Aussie is boosted to new high against dollar by stronger than expected retail sales report released overnight. Dollar weakens mildly together with recovery in commodities which sees crude oil back above 67 while gold is at 998 level. Yen remains steadily in range on mixed performance in Asian stocks. Sterling is lifted by better than expected consumer confidence data and continues to strengthen in early European session. Strength in the pound in EUR/GBP cross is somewhat weighing on Euro in general and thus limiting the recovery in EUR/USD. The markets are lacking a clear theme for the moment and will look into the jam-packed economic calendar, in particular the ADP employment report, for inspirations.

Retail sales in Australia was surprisingly strong, rising 0.9% mom in August following the disappointment of dropping -0.9% in July. Aussie is additionally boosted by mild recovery in China stocks too. Following up on EUR/AUD, the cross's down trend is still in progress and dips to a new low of 1.6597 today. Further fall is still anticipated towards 1.6045 key support as long as 1.7044 near term resistance holds.

/

Bank of Japan said it's considering to end the emergency corporate-debt buying programs next month and let them expire. The bank is concerned that maintaining the program beyond scheduled end in December would distort capital markets. Much volatility is seen in yen crosses recently on flip-floping rhetoric from Japan Finance Minister Fujii on whether he has a strong yen policy. Nevertheless, the recovery in yen crosses are looking corrective so far and we'd anticipate further rise in yen going forward. For example, in CAD/JPY, the medium term corrective rise from 68.38 should have completed after hitting an important fibonacci resistance. Fall from 90.28 is expected to extend further to 78.52 support next.

/

On the data front, Japan manufacturing PMI rose from 53.6 to 54.5 in September. Industrial productions rose 1.8% mom dropped -18.7% yoy in August. Housing starts dropped more than expected by -38.3% yoy in August. Australia retail sales rose much more than expected by 0.9% mom in August while leading indicators rose 0.7%. UK Gfk consumer confidence improved significantly from -25 to -24 in September.

Looking ahead, Germany job report is expected to 20k job grown in september but unemployment rate is expected to rise slightly to 8.4%. Eurozone CPI is expected to be unchanged at -0.2% yoy in September. Swiss KOF is expected to turn positive to 0.3 in September.

US ADP employment change will be closely watched for hints on NFP and is expected to improve to -195k in September. Q2 GDP is expected to be finalized at -1.2% annualized contraction. Chicago PMI is expected to stay above 50 and rise to 52 in September. Canadian GDP is expected to show 0.5% mom growth in July.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.8665; (P) 0.8713; (R1) 0.8751; More

AUD/USD's recent rally resumed by breaking 0.8787 high and reaches as high as 0.8802 so far. At this point, intraday bias remains on the upside and further rally should be seen towards next target of 61.8% projection of 0.6284 to 0.8262 from 0.7702 at 0.8924. Nevertheless, we'd expect further loss of upside moment on the current rise and AUD/USD should turn into some larger consolidation after hitting the mentioned 0.8924 target. On the downside, below 0.8674 support minor support will turn intraday outlook neutral first. Further break of 0.8585 support will indicate that a short term top is at least formed and should bring deeper pull back to 0.8154/8468 support zone.

In the bigger picture, as noted before, the strength of the rise from 0.6008 argues that AUD/USD is developing into another up trend. In other words, long term correction from 0.9849 has possibly completed at 0.6008 already, after being support slightly above 76.4% retracement of 0.4773 (01 low) to 0.9849 (08 high). The current rally from 0.6008 might extend further to retest 0.9849 high next.

Sustained trading below medium term rising trend line (now at 0.8557) will indicate that a medium term top is formed. Some deep pull back and lengthy consolidation might then be seen, with prospect of fall to 0.7267/7702 support zone. But a break of 0.7267 resistance turned support is needed to indicate that whole rise from 0.6008 has completed. Otherwise, we'll continue to favor the longer term bullish case even in case of deep correction.

/

Economic Indicators Update

GMTCcyEventsActualConsensusPreviousRevised
23:01GBPGfK Consumer Confidence Sep-16-24-25 
23:15JPYManufacturing PMI Sep54.5--53.6 
23:50JPYIndustrial Production M/M Aug P1.80%1.90%1.90%2.10%
23:50JPYIndustrial Production Y/Y Aug P-18.70%-18.80%-22.70% 
0:00AUDConference Board Leading Index Jul0.70%--0.90%0.60%
1:30AUDRetail Sales M/M Aug0.90%0.50%-1.00%-0.90%
2:00NZDNBNZ Business Confidence Sep49.1--34.2 
5:00JPYHousing Starts Y/Y Aug-38.30%-31.70%-32.10% 
7:55EURGerman Unemployment Change Sep 20K-1K 
7:55EURGerman Unemployment Rate Sep 8.40%8.30% 
8:30GBPIndex of Services (3M/3M) Jul ---0.60% 
9:00EUREurozone CPI Estimate Y/Y Sep -0.20%-0.20% 
9:30CHFKOF Swiss Leading Indicator Sep 0.3-0.04 
12:15USDADP Employment Change Sep -195K-298K 
12:30CADGDP M/M Jul 0.50%0.10% 
12:30CADIndustrial Product Price M/M Aug 0.50%-0.50% 
12:30CADRaw Materials Price Index M/M Aug 3.00%-3.80% 
12:30USDGDP (Annualized) Q2 F -1.20%-1.00% 
12:30USDGDP Price Index Q2 F 0.00%0.00% 
12:30USDCore PCE Q/Q Q2 F 2.00%2.00% 
13:45USDChicago PMI Sep 5250 
14:30USDCrude Oil Inventories 0.5M2.8M