USD edging towards breakout of current levels

This and next week will see a lot of event risks, and the market could be very choppy. Yesterday’s main mover in the currency market has been the buying of Japanese yen, like on Monday, but as the false trendline breakout has shown, yen’s strength was only temporary. The market will be expecting the Bank of Japan’s policy meeting tomorrow, and Governor Fukui’s press conference on Friday, although the BOJ is widely expected to keep rates unchanged at 0.25%. As Japan’s interest rates will surely lag behind Eurozone’s and US’s, the yen will still be an attractive currency to sell for carry traders. Nearest near-term resistance for USD/JPY lies around 116.50.

The Reserve Bank of Australia has held its interest rate at 6% this morning as expected, and Australia GDP gained by just 0.3% q/q, much lower than forecasts centred on a 0.7% gain. These weak data has led to the decline of AUD/USD this morning. Tomorrow’s employment data will be crucial for the AUD/USD, as a strong number will keep alive an interest rate hike in November. Nearest support will lie around 0.7665.

Today we’ll have the US ISM non-manufacturing at 1400 GMT and Fed Beige Book at 1800 GMT. The last time the Beige Book was released, there was a huge stir in the market. So for this time, it could happen again if the report reveals something unexpectedly hawkish or dovish. USD/CHF is very close to breaking out of its current levels as the triangle on the daily chart gets smaller, and the Beige Book could be the stimulus for a hit above 1.2400.

Bank of Canada is expected to hold its interest rate at 4.25% when released today at 1300 GMT.

Subscribe by RSS Subscribe by Email