Antipodeans crash to cycle lows on Yuan fix again, China data, UK jobs eyed
The People’s Bank of China (PBoC) continued to devalue its currency on Wednesday – second day in a row, waging a currency war as the world’s second-biggest economy tries to shore up growth by boosting exports. Antipodeans suffered the most from the lower Yuan reference rate while the USD/JPY rose to fresh 2-month highs beyond 125 handle amid risk-off moods.
USD/CAD rises to 1-month highs in early trade
The U.S. dollar rose to one-month highs against its Canadian counterpart on Tuesday, after the release of mixed U.S. durable goods orders data, as expectations for a U.S. rate hike in the coming months continued to support. USD/CAD hit 1.2416 during early U.S. trade, the pair’s highest since April 15; the pair subsequently consolidated at 1.2415, advancing 0.82%. The pair was likely to find support at 1.2275, Monday’s low and resistance at 1.2570, the high of April 15. In a report, the U.S. Commerce Department said that total durable goods orders, which include transportation items, declined by 0.5% last month, compared to expectations for a drop of 0.4%.
Pound falls to 2-week lows vs. stronger dollar
The pound fell to two-week lows against the U.S. dollar on Tuesday, as expectations for a U.S. rate hike in the coming months continued to lend broad support to the greenback.
GBP/USD hit 1.5385 during European morning trade, the pair’s lowest since May 8; the pair subsequently consolidated at 1.5415, sliding 0.36%. Cable was likely to find support at 1.5241, the low of May 8 and resistance at 1.5591, the high of May 20. The dollar was boosted after Federal Reserve Chair Janet Yellen reiterated Friday that the bank still expects to start raising interest rates later in the year if the economy continues to improve as expected.
EUR/USD unstoppable near 1.1080, ignores PBOC-led risk-aversion
The shared currency keeps gathering pace and remains strongly bid versus the US dollar heading into the European opening bells, sending EUR/USD towards 1.1090 – key upside barrier. The major remained firmer despite PBOC further yuan devaluation induced risk-off moods as the greenback is now losing ground across the board as markets now gear up for key China data flow.
| Important events and their explanation: |
| Time ( IST) | Currency | Economic Data | Expectation | Previous |
| 5:20am | JPY | Core Machinery Orders m/m | -4.90% | 0.60% |
| 5:00pm | EUR | ECB Monetary Policy Meeting Accounts | ||
| 6:00pm | USD | Core Retail Sales m/m | 0.50% | -0.10% |
| USD | Retail Sales m/m | 0.50% | -0.30% | |
| USD | Unemployment Claims | 272K | 270K | |
| USD | Import Prices m/m | -1.00% | -0.10% | |
| 13th-14th | USD | Mortgage Delinquencies | 5.54% |
As we are heading towards the most crucial event of the Thursday Unemployment claims and Retail claims. But our Indian rupees movement is more dependent on the Chinese news. Hence we expect rupee to further depreciates till 65.20 levels.
| Quick Glance : |
| Instrument | Price | %Chg | Volume | OI |
| USD/INR | 64.8725 | 0.17 | 788526 | 960103 |
| EUR/INR | 71.91 | -0.82 | 37048 | 48836 |
| GBP/INR | 101.02 | 0.07 | 21059 | 41217 |
| JPY/INR | 51.91 | -0.64 | 7908 | 15311 |
As seen pair has pierced its prolonged Ascending triangle and trading above crucial 64.50 levels.
After a surprise move by the Chinese banks rupee depreciated and touched 64.80 levels. We assume rupee to form a minor resistance at 65.00 levels and minor appreciation till 64.50 levels.
Once can go long with 64.20 SL