Dollar and Yen Remain Strong on Risk Aversion Sentiment


The dollar, yen and Swiss franc are currently trading as the strongest for the week, supported by risk aversion sentiment. Yen dominates the other with the help of Japan’s intervention. The dollar is supported by a hawkish Fed while the Swiss franc is clearly lagging behind. Nevertheless, the franc is still rising against the euro and the pound sterling, which are among the worst performers with the New Zealand dollar.

Technically, as long as certain levels hold, it is possible for the Dollar to extend the recent rally ahead of the weekly close. levels include minor resistance 0.9943 in EUR/USD, minor resistance 0.6698 in AUD/USD, minor support 0.9694 in USD/CHF and minor support 1.3343 in USD/CAD . But a lot would depend on how the risk market fires up.

In Asia at the time of writing, the Hong Kong HSI index is down -0.85%. China Shanghai SSE is down -1.08%. The Singapore Strait Times is down -0.83%. Japan is on vacation. Overnight, the DOW fell -0.35%. The S&P 500 fell -0.84%. The NASDAQ fell -1.37%. The 10-year yield rose from 0.198 to 3.708.

Australia’s composite PMI edged higher to 50.8, risking heading into contractionary territory

Australia’s manufacturing PMI fell from 53.8 to 53.9 in September. PI Services also rose slightly, from 50.2 to 50.4. The composite production PMI rose from 50.2 to 50.8.

Laura Denman, Economist at S&P Global Market Intelligence, said: “September data indicated that recent interest rate hikes by the RBA have started to have the desired price effect…. At the same time, the private sector remained in expansion territory, with the pace of growth accelerating even slightly…

“On the negative side, the full effects of recent interest rate hikes will be delayed… If the RBA continues to raise the base rate further, the private sector economy could risk heading into contractionary territory in the future. future as disposable incomes across the country tighten and general demand conditions remain subdued.

Gfk’s UK consumer confidence fell to a new record high at -49

UK consumer confidence Gfk fell further from -44 to -49 in September, hitting a new high since 1974. Personal financial condition over the next 12 months fell -9 points to -40. The general economic situation over the next 12 months fell -8 points to -68. The Major Buys Index remained unchanged at -38.

“Consumers are caving in under the pressure of the UK’s growing cost of living crisis, driven by rapidly rising food prices, household fuel bills and mortgage payments. They wonder when and how the situation will improve. Joe Staton, director of client strategy at GfK, said.

ECB Schnabel: Inflationary pressures have crept into all sectors of the economy

ECB Executive Board Member Isabel Schnabel said yesterday in Luxembourg: “What we are seeing is that inflationary pressures have become much more generalized. They somehow crept into all sectors of the economy.

“At the moment, we are not in a situation where the normalization of monetary policy harms the economy,” she said. “It’s more like we have to remove the accommodations that we still have in the system.”

Look forward

Eurozone, UK and US PMIs will be released today. Canada will also publish retail sales.

USD/CAD Daily Outlook

Daily Pivots: (S1) 1.3417; (P) 1.3480; (R1) 1.3552; After…

The USD/CAD rally is still ongoing and the intraday bias remains to the upside. The current uptrend should target the medium term Fibonacci level at 1.3650. On the downside, minor support below 1.3343 will make the intraday bias neutral and bring consolidations first, before staging another rally.

Overall downtrend from 1.4667 (2020 high) should have ended at 1.2005, after defending 1.2061 long term cluster support. The upside from there should aim for a 61.8% retracement from 1.4667 to 1.2005 (2021 low) at 1.3650. This will remain the preferred case as long as the support at 1.2716 holds.

Economic Indicators Update

GMT Ccy Events Real Provide Previous amended
23:00 USD Manufacturing PMI Sep P 53.9 53.8
23:00 USD PMI Services Sep P 50.4 50.2
23:01 GBP GfK Consumer Confidence Sep -49 -42 -44
07:15 USD Manufacturing PMI France Sep P 49.9 50.6
07:15 USD France Services PMI Sep P 50.4 51.2
07:30 USD Germany Manufacturing PMI Sep P 48.3 49.1
07:30 USD Germany Services PMI Sep P 47.2 47.7
08:00 USD Eurozone Manufacturing PMI Sep P 48.8 49.6
08:00 USD Eurozone Services PMI Sep P 49.1 49.8
08:30 GBP Manufacturing PMI Sep P 47.4 47.3
08:30 GBP PMI Services Sep P 50 50.9
12:30 BODY Retail Sales M/M Jul -2.00% 1.10%
12:30 BODY Retail sales excluding Autos M/M Jul -1.00% 0.80%
13:45 USD Manufacturing PMI Sep P 51.2 51.5
13:45 USD PMI Services Sep P 45 43.7

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