Markets' focus is turning to services data and ADP employment report today. ISM non-manufacturing index is expected to drop slightly from 55.8 to 55 in Sep with price paid index dropping from 58.6 to 57. With Friday's highly anticipated NFP in sight, the employment component of the ISM non-manufacturing report will be closely watched. This employment component surprisingly dropped to contractionary level at 47.9 in Aug, marking first contraction since Jul 04. The private ADP employment report, which serves as a preview to NFP is expected to show 53k job growth in Sep. Monday's recovery in the employment component in the ISM manufacturing report provided some support to a rebound in NFP in Sep. Markets will look into whether the ISM non-manufacturing employment and ADP provide further support or offset that positive data.
Services PMI in Eurozone and UK will also be featured today and are expected to drop slightly from Aug's reading as recent financial markets turmoil hit the markets. Eurozone retail sales is expected to show growth of 0.3% mom, 0.4% yoy in Aug.
The Asian session was dominated by Australia. RBA left rates unchanged at 6.50% as widely expected. Trade deficit widened more than expected to -1.6b in Aug. Retail sales slowed to 0.7% mom in Aug, but came in much better than expectation of 0.3%. Aussie was lifted mildly by the retail sales data but after all, it's still staying in tight range below 18 years high of 0.8948 against dollar.
Read full report (EUR/USD, GBP/USD, USD/CHF, USD/JPY, EUR/JPY) here.
Daily Pivots: (S1) 2.0373; (P) 2.0410; (R1) 2.0452; More
Cable's consolidation from 2.0492 continues. Further pull back could still be seen towards inner trend line support (now at 2.0313). However, rise from 1.9879 should still be in force as long as pull back is contained above 2.0195 support. Above 2.0492 again will indicate rally from 1.9879 has resumed for next upside target of 100% projection of 1.9652 to 2.0365 from 1.9879 at 2.0592 and probably extends further to retest 2.0652 high too.
In the bigger picture, a medium term top is in place at 2.0652 with bearish divergence condition and daily and weekly MACD. The three wave structure of the fall from 2.0652 suggest that such correction is either completed at 1.9652, or is developing into sideway consolidation. Hence, 61.8% projection of 1.3680 (01 low) to 1.9554 (05 high) from 1.7047 (05 low) at 2.0677 remains a key resistance. Decisive break of this resistance is needed to confirm rally from 1.7047 has resumed for 100% projection of 1.3680 to 1.9554 from 1.7047 at 2.2901. Otherwise, another fall could still be seen before completing the consolidation.
On the downside, below 2.0195 will warn that the rise from 1.9652 has completed and break of 1.9879 low will confirm this case. In other words, the last leg of consolidation that started at 2.0652 has begun in such case and a retest of 1.9652 low could be seen.