Mid-Day Report: FX Markets Stay in Consolidation Mode

The forex markets continue to stay in consolidative mode in early US session, without any stimulus for fresh moves. Yen reversed some of the risk aversion triggered gains ad is back under pressure against other major currencies. Meanwhile, dollar continues to be mixed in tight range. Released from US, personal income rose 0.2% in July while spending dropped -0.1%. Headline PCE was unchanged at 1.6% yoy while core PCE was also unchanged at 1.5% yoy. Released from Canada, GDP rose 0.3% mom in June, inline with consensus. IPPI dropped -0.3% mom in July while RMPI dropped -1.4% mom.

Eurozone CPI flash slowed to 0.3% yoy in August, down from prior month’s 0.4% yoy, inline with expectation. That’s the lowest rate since October 2009. And the data add to the case for ECB to launch additional stimulus later this year to boost inflation back to its 2% target. Core CPI rose to 0.9% yoy, above expectation of 0.9%. Meanwhile, Eurozone unemployment rate was unchanged at 11.5% in July. Swiss KOF leading indicator improved to 99.5 in August. UK Gfk consumer sentiment improved to 1 in August. ECB governing council member Nowotny said Germany is “no longer able to be a locomotive for growth” and there is a downturn in the Eurozone economy. The upturn in 2014 was weaker than expected. ECB will release updated staff projection next week.

Elsewhere, Japan Tokyo CPI core dropped back to 2.7% yoy in August while national CPI core was unchanged at 3.3% yoy in July. Unemployment rate rose to 3.8% in July, household spending dropped -5.9% yoy, retail sales rose 0.5% yoy, industrial production rose 0.2% mom, housing starts dropped -14.1% yoy. New Zealand building permits rose 0.1% mom in July, NBNZ business confidence dropped to 24.4 in August.

Daily Pivots: (S1) 0.9130; (P) 0.9145; (R1) 0.9165; More….

USD/CHF’s consolidation from 0.9184 temporary top is still in progress and intraday bias remains neutral. Another fall could be seen but we’d expect downside of pull back to be contained above 0.9022 support and bring resumption. Break of 0.9184 should target 161.8% projection of 0.8702 to 0.9036 from 0.8855 at 0.9395 next.

In the bigger picture, price actions from 0.9971 are viewed as a correction pattern. The sustained trading above 55 week EMA argues that it might be finished at 0.8698 already. Focus remains on whether USD/CHF can sustain above 0.9156 resistance. Decisive break there should confirm this case and turn outlook bullish for a test on 0.9971 high. Meanwhile, break of 0.8855 near term support will dampen this bullish view and would extend the correction to 50% retracement of 0.7065 to 0.9971 at 0.8518 and below. In that case, we’ll start to look for reversal signal below 0.8518 again.

USD/CHF 4 Hours Chart

USD/CHF Daily Chart

GMT
Ccy
Events
Actual
Consensus
Previous
Revised
22:45
NZD
Building Permits M/M Jul
0.10%

3.50%

23:05
GBP
GfK Consumer Sentiments Aug
1
-1
-2

23:30
JPY
Unemployment Rate Jul
3.80%
3.70%
3.70%

23:30
JPY
Household Spending Y/Y Jul
-5.90%
-2.70%
-3.00%

23:30
JPY
National CPI Core Y/Y Jul
3.30%
3.30%
3.30%

23:30
JPY
Tokyo CPI Core Y/Y Aug
2.70%
2.70%
2.80%

23:50
JPY
Retail Trade Y/Y Jul
0.50%
-0.10%
-0.60%

23:50
JPY
Industrial Production M/M (JUL P)
0.20%
1.40%
-3.30%
-3.40%
01:00
NZD
NBNZ Business Confidence Aug
24.4

39.7

05:00
JPY
Housing Starts Y/Y Jul
-14.10%
-10.50%
-9.50%

07:00
CHF
KOF Leading Indicator Aug
99.5
97.9
98.1
97.9
09:00
EUR
Eurozone Unemployment Rate Jul
11.50%
11.50%
11.50%

09:00
EUR
Eurozone CPI Estimate Y/Y Aug
0.30%
0.30%
0.40%

09:00
EUR
Eurozone CPI – Core Y/Y Aug A
0.90%
0.80%
0.80%

12:30
CAD
GDP M/M Jun
0.30%
0.30%
0.40%
0.50%
12:30
CAD
Industrial Product Price M/M Jul
-0.30%
0.20%
-0.10%
0.10%
12:30
CAD
Raw Materials Price Index M/M Jul
-1.40%
0.70%
1.10%

12:30
USD
Personal Income Jul
0.20%
0.30%
0.40%
0.50%
12:30
USD
Personal Spending Jul
-0.10%
0.20%
0.40%

12:30
USD
PCE Deflator M/M Jul
0.10%
0.10%
0.20%

12:30
USD
PCE Deflator Y/Y Jul
1.60%
1.60%
1.60%

12:30
USD
PCE Core M/M Jul
0.10%
0.10%
0.10%

12:30
USD
PCE Core Y/Y Jul
1.50%
1.50%
1.50%

13:45
USD
Chicago PMI Aug

56.3
52.6

13:55
USD
U. of Michigan Confidence Aug F

80.4
79.2

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