A better-than-expected U.S. ADP report and hopes for a U.S. stimulus bill as early as this week encouraged risk-takers to bet on high-yielding currencies like the comdolls.
Will today’s European PMI releases give the euro an edge over the Australian dollar?
Here are the top headlines during the Asian session to help you shape your next trades:
- HK and Chinese markets out on holidays
- Tokyo Stock Exchange suspends day’s trade after worst-ever system glitch
- Oil prices rise after EIA reports small crude draw
- Fed’s Kashkari expects continued economic recovery but only in a ‘grinding’ fashion
- Fed’s Bowman sees bumpy recovery, warns on asset prices
- AiG: Australian manufacturing contracts in September
- Japan’s factories suffer record 17th month of declining activity
- Japan business sentiment perks up as hit from pandemic begins to ease
- House delays vote on $2.2 trillion coronavirus stimulus bill to allow more time for talks
- Japan ruling party heavyweight says to consider ‘large-scale, bold’ spending package – Nikkei
- Dollar loses ground on hopes for compromise on U.S. stimulus
Upcoming Potential Catalysts on the Economic Calendar:
- Switzerland’s CPI and retail sales at 6:30 am GMT
- Spain’s manufacturing PMI at 7:15 am GMT
- Switzerland’s manufacturing PMI at 7:30 am GMT
- Italy’s manufacturing PMI at 7:45 am GMT
- France’s final manufacturing PMI at 7:50 am GMT
- Germany’s final manufacturing PMI at 7:55 am GMT
- Eurozone’s final manufacturing PMI at 8:00 am GMT
- U.K.’s final manufacturing PMI at 8:30 am GMT
- Eurozone unemployment rate at 9:00 am GMT
- U.S. Challenger job cuts at 11:30 am GMT
- U.S. core PCE price index at 12:30 pm GMT
What to Watch: EUR/AUD
EUR/AUD is consolidating in a tight range around the 1.6340 level that served as resistance in the first half of September.
Today’s eurozone PMI reports may help tell us where EUR/AUD is going next.
A risk-friendly trading environment and more headlines over a U.S. stimulus package could continue to strengthen the higher-yielding Aussie against the euro.It also won’t help if today’s eurozone PMI reports, like other major economies, reflecting a slowdown of activity recovery from their lockdown numbers.
Meanwhile, euro bulls can look forward to upside surprises in today’s data releases. If we see better-than-expected economic prospects in the region, or if the passing of the next U.S. stimulus bill gets delayed again, then we could see some profit-taking from EUR/AUD’s losses.
EUR/AUD has an average volatility of just above 100 pips a day. This means that it could drop to the 1.6240 previous area of interest if euro bears regain their momentum, while an upside breakout could push EUR/AUD up to a 38.2% Fib move of its latest downswing.