AUDUSD R 2: 0.9010 R 1: 0.8950 CURRENT: 0.8925 S 1: 0.8735 S 2: 0.8645
USDCAD R 2: 1.0635 R 1: 1.0577 CURRENT: 1.0485 S 1: 1.0405 S 2: 1.0270
EURJPY R 2: 133.60 R 1: 132.70 CURRENT: 132.15 S 1: 130.55 S 2: 129.95
USDMXN R 2: 13.441 R 1: 13.094 CURRENT: 13.019 S 1: 12.849 S 2: 12.767
Asian stock markets have been mixed overnight with the Shanghai Composite up over 1.5% on the day, but the Nikkei nearly a percent lower – weighed down primarily by speculation that Japan Airlines may have to file for bankruptcy. Shares in the troubled airline are down over 25% from yesterdays close to 67 yen (the lowest levels since the shares began trading) and sentiment is particularly weak given that the carrier has already accepted 4 bailouts from the Japanese government since 2001. Despite the knock to risk sentiment, the USD has been largely unchanged from the end of the European session yesterday, with EURUSD at 1.4340 and USDCHF at 1.0380.
The main data from yesterday’s session was US Consumer Confidence which was better than expected on balance; despite a slight miss compared to this month’s consensus estimate (52.9 vs. 53.0 expected), there was a much larger revision higher to the month prior (to 50.6 from 49.5). This news marked the turning point in the day for the USD which had come under some selling pressure early at the London open, but quickly pared these losses after the release. EURUSD sold off from 1.4445 levels down over a big figure to current 1.4340 levels, and gold also tumbled back below $1100 levels – a move which has extended this morning to lows of $1090.95 before recovering modestly to $1096.
In the session ahead the main European data will be the Eurozone M3 data and Swiss KOF Leading Indicator. The latter is likely to have the greatest chance of moving the market, with analysts looking for an uptick to 1.73 from last month’s 1.62. With EURCHF below 1.4900 levels and trading in holiday liquidity, it will be interesting to see if an upside surprise in the data can strengthen CHF to levels where SNB feels the need to step in. The afternoon will be quiet on the economic docket, with only the US Chicago Purchasing Managers Index due; and we expect month-end flows to dominate FX moves through to the end of the week.