USDCNY to Multi Month Lows on Improving Trade Spat

EUR/USD continued to press lower and tested the 1.1112 level after running out of steam around the 1.1175 area during yesterday’s trading activity.  Traders have been unable to breach the 1.1185 area this month, a level that represents the 61.8% retracement of the 1.0339 – 1.2555 range. Over the past couple of weeks, the pair has not traded far below the 1.1082 area, representing the 38.2% retracement of the 1.1412 – 1.0879 range.  If that level breaks, traders will pay attention to the 1.1064 area, representing the 38.2% retracement of the 1.0879 – 1.1179 range. Eurozone October PMI data will be released Wednesday along with September retail sales. Comments from ECB officials including Mersch and Guindos will also be scrutinised tomorrow. Thursday is an important day in the eurozone with German industrial production and the ECB Economic Bulletin due, along with the EU’s economic forecasts. Fed officials Williams and Evans speak Wednesday followed by Dallas Fed’s Kaplan on Thursday and Fed officials Brainard and Daly on Friday. University of Michigan consumer sentiment data are also due on Friday.

USD/JPY extended yesterday’s gains with traders electing stops above the 108.75 area, representing the 61.8% retracement of the recent 109.28 – 107.89 range. The pair has now been bid for three consecutive trading days and is seeking to reclaim some of the ground it lost last week.  The pair’s next upside challenge will be the 108.95 area, representing the 76.4% retracement of the same range. The move lower last week was quite technical as bids emerged around the 107.89 area, representing the 50% retracement of the 106.48 – 109.28 range. Household earning and spending data are due on Thursday.

GBP/USD continued to weaken following last week’s price activity above the 1.2900 figure with traders looking to see how big the stops are below the 1.2874 area, representing the 38.2% retracement of the 1.3012 – 1.2788 range.  Technicians are particularly interested in the pair’s movements around the 1.2882 area, representing the 38.2% retracement of the 1.4376 – 1.1958 range. Another very important level remains the 1.2746 area, the 61.8% retracement of the 1.1738 – 1.4376 area.  If cable finds its way back above the psychologically-important 1.3000 figure, traders will focus on its approaches to the 1.3025 area, representing the 23.6% retracement of the 1.7190 – 1.1739 range. Thursday is a very important day in the UK with Bank of England’s MPC expected to keep its Bank Rate steady at 0.75%. The Bank’s Inflation Report will also be released that day and remarks from BoE Governor Carney will be closely watched.  The UK election on 12 December will continue to be closely watched and have profound implications for EUR/GBP.

USD/CHF pushed higher to the 0.9895 area after trading as low as the 0.9859 area last Friday.  Early last week, the pair briefly tested the 0.9970 area, representing the 38.2% retracement of the 0.9542 – 1.0237 range.  If the pair’s upward trajectory continues, traders will eye the 0.9912 and 0.9934 areas as possible technical resistance, representing the 38.2% and 50% retracements of the recent 1.0028 – 0.9841 range.  October unemployment data will be released on Friday.

USD/CAD came off from intraday highs around the 1.3161 area after being bid higher from the 1.3130 area during yesterday’s session.  Following the pair’s recent sharp depreciation from 1.3382 to 1.3042, the pair has been unable to wander too far above the 1.3200 figure, representing the 50% retracement of the 1.3017 – 1.3383 range.  Traders are looking to see if the pair can remain bid above the 1.3125 area in the short-term. October Ivey PMI data will be released tomorrow followed by October unemployment data on Friday.  

AUD/USD found technical support around the 0.6876 level today, right around the 50% retracement of the 0.7082 – 0.6670 range.  This buying pressure positions the pair to potentially test last week’s multi-month high of 0.6929, a print that was just above the 61.8% retracement of the 0.7082 – 0.6670 range.  Above that area, the 0.6947 level is the 38.2% retracement of the 0.7394 – 0.6670 range. September trade balance data will be released on Thursday and RBA’s Monetary Policy Statement is due on Friday.

NZD/USD reversed some of yesterday’s losses and traded higher to the 0.6413 level today, right around the 23.6% retracement of the 0.6204 – 0.6465 range.  The pair has been bid higher from the 0.6204 level this month and if the upward trend resumes, traders will be interested in how price activity behaves around the 0.6496 area, representing the 38.2% retracement of the 0.6970 – 0.6204 range.  RBNZ’s monetary policy decision is due on 12 November.

USD/CNY moved to multi-month lows today as the pair traded as low as the 7.0176 level, having decisively broken the 7.0311 low from 13 September. Chartists are now eyeing technical support around the 7.0065 area, representing the 50% retracement of the 6.8167 – 7.1962 range.  The 6.9951 area is another very important level, representing the 38.2% retracement of the 6.6705 – 7.1957 range. October trade balance data are due on Thursday followed by money supply and CPI numbers on Friday. Upcoming trade meetings between the US and China will continue to impact the pair.