Risk recovers after dismal global manufacturing numbers

<p>  EUR/USD Range: 1.2572-1.2606 Support: 1.2400 Resistance: 1.2750 The single currency opens up above 1.2600 in early European trading following news yesterday that Finland and […]</p>



Range: 1.2572-1.2606
Support: 1.2400
Resistance: 1.2750
The single currency opens up above 1.2600 in early European trading following news yesterday that Finland and Holland would block ESM bond buying in secondary markets. Risk has been aided by a better than expected Chinese non-manufacturing PMI reading overnight after yesterdays shocking US ISM data showing a below 50 reading and the first contraction number since 2009 although I did note the employment component wasn’t that bad which should be considered as we head into Friday’s US jobs data. The market has fully priced in an ECB cut Thursday.


Range: 1.5653 – 1.5705
Support: 1.5500
Resistance: 1.5800
Teflon Sterling seems to be attracting safe haven flows again despite the negatives of bad banking practices, weak manufacturing data and a consensus view that further stimulus will be added by the BoE on Thursday. Today at 9.30am the construction PMI, consumer credit and mortgage lending will be released. With further QE fully priced in for the pound this week I’m considering a tactical EUR/GBP short with the MPC holding fire on Thursday awaiting the August inflation report and how the latest EU silver bullet pans out.




Range: 1.0211-1.0276
Support: 1.0100
Resistance: 1.0300
The RBA kept cash rates unchanged at 3.5% with the statement suggesting a ‘wait and see’ approach due to employment remaining high but also acknowledging the lack of credit growth with the housing market very subdued. The pain trade in the AUD continues as further stops are noted above 1.0280 to 1.0315 with a close above the 200-day moving average of 1.0255 providing further support. I’m still not brave enough to stand in the way of this short squeeze and will reassess again above 1.03.

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