TheCable

Global Market

The consequences of the Federal Reserve leaving rates unchanged continues to linger within the USD as its state of heightened sensitivity leads to anxiety among market participants. The USD is still exposed to some pressure, but has managed to claw back some of the losses of last week with the Dollar Index meandering around the 95.89 regions as of writing. The gains within the USD have translated to the American equities, which closed back into green territory yesterday whilst enforcing some pressure on commodities such as Gold. With the Fed expressing that a rate hike may be based on the global and financial developments relating to China growth, if the China flash PMI on Wednesday falls below expectations it may lead to volatility within the USD, exposing the dollar to further weakness.

In the Eurozone area, the decelerating growth of emerging markets and the global decline in commodities have punished the cultivation of inflation. Eurozone inflation was revised lower to 0.1% in August which suggested that a threatening streak of collapsing prices could be returning to Europe. China’s slowdown which has led to the unwinding of the carry trade thus bolstering the EUR, has made exports from Europe less enticing. The stacks are weighed against the EUR, and the ECB which has been threatening to implement QE as a weapon to induce domestic growth within Europe, may move ahead with this policy measure in the near future.

Commodity currencies are continuing to remain under pressure, with both the NZD and AUD looking vulnerable to further losses. Despite the slight incline last week, both the AUDUSD and NZDUSD still look bearish on the daily timeframe and may be exposed to more losses this week as market participants focus on the developments in China.

With no further major economic data releases on Tuesday, the markets may consolidate in wait for the China flash PMI on Wednesday.

GBPJPY

The GBPJPY has undergone a hefty correction to the 188.0 regions. The pair is currently in a range with support at 185.00 and resistance at 188.00.  A breakdown below the 185.00 support may open a path to the next relevant support at 182.50. Currently lagging indicators are conflicting, whilst the MACD points to the downside, prices are above the daily 20 SMA.

AUDCAD

The AUDCAD is turning technically bullish on the daily timeframe. Prices must keep above the 0.9400 support for this daily bullish outlook to remain valid. A breakout above the 0.9500 resistance may open a path to the next relevant resistance at 0.9650.

AUDNZD

There exists a battle within the AUDNZD. Both AUD and NZD are commodity currencies which have been exposed to weakness due to the developments within China and the overall decline in commodity prices. Technically the AUDNZD is bullish on the daily timeframe as long as prices can keep above the 1.1200 support. The next relevant resistance resides at 1.1400.

AUDCHF

The AUDCHF trades around the sticky 0.6950 level but remains bullish on the daily timeframe. Prices are above the 20 daily SMA and the MACD is about to cross to the upside. A breach above 0.7000 may open a path to 0.7100 but prices must keep above the 0.6850 support.

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