The strong Chinese manufacturing data sent stocks higher in Asia and Europe and this accelerated in the US session on better than expected August ISM data at 56.3 vs. 55.5 previously. Also released August ADP Employment at -10k vs. +19k forecast. The Yen buoyant crosses helped the major lift to the mid Y84 region after first testing decade lows at Y83.70. AUD/JPY was the standout performer up nearly 2 Yen. The downtrend remains in place and Friday's Nonfarm will be critical for future direction. The Aussie was the best performer as the Q2 GDP beat expectations with a rise of 1.2% q/q. Adding fuel to the rally was strong Chinese PMI figures and a major move higher in US stocks. Meanwhile, the risk appetite pushed Euro back above 1.2800 and the topside is now in focus after support was found in the last 2 weeks above 1.2500. July German Retail Sales are missed at -0.3% vs. 0.5% previously. Elsewhere, Sterling was contained until NY opened when the underperforming Pound surged back to test 1.5500. GBP/JPY struggled above Y130 is a big reason for Pound weakness in recent sessions.
EURO: The Euro (1.2788) shooted up to as high as 1.2855 levels in yesterday's US Session post the data release from the US increasing the risk appetite in the market. It broke past its resistance of 1.2780 as short covering builded up as it consolidates some of the decline off this month's high. Support continues to be at 1.26 whereas the resistance is seen near 1.2840 levels(55 Daily EMA). Today's ECB is expected to leave the interest rate unchanged. Medium term tone: Overall bearish.
GBP: GBP/USD closed higher yesterday due to short covering and made a high of 1.5491 levels in the evening session. Stochastics and the RSI are oversold but remain neutral to bearish signaling that additional weakness is possible near-term. Resistance holds near 1.5460 - 1.5480 levels. Today's PMI data would be eyed for the currency. Medium term tone: Neutral to bearish.(Spot 1.5446).
JPY: UsdJpy was volatile yesterday and is getting support at lower levels. A fall to 83.66 was held there, leading to a bounce to 84.66 overnight. We expect sideways movement between 83.90-84.70 levels. Resistance comes near 85.23 levels(21 daily EMA) whereas support is seen near 80 levels. Outlook for Yen: Neutral to Bullish - Target 80.
AUD: The Aussie rose yesterday due to strong retail sales numbers followed by the evening momentum pushing the currency upto 0.9110 levels. It is currently trading at 0.9066 levels. The resistance of 0.9150 - 180 levels should hold which can push the pair to the support of 0.90 levels. Overall Bias remains: Neutral .
GOLD: Gold($1246) rose yesterday to the highs of $1254 levels in the US session after the data release. Buying on dips is recommended targeting $1262 levels (high of 27 June) Medium Term remains- Bullish.
Dollar Index: Dollar index is currently trading at 82.54 levels as it failed to sustain above 83.45 cluster resistance (38.2% retracement of 88.70 to 80.08 at 83.37) and turned sideway. A short term top is formed and some more sideway trading should be seen in near term. Support is seen near 82.45 levels which is likely to hold.