• AUD/USD snapped five-month run-up in September despite consolidation from 0.7004 during the last few days.
  • Vaccine hopes, expectations of US stimulus favored market’s risk-on before witnessing disappointment in the last hour.
  • US presidential debate failed to offer any major clues, China PMIs and US ADP flashed welcome numbers.
  • Beijing is off for the golden week, Aussie PMIs and risk catalysts should be carefully watched.

Having closed a month with a three-day winning streak, by rising to more than one week high, AUD/USD picks up bids near 0.7165 at the start of Thursday’s Asian session. In doing so, the aussie pair keeps the recent trading range between 0.7150 and 0.7176 amid a shift in the risk-tone sentiment.

Risk is the key…

Although global traders got nothing but the disappointment from the first round of the US presidential election debate on Wednesday, upbeat data and hopes of American aid package kept the market mood positive.

China’s September month Manufacturing PMI, be it official or from Caixin, preceded the US ADP Employment Change to register positive calendar outcomes.

On the other hand, American Congress tries hard to agree on the coronavirus (COVID-19) aid package with Republicans up for $1.5-$1.6 trillion versus Democratic demand of $2.2 trillion. While the immediate negotiations have failed, the policymakers pushed back the final voting on the stopgap funding, giving indirect hints of one more day for the politicians to agree on the much-awaited stimulus.

Elsewhere, the COVID-19 is causing serious problems in the UK and Europe but positive comments from Regeneron Pharmaceuticals and Moderna fuels the hopes of the cure to the pandemic.

Against this backdrop, the Wall Street benchmark managed to close on the positive side, despite stepping back during the last hour, whereas the US 10-year Treasury yields gained over four basis points (bps) to 0.686% at the end of Wednesday’s North American session.

Looking forward, China’s absence for one full week can restrict the market moves in Asia. Though, Australia’s AiG Performance Mfg Index and Commonwealth Bank Manufacturing PMI can offer intermediate moves. It should, however, be noted that the risk catalysts are the key to watch.

Technical analysis

Despite surging to highest in more than a week, AUD/USD is yet to clear the September 09 low of 0.7191, needless to mention about 50-day SMA level near 0.7205, which in turn probe the pair buyers. Though, sellers may await a downside break of 10-day SMA, currently around 0.7135, for fresh entries.

 

  • AUD/USD snapped five-month run-up in September despite consolidation from 0.7004 during the last few days.
  • Vaccine hopes, expectations of US stimulus favored market’s risk-on before witnessing disappointment in the last hour.
  • US presidential debate failed to offer any major clues, China PMIs and US ADP flashed welcome numbers.
  • Beijing is off for the golden week, Aussie PMIs and risk catalysts should be carefully watched.

Having closed a month with a three-day winning streak, by rising to more than one week high, AUD/USD picks up bids near 0.7165 at the start of Thursday’s Asian session. In doing so, the aussie pair keeps the recent trading range between 0.7150 and 0.7176 amid a shift in the risk-tone sentiment.

Risk is the key…

Although global traders got nothing but the disappointment from the first round of the US presidential election debate on Wednesday, upbeat data and hopes of American aid package kept the market mood positive.

China’s September month Manufacturing PMI, be it official or from Caixin, preceded the US ADP Employment Change to register positive calendar outcomes.

On the other hand, American Congress tries hard to agree on the coronavirus (COVID-19) aid package with Republicans up for $1.5-$1.6 trillion versus Democratic demand of $2.2 trillion. While the immediate negotiations have failed, the policymakers pushed back the final voting on the stopgap funding, giving indirect hints of one more day for the politicians to agree on the much-awaited stimulus.

Elsewhere, the COVID-19 is causing serious problems in the UK and Europe but positive comments from Regeneron Pharmaceuticals and Moderna fuels the hopes of the cure to the pandemic.

Against this backdrop, the Wall Street benchmark managed to close on the positive side, despite stepping back during the last hour, whereas the US 10-year Treasury yields gained over four basis points (bps) to 0.686% at the end of Wednesday’s North American session.

Looking forward, China’s absence for one full week can restrict the market moves in Asia. Though, Australia’s AiG Performance Mfg Index and Commonwealth Bank Manufacturing PMI can offer intermediate moves. It should, however, be noted that the risk catalysts are the key to watch.

Technical analysis

Despite surging to highest in more than a week, AUD/USD is yet to clear the September 09 low of 0.7191, needless to mention about 50-day SMA level near 0.7205, which in turn probe the pair buyers. Though, sellers may await a downside break of 10-day SMA, currently around 0.7135, for fresh entries.

 

  • EUR/GBP is trading 0.44% lower as the pound outperforms.
  • There could be some trouble at 0.9060 as it is an important zone.

EUR/GBP daily chart

EUR/GBP has moved lower after the Bank of England’s Cheif economist poured cold water on the idea of negative interest rates in the UK for now. He went on to say it could take months to look at the cost-benefit analysis. This means there could be some movement to later in the curve in the rates markets, which would take some pressure off the short term in GBP.

The chart shows the extent of the sell-off. The price is now moving lower towards the bottom of the flag type pattern. Before that, the red support zone at 0.9060 would need to be broken to the downside. This level has been used many times as both support and resistance but in the middle of august, it was a very firm resistance. 

The indicators are looking pretty bearish at the moment. The MACD histogram is breaking to the downside and the signal lines are already depressed. The Relative Strength Index is under 50 and there is still room for the indicator to move lower. 

Overall, this could be the trend change the market has been looking for. The news out of the latest round of Brexit negotiations has been more positive too and this could be another catalyst for a move lower. 

EURGBP Brexit

Additional levels

 

  • EUR/GBP is trading 0.44% lower as the pound outperforms.
  • There could be some trouble at 0.9060 as it is an important zone.

EUR/GBP daily chart

EUR/GBP has moved lower after the Bank of England’s Cheif economist poured cold water on the idea of negative interest rates in the UK for now. He went on to say it could take months to look at the cost-benefit analysis. This means there could be some movement to later in the curve in the rates markets, which would take some pressure off the short term in GBP.

The chart shows the extent of the sell-off. The price is now moving lower towards the bottom of the flag type pattern. Before that, the red support zone at 0.9060 would need to be broken to the downside. This level has been used many times as both support and resistance but in the middle of august, it was a very firm resistance. 

The indicators are looking pretty bearish at the moment. The MACD histogram is breaking to the downside and the signal lines are already depressed. The Relative Strength Index is under 50 and there is still room for the indicator to move lower. 

Overall, this could be the trend change the market has been looking for. The news out of the latest round of Brexit negotiations has been more positive too and this could be another catalyst for a move lower. 

EURGBP Brexit

Additional levels

 

  • The Dow Jones Industrial Average DJI rose 329.04 points, or 1.2%.
  • The S&P 500 SPX gained 27.53 points, or 0.83%.
  • The Nasdaq Composite IXIC added 82.26 points, or 0.74%.

US stocks ended higher on Wednesday despite the mixed sentiment surrounding further emergency COVID-19 relief stimulus. 

Government leaders continued talks for a new pandemic relief package but to no avail. 

Late comments from Representative Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin both expressed hope, but  Senate Majority Leader Mitch McConnell warned the sides remained “far apart” in their talks.

Consequently, there was a last-hour chop on an otherwise steadily bullish session for the benchmarks, supported by positive data.

The Dow Jones Industrial Average climbed 329.04 points, or 1.2%, to 27,781.,  the S&P 500 gained 27.53 points, or 0.83%, to 3,363 and the Nasdaq Composite put up 82.26 points, or 0.74%, to 11,167.51.  

US data keep hopes alive

US data was positive. 

The National Association of Realtors’ pending home sales headline rose 8.8%, hitting a record high for the report, after a 5.9% increase in July, the group said Wednesday vs an expected rise of just 3.2%.

The September Chicago Institute for Supply Management’s manufacturing Purchasing Managers’ Index was higher-than-expected at 62.4, the highest since December 2018, against 51.2 in August. The headline was expected at 52.

The final Q2 gross domestic product headline showed a 31.4% contraction rate versus a final Q1 contraction rate of 0.5%, the Bureau of Economic Analysis said Wednesday. The headline was expected to show a 31.7% contraction.

Lastly, and before the much anticipated Nonfarm Payrolls on Friday, the September ADP private payrolls headline beat expectations, gaining 749,000 following an upward revision to 481,000 in August. The consensus was for a 648,000 headline increase.

The services sector showed an increase of 552,000 jobs, while the goods-producing sector rose 196,000.

“In September, the majority of sectors and company sizes experienced gains with trade, transportation and utilities; and manufacturing leading the way,” ADP Research’s Ahu Yildirmaz explained. “However, small businesses continued to demonstrate slower growth.”

In a last note on stimulus, ”there is little doubt that as momentum in the labour market recovery cools, the additional stimulus will be needed”, analysts at ANZ bank argued, adding:

”Overnight, Treasury Secretary Mnuchin suggested he’ll offer up a proposal for USD1.5tn in pandemic aid in “one more serious try” at getting a deal through Congress.

Democrats prefer a USD2.2tn relief package and are taking that to a House vote – that’s a considerably smaller package than their USD3.4tn package that was rejected by Republicans in May. So the gap is closing – but the election is looming.

Mnuchin said he would know if a deal is possible before the election within the next day or so.”

SP 500 levels

 

  • The Dow Jones Industrial Average DJI rose 329.04 points, or 1.2%.
  • The S&P 500 SPX gained 27.53 points, or 0.83%.
  • The Nasdaq Composite IXIC added 82.26 points, or 0.74%.

US stocks ended higher on Wednesday despite the mixed sentiment surrounding further emergency COVID-19 relief stimulus. 

Government leaders continued talks for a new pandemic relief package but to no avail. 

Late comments from Representative Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin both expressed hope, but  Senate Majority Leader Mitch McConnell warned the sides remained “far apart” in their talks.

Consequently, there was a last-hour chop on an otherwise steadily bullish session for the benchmarks, supported by positive data.

The Dow Jones Industrial Average climbed 329.04 points, or 1.2%, to 27,781.,  the S&P 500 gained 27.53 points, or 0.83%, to 3,363 and the Nasdaq Composite put up 82.26 points, or 0.74%, to 11,167.51.  

US data keep hopes alive

US data was positive. 

The National Association of Realtors’ pending home sales headline rose 8.8%, hitting a record high for the report, after a 5.9% increase in July, the group said Wednesday vs an expected rise of just 3.2%.

The September Chicago Institute for Supply Management’s manufacturing Purchasing Managers’ Index was higher-than-expected at 62.4, the highest since December 2018, against 51.2 in August. The headline was expected at 52.

The final Q2 gross domestic product headline showed a 31.4% contraction rate versus a final Q1 contraction rate of 0.5%, the Bureau of Economic Analysis said Wednesday. The headline was expected to show a 31.7% contraction.

Lastly, and before the much anticipated Nonfarm Payrolls on Friday, the September ADP private payrolls headline beat expectations, gaining 749,000 following an upward revision to 481,000 in August. The consensus was for a 648,000 headline increase.

The services sector showed an increase of 552,000 jobs, while the goods-producing sector rose 196,000.

“In September, the majority of sectors and company sizes experienced gains with trade, transportation and utilities; and manufacturing leading the way,” ADP Research’s Ahu Yildirmaz explained. “However, small businesses continued to demonstrate slower growth.”

In a last note on stimulus, ”there is little doubt that as momentum in the labour market recovery cools, the additional stimulus will be needed”, analysts at ANZ bank argued, adding:

”Overnight, Treasury Secretary Mnuchin suggested he’ll offer up a proposal for USD1.5tn in pandemic aid in “one more serious try” at getting a deal through Congress.

Democrats prefer a USD2.2tn relief package and are taking that to a House vote – that’s a considerably smaller package than their USD3.4tn package that was rejected by Republicans in May. So the gap is closing – but the election is looming.

Mnuchin said he would know if a deal is possible before the election within the next day or so.”

SP 500 levels

 

  • El USD/JPY ha caído un 0.14% el miércoles a pesar de un buen movimiento alcista la semana pasada.
  • Podría haber algún movimiento lateral en el futuro, ya que el precio está atascado entre dos niveles.

Gráfico de 4 horas 

El USD/JPY ha vuelto a situarse en medio de una zona muy congestionada y ha cumplido con algunas ofertas. El par normalmente está correlacionado con el entorno de riesgo y, en este momento, las acciones están muy mixtas. Esto se debe al hecho de que hay próximas elecciones en Estados Unidos y la Casa Blanca está luchando para elaborar un proyecto de ley de estímulo. Este viernes, las cosas podrían ponerse bastante volátiles ya que el mercado obtendrá las últimas cifras de nómina no agrícola y es probable que el par se mantenga bastante estático hasta entonces.

El gráfico muestra qué tan fuerte es la línea negra en 105.80. Esta es el área clave dentro de la consolidación, ya que el precio reaccionó alrededor de la zona al menos nueve veces solo en el gráfico. El nivel ahora enfocado es el nivel de soporte en 105.20 si este nivel se rompe, entonces podría haber un movimiento más sostenido a la baja.

Los indicadores ahora estarán de regreso en sus familiares zonas medias, ya que el mercado había estado en una consolidación lateral durante algún tiempo antes del movimiento a la baja hacia 104.00. En todo caso, son ligeramente bajistas, ya que el histograma MACD es rojo y el índice de fuerza relativa se está moviendo nuevamente hacia 50. En general, parece que necesitamos otra sacudida y mucho dependerá de los datos hacia el final de la semana.

Niveles técnicos