Dollar Firms Up Again ahead of Weekly Close

Dollar firms up again entering into US session, but it’s so far held below yesterday’s high against all but Swiss Franc. There is little reaction to weaker than expected growth in durable goods orders. New Zealand Dollar is surprisingly the strongest on for today, while Yen is the third. Euro is currently the weakest one for today, followed by Aussie and then Swiss Franc. Overall market sentiments turned sour in European session but there is no follow through selling at this point.

Technically, Kiwi’s strength is largely thanks to cross buying against Aussie. AUD/NZD is extending the fall from 1.1043, with downside re-acceleration. Further fall is expected as long as 1.0850 resistance holds, towards 38.2% retracement of 0.9994 to 1.1043 at 1.0865. Such developments would raise the odds of EUR/AUD breaking 1.6586 resistance firmly, and AUD/CAD breaks 0.9409 support decisively.

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In Europe, FTSE is currently down -0.37%. DAX is down -1.58%. CAC is down -1.56%. Germany 10-year yield is down -0.022 at -0.519. Earlier in Asia, Nikkei rose 0.51%. Hong Kong HSI dropped -0.32%. China Shanghai SSE dropped -0.12%. Singapore Strait Times rose 0.88%. Japan 10-year JGB yield rose 0.0007 to 0.011.

US durable goods orders rose 0.4%, ex-transport orders rose 0.4%

US durable goods orders rose 0.4% mom in August to USD 232.8B, below expectation of 1.2% mom. That was still the fourth straight month of increase nonetheless. Ex-transport orders rose 0.4% mom, also missed expectation of 1.2% mom. Excluding defense, orders rose 0.7% mom. Machinery led the increase by 1.5% mom.

Villeroy: ECB ready to accept inflation above 2% for some time

ECB Governing Council member Francois Villeroy de Galhau emphasized that the central bank “has frequently re-affirmed its commitment to symmetry” of its inflation target. As a result, “we might be ready to accept inflation higher than 2% for some time.” Still, “we should examine whether the current formulation casts doubt on this.”

Villeroy also dismissed chatter that it’s running out of ammunition. “If needed, the ECB has ample room for maneuver,” he said. “Have no doubt about our determination to act as much as needed, and about our capacity to act.”

UK Gfk consumer confidence rose to -25, but only an unbridled optimist will bet on further rise

UK Gfk Consumer Confidence rose to -25 in September, up from -27. German Economic Situation index over the next 12 month rose 4 pts to -38. Major Purchase index also rose 4 pts to -21. But Personal Financial Situation over the next 12 months was unchanged at 1.

Joe Staton, Client Strategy Director GfK, says: “Consumer confidence has crept forward for nearly four months in a row now, but can this fragile improvement last or is it about to come to a grinding halt?… Consumers are as jittery as stock markets right now and as the UK government puts the brakes back on – and there may be more to come – only an unbridled optimist will bet on confidence climbing further.”

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.9230; (P) 0.9255; (R1) 0.9294; More…

USD/CHF’s rally is still in progress and intraday bias stays on the upside for the moment. Rebound from 0.8998 should target 38.2% retracement of 0.9901 to 0.8998 at 0.9343. Sustained break there will pave the way to 61.8% retracement at 0.9556. On the downside, break of 0.9215 minor support will turn intraday bias neutral and bring some consolidations first.

In the bigger picture, decline from 1.0237 is seen as the third leg of the pattern from 1.0342 (2016 low). There is no clear sign of completion yet and on resumption, next target will be 138.2% projection of 1.0342 to 0.9186 from 1.0237 at 0.8639. Nevertheless, strong break of 0.9376 support turned resistance will be an early sign of trend reversal and turn focus back to 0.9901 key resistance.

Economic Indicators Update