Monday, September 28, 2015

Fed’s preferred PCE price index, Central bankers’ speeches – Key

FXStreet (Mumbai) - A quiet start to a macro-busy week ahead, with all eyes set on the US economic releases, with the non-farm payroll in the spotlight. The yen was better bid versus the US dollar in Asia while the Antipodeans turned in to the positive territory after opening slightly lower.

Key headlines in Asia

Monetary policy framework is flexible and supporting the economy – RBNZ

China to unveil over 10 policy measures in Q4 2015 to stabilize growth - Xinhua

China’s industrial profits plunge -8.8% y/y in August vs. -2.9% July

Dominating themes in Asia - centered on JPY, AUD, NZD

An absolutely eventless Asian session, with the US dollar on the back foot against its major competitors, awaiting plenty of US event risk in the week ahead. Asian markets were a mixed bag with the stocks on the Japanese and Chinese bourses in the red. While Australia’s ASX rallied as the banking stocks supported the index.

The Japanese yen keeps the upper edge over its American counterpart, with USD/JPY losing -0.06% to 120.40, finding it difficult to extend beyond 120.50 levels. The major hovers above the key hourly 200-MA located at 120.25 and remains pressured as markets resort to profit-taking on their USD longs after the US Q2 GDP-inspired rally beyond 121 handle.

The Antipodeans extended their choppy-trend and swung between gains and losses all through the Asian session, with the Aussie unable to extend beyond the hourly 100-MA resistance. While the Kiwi trimmed gains and stalled its recovery from multi-year lows just ahead of 0.64 barrier. NZD/USD remained bid as markets digest the latest comments from RBNZ Governor Wheeler in its Annual report published earlier on the day.

RBNZ Governor Wheeler noted that the international forces remain a major influence on the economy, while New Zealand’s economy has performed better than many advanced economies in recent years. He also added that the RBNZ monetary policy framework is flexible and supporting the economy’s adjustment to these significant external forces.

On the equities space, Asian markets traded mixed, with Japan’s Nikkei losing over 1% to 17,681. Australia’s S&P ASX index rallies 1.30% to 5,107. While the Chinese indices, the Shanghai Composite trades subdued, down -0.20% to 3,086. While Hong Kong markets are closed today for the Mid-Autumn festival holiday.

Heading into Europe - centered on EUR, GBP

We have a data-empty EUR calendar to kick-off a fresh trading week ahead, with the BOE and the Fed officials speeches’ expected to keep EUR, GBP traders busy.
BOE MPC Member Cunliffe is due to participate in a panel discussion about financial regulation at the Banque de France Conference, in Paris. While FOMC member Daniel Tarullo is also scheduled to speak at the same event.

Looking ahead, we have a data-filled New York session with the Fed’s favorite inflation gauge, the core PCE price index on the cards. Also, pending home sales and personal spending data will be reported ahead of the US open. Markets are expecting an unchanged reading for the PCE index (0.1% previous).

Besides, New York Fed President William Dudley is due to discuss interest-rate increases and inflation expectations in an interview conducted by WSJ's Jon Hilsenrath. While Chicago President Charles Evans is due to deliver a speech titled "A Perspective on Monetary Policy" at Marquette University's Business Leaders Forum, in Milwaukee.

EUR/USD Technicals

Valeria Bednarik, Chief Analyst at FXStreet noted, “The pair has shown little progress these last few days, once again, stuck around the 1.1200 level. The daily chart shows that the price has been hovering around horizontal moving averages, with the 20 SMA now around 1.1245. In the same chart, the Momentum indicator is flat around 100 whilst the RSI is also flat right below its 50 level, in line with a neutral stance.”

“Shorter term, the 4 hours chart shows that the price has managed to advance a few pips above its 20 SMA, whilst the technical indicators are bouncing from their mid-lines, with no actual momentum. The base of the range has been set at 1.1080, which means additional declines below it, are required to confirm a bearish continuation, while bulls may get encouraged only with an upward acceleration beyond 1.1335. ”
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