoothed using three-month averages).”

  • EUR/USD stuck in range as USD sees a steady recovery.
  • US-China trade deal woes, Hong Kong unrest dent risk appetite.
  • German ZEW Survey to boost the EUR bulls ahead of Trump’s speech?

EUR/USD is seen moving back and forth in a 15-pips trading range around 1.1030 ahead of the European open, having faced rejection on several attempts to regain the 1.1050 level.

EUR/USD: Bearish while below 50-DMA at 1.1042

The spot trades modestly flat in the familiar trading range on the 1.10 handle, with the upside attempts capped by the broad-based US dollar recovery. The resurgence of the safe-haven demand amid lingering US-China trade deal concerns and the Hong Kong civil unrest aided the overnight recovery in the greenback.

Meanwhile, on the EUR-side of the equation, the inconclusive outcome of the Spanish general election combined with Eurozone economic growth worries continue to remain a dragged on the common currency.

However, the downside remains capped amid expectations of an improvement in the German ZEW Survey, which is seen rebounding from -22.8 to -13.0 in November. Further, the latest Politico report, citing the EU officials that US President Trump is expected to delay auto tariff decision for 6 more months, also lend some support to the EUR bulls.

Markets now eagerly await the German macro news and some clarity on the US-China trade front for fresh trading impetus while Trump’s speech later today at 1700 GMT could also direct the next moves in the spot.

EUR/USD Technical levels to consider

According to Dominick Stephens, chief economist at Westpac, New Zealand’s further decline in inflation expectations will concern the RBNZ and consequently they now expect an OCR cut tomorrow.

Key Quotes

“The RBNZ Survey of Expectations has revealed a further decline in inflation expectations. This alters the balance of available information ahead of tomorrow's OCR decision. Accordingly, we are reverting to forecasting an OCR cut tomorrow (previously on hold).”

“If the RBNZ does cut, we would expect no explicit signal of future follow-up cuts, similar to the May and August MPSs. We would expect the OCR forecast to be around 0.75%, again not signalling any intent to cut again. However, we would expect the RBNZ to remain open to the possibility of further cuts with a phrase like “There is scope for further fiscal and monetary easing if necessary.”

“We would also expect the RBNZ to try to rectify these flagging inflation expectations with something like the August phrase: “Our actions today demonstrate our ongoing commitment to ensure inflation increases to the mid-point of the target range.”

“We continue to forecast that 0.75% will be the low in the OCR – rising house prices and an associated firming in the economy are expected to remove any reason to cut below that point. We are now forecasting no change in the OCR over 2020 and 2021.”

ANZ analysts note that New Zealand’s two-year-ahead inflation expectations dipped further below 2% in Q4, coming in at 1.80%, the lowest level since late-2016.

Key Quotes

“Long-term inflation expectation measures were stable near 2%.”

“Across other elements of the survey, GDP growth expectations one- and two-years ahead were broadly stable near 2.15%. House price inflation expectations rose. In one year’s time, the OCR is expected to be at 0.61%.”

“The RBNZ will be concerned that inflation expectations have fallen further below 2%, despite the OCR cuts so far this year. The RBNZ’s survey supports our call for an OCR cut tomorrow and further cuts next year.”