The dollar dominates as AUD succumbs

<p>The Asian session has seen the ‘buy dollars, wear diamonds’ theme continue despite long USD positioning reaching extreme levels. Investors show no signs of reducing […]</p>

The Asian session has seen the ‘buy dollars, wear diamonds’ theme continue despite long USD positioning reaching extreme levels. Investors show no signs of reducing risk ahead of the ECB meeting tomorrow and US jobs report on Friday. USD/JPY broke above 110 to reach a high of 110.09, a level not seen since August 2008. Japan’s Q3 Tankan survey showed a mixed picture as the large manufacturing index beat expectations of 10 coming in at 13, and the non-manufacturing component falling below consensus at 13 versus the forecast of 17.

The AUD succumbed to further pressure despite the better China manufacturing PMI data which came in at 51.1 and above expectations. The lifestyle took its lead from disappointing domestic data in the form of retail sales that came in at 0.1% versus the expectation of 0.4%. The AUD collapsed through the 0.8700 level, although the 2014 low of 0.8660 remains unbroken for the moment.

The struggling euro will take its lead from PMI data following CPI data released yesterday hitting the lowest levels in five years ahead of the ECB meeting tomorrow. All the focus will be on ECB President Mario Draghi, and his subsequent press conference, and how he will communicate the strategy to increase the ECB’s balance sheet. The FT reports that he could suggest the Central Bank are willing to buy Greek and Cypriot bank loans with a junk rating, which will no doubt please the Germans no end!

The US data calendar this afternoon will give us our NFP preview as the ADP survey will be released along with ISM manufacturing, Markit manufacturing PMI, construction spending and further housing data in the form of new mortgage applications.



Supports 1.2570-1.2550-1.2500  | Resistance 1.2665-1.2685-1.2715



Supports 109.50-109.10-108.70    Resistance 110.10-110.35-110.80



Supports 1.6160-1.6100-1.6060  Resistance 1.6240-1.6280-1.6340



Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.