AUD Rallies; Bond Yields Ease; Wall Street Stocks Mixed
Briefly.
The Dollar Index (DXY), a popular gauge of the greenback’s value against a basket of 6 major currencies, closed flat at 106.58 (106.60). The U.S. currency extended gains against its rivals ahead of this week’s Federal Reserve interest rate decision.
Against the Japanese yen, the dollar fell to 149.65 by the close of trading in New York after opening at 150.37 on Friday. The Yen gained after Tokyo’s annual core consumer price index rose to 2.7% from 2.5%.
The Euro (EUR/USD) fell slightly to 1.0560 from Friday’s opening price of 1.0570. The common currency once again failed to breach the 1.0600 level, trading at an overnight high of 1.0597.
The Pound Sterling (GBP/USD) fell to 1.2120 from Friday’s 1.2130. In choppy overnight trading, the British currency soared to a high of 1.2163 before sliding back to the close. The overnight low was 1.2102.
Bucking the trend, the Australian dollar (AUD/USD) rose against the greenback to close at 0.6335 (0.6325). Australia’s Q3 producer prices rose more than expected to 1.8% versus forecasts of 1.2%.
The Dollar was mixed against the Asian and Emerging Market currencies. The USD/CNH (dollar-offshore Chinese yuan) rose to 7.3270 from 7.3230. The USD/THB fell to 36.10 from 36.25.
The yield on the 10-year US Treasury note fell to 4.83% from 4.84%. Germany’s 10-year Bund yield was last at 2.83%, down from 2.86% on Friday. Australia’s 10-year bond yield closed at 4.81%, down from 4.87%.
In other economic data released Friday, France’s October consumer confidence rose to 84 from 83. The U.S. core PCE price index rose to 0.3% in September from 0.1%, in line with estimates.
US personal income fell to 0.3% in September from 0.4%, while US personal spending rose to 0.7% from 0.4%. The U.S. Michigan Consumer Sentiment Index fell to 63.8 from 68.1 but beat expectations at 63.0.
AUD/USD – Bucking the trend, the Aussie battler rose against the greenback to close at 0.6335, up from Friday’s opening price of 0.6325. In volatile trading, the Australian dollar jumped to an overnight high of 0.6368. The overnight low was recorded at 0.6319.
USD/JPY – The Dollar-Yen was also seen in choppy trading. The greenback jumped from Friday’s opening price of 150.37 to an overnight high of 150.42. The USD/JPY fell to a low of 149.46. The rise in Tokyo’s inflation report to 2.7% from 2.5% supported the Japanese currency.
GBP/USD – The British Pound fell to 1.2120 by the close of trading, little changed from its opening level of 1.2130. In choppy trading, the British Pound saw an overnight high of 1.2163, while an overnight low of 1.2102 was recorded. There were no major UK data releases on Friday.
EUR/USD – The common currency fell to 1.0560 at the close of trading, little changed from its opening price of 1.0570. Overnight, the euro rallied to 1.0597, just below the 1.0600 resistance level. The overnight low was 1.0537.
Looking ahead
Today’s economic calendar is light. Australia kicks off with its September Retail Sales report (m/m f/c 0.3% from 0.2% – ACY Finlogix).
Germany follows with its flash GDP growth (q/q f/c -0.3% from 0%; y/y f/c -0.7% from -0.2% – ACY Finlogix).
The U.K. releases its September Mortgage Approvals (f/c 45k from 45.354k – ACY Finlogix) and U.K. September Net Lending to Individuals (m/m f/c 0.5 billion from 2.9 billion – ACY Finlogix).
The Eurozone releases its October Economic Sentiment (f/c 93 from 93.3 – ACY Finlogix) and October Consumer Confidence (f/c -17.9 from -17.9 – FX Street).
Finally, the U.S. will release its September Dallas Fed Manufacturing Index (no f/c, previous was -18.1 – FX Street).
Trading Perspective
The week ahead promises more volatility in the forex market, culminating in Friday’s US Payrolls report.
While the Dollar Index (DXY) dipped a bit, the U.S. currency maintained its bid. This week’s highlight will be the Federal Reserve’s interest rate decision following its meeting on Thursday, November 2nd.
The FOMC is widely expected to leave the federal funds rate unchanged at 5.5%. Markets will scrutinize the FOMC statement as well as Federal Reserve President Jerome Powell’s words in his speech following the release.
On Friday (November 3rd), the US Non-Farm Payrolls report for October will be released. The focus will be on the increase in US Non-Farm Payrolls, which at the time of writing is expected to fall from 336,000 to 182,000.
Due to the relatively large difference, traders will be watching for revisions to this number heading into Friday.
AUD/USD – While the Australian dollar has managed to grind higher against the greenback, any upward movement is expected to be limited today. Immediate resistance is at 0.6360, followed by 0.6390 and 0.6420. On the downside, look for immediate support at 0.6310 followed by 0.6280 and 0.6250. Look for the Aussie to consolidate today in a likely range of 0.6300-0.6350. Sell rallies.
USD/JPY – After climbing above the 150 yen level on Friday, the U.S. Dollar retreated to close at 149.65. Look for immediate support at 149.45 (the overnight low). The next support level is at 149.15. Immediate resistance is at 149.95 followed by 150.25. Look for the Dollar-Yen to trade in a likely range of 149.45-150.45 today. Trade the range.
GBP/USD – The Pound slid to 1.2020 from Friday’s open of 1.2130 against a broadly stronger U.S. Dollar. On the day, look for immediate support at 1.2000 (overnight low traded at 1.2004). The next support level is at 1.1970. Immediate resistance for the British currency is at 1.2150, followed by 1.2180 and 1.2210. Look for the Pound to trade in a likely range of 1.2070-1.2170. Trade the range with a preference to sell rallies.
EUR/USD – The common currency fell from 1.0570 on Friday to close at 1.0560. Look for immediate support at 1.0535 (which was the overnight low traded). The next support level is at 1.0505. On the upside, immediate resistance can be found at 1.0600 followed by 1.0630. Look for the euro to consolidate in a likely range of 1.0530-1.0630 today. The preference is to sell euro rallies.
