Pound lags heavily while yen outperforms, AUD/USD off the lows

UK parliament session to keep the pound jumpy, RBA keeps rates on hold at 1% aiding AUD in retracing back up.

EUR/USD: Bear trend technical overview intact on the daily as long-term bear trend channel breaks

The euro underperformed yesterday against most of the FX majors, and with the US dollar outperforming it was an easier finish lower for this pair’s price that has broken the lower end of its long-term bear trend channel. On the daily, it’s a bear trend technical overview with heavy negative bias but that on most days has shown a lack of follow through and with a non-trending ADX. That’s not to say sell breakout strategies won’t bear any fruit, but might be met with more resistance at support levels especially if the greenback doesn’t continue to outperform. Low-impacting data today out of the Eurozone following yesterday’s manufacturing PMIs, whereby it was unchanged and contracting for the bloc but worse for its manufacturing powerhouse Germany. Retail long bias is still heavy to the buy side but has dropped slightly as fresh shorts enter anticipating further declines.

GBP/USD: Pound lags heavily with manufacturing PMI contracting at a worse than expected pace

The UK’s manufacturing PMI figure contracted at its worst pace since 2012 and raising fears of what a no-deal Brexit might like if further uncertainty persists. And while there’s more UK data in the form of construction PMI today and services tomorrow, it’s the emergency debate in parliament where they are set to vote today on whether to block the PM from a no-deal Brexit, and potentially end in a call for early elections. The pound lagged the most yesterday amongst the FX majors and by a significant amount, with the fundamental outlook reinforcing its bear trend technical overview that has stalled close to its 1st Support level. Retail bias is back up at extreme long levels as shorts get enticed into closing out even as fresh ones enter, and with longs holding on.

USD/JPY: Little change as both safe haven currencies outperform

The yen was the top performer yesterday in the FX market, but given that the US dollar was just behind in second place, there was little change in this pair’s price with oscillation in line with its current consolidatory technical overview that’s showing conflicting technicals as its price is below all its main long-term moving averages but above all its main short-term moving averages and a positive DMI. On the weekly outlook there’s real negative bias, but that was formed due to a trade war that aided the classic safe haven yen over an exposed greenback that might have strengthened against most of the FX majors, but is having trouble overcoming the yen. PMI manufacturing for Japan contracted yesterday, and its bond auction today on the 10-year was at -0.27% but with lower bids.

USD/CAD: Short-term resistance level briefly breached as oil prices fail to lift off the lows

Although it was a bank holiday yesterday for both the US and Canada, the former strengthened further against the latter as its energy underlying weakened slightly. Manufacturing PMI figures for both will be released today with US ISM closely watched, but risk-taking for the CAD aspect might be limited ahead of tomorrow’s BoC. From a technical overview standpoint – and its far less relevant in the face of significant fundamental forces like the central bank announcement tomorrow and US NFP this Friday – nearly all its technicals are flashing green, but with intraday movement continuing to remain limited so long as oil manages to have a leg to stand on. Retail bias while heavy short at 67% has dropped 5% as some shorts get out and fresh longs enter anticipating further gains.

AUD/USD: RBA leaves rates on hold at 1%, aiding the commodity currency off the lows this morning

This morning was all about the Reserve Bank of Australia’s announcement, matching expectations of keeping its rates on hold at 1% and taking the commodity currency off the lows suffered earlier in the session, and taking the AUD/NZD spread back up. More data awaits out of Australia in the form of tomorrow’s GDP and services data, though fresh lows for the Chinese yuan against the greenback despite better than expected Caixin data yesterday remains worrying for the proxy currency. Retail bias has inched higher to extreme long territories with the Australian dollar squeezed earlier in the session.


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