Forex Market

FX Daily Majors

Today’s highlights: * EURUSD: Market holds the 38.2% retracement support at 1.2326. We expect the market to continue higher through 1.2444 to 1.2598 78.6% retracement resistance.

Softer Chinese data are probably not soft enough to de-rail the risk rally * Asian data and news grabs overnight headlines. The Bank of Korea left rates on hold after last month’s surprise cut, and the won gained slightly. Chinese data come out slightly softer than expected as the slowdown continues.

Asian Currencies Technicals

AUD/USD: Starting to look a little tired. Failure by the AUD/USD to retest the Aug 7 highs on yesterday’s bounce combined with overbought daily techs looking to correct could be hinting at a pullback.

Busy Asian session ahead with BoJ and Chinese data

We’ve got a busy Asian session ahead with Chinese data galore and an Aussie employment report. The BoJ will also be on tap with its latest decisions on monetary policy.

FX Daily: Fundamental and technical support for carry

* On a technical level carry looks attractive as our Style Allocation Model (SAM) indentifies a “risk on” environment and carry needs to catch up with the equity market.

FX Daily Crosses

Today’s highlights: * EURGBP: Coiling sideways ahead of the 55-day average placed at .7969. A break above here sees risk up to .8013.

EURGBP at pivot point ahead of BoE inflation report

EURGBP has risen to a key resistance area, much like the 1.2400+ area in EURUSD. The coming days are a test for both the Euro and sterling, starting with today’s BoE quarterly inflation report.

Technical Analysis

AUD/NZD breaking higher, NOK/SEK firming… EUR/USD Another neutral doji candle… AUD/NZD Returning upside pressure… EUR/SEK 8.3025 support intact… NOK/SEK Breaking higher… EUR/NOK Mid body support cleared… EUR/PLN Watch the 4.0855 resistance.

USD/JPY Analysis

Closed in NY Tuesday at Y78.60, off Y78.73 highs driven by real money demand. USD/JPY ground higher on the Asian open before running into exporter offers around the Tokyo fix, the pair stood firm at Y78.50 and continued in a tight range ahead of Europe.

FX Daily Strategist: Europe

Dovish BoE inflation report could put some pressure on GBP Sterling’s recent underperformance may have been stabilised by Tuesday’s slightly better-than-expected industrial production data, but today’s key event – the BoE Inflation Report – could lead to some renewed weakness.

GBP/USD Analysis

Closed in NY at $1.5618, the rate having pulled back from sessionhighs of $1.5684 after recovering off earlier European lows of $1.5579. Rate continued this corrective easing into early Asia, meeting supportat $1.5603 (76.4% $1.5579-1.5684) before recovering to $1.5622 thensettling between $1.5610/20 into the Asian afternoon.

EUR/USD Analysis

Closed in NY at $1.2397 after rate had extended its recovery off European morning lows of $1.2376 to $1.2443, falling just short of Monday’s highs at $1.2444, with protection of the much reported barrier at $1.2450 countering.