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Daily Pivots: (S1) 0.7798; (P) 0.7823; (R1) 0.7850; More...

AUD/USD breaches 0.7798 again today but there is no follow through selling below 0.7807 near term support. Intraday bias remains neutral first. As noted before, considering bearish divergence condition in daily MACD, firm break of 0.7807 support will indicate near term reversal. Outlook will then be turned bearish for 55 week EMA (now at 0.7674) first. Meanwhile, rebound from 0.7807 will retain bullishness. Above 0.7907 minor resistance will turn bias back to the upside for retesting 0.8124 high.

In the bigger picture, rise from 0.6826 medium term bottom is seen as corrective pattern. In case of further rally, strong resistance should be seen at 38.2% retracement of 1.1079 to 0.6826 at 0.8451 to limit upside. Meanwhile, firm break of 0.7807 is the first signal that such correction is focused. Break of 0.7328 will bring retest of 0.6826 low.

US equities surged to new record highs overnight on solid manufacturing data and dollar followed by gaining broadly in Asian session today. DOW jumped 152.51 points or 0.68% to close at 22557.6. S&P 500 rose 9.76 pts or 0.39% to end at 25.29.12. NASDAQ also gained 20.76 pts or 0.32% to 6516.72. 10 year yield was steady, though, failing to take out last week's high at 2.344 but still rose 0.011 to 2.337. While the greenback is clearly stronger against European majors, it's strength against commodity currencies is less apparent. Aussie dips mildly after RBA left interest rates unchanged. But no follow through selling is seen yet below 0.78 handle.

Fed Kashkari prefer Fed to stand pat

Minneapolis Fed President Neel Kashkari, a know dove, criticized that Fed's monetary accommodation over the past few years is "likely an important factor driving inflation expectations lower". And he preferred not to hike interest rates again until core PCE hitting 2% yoy, a large drop in headline unemployment rate signalling using up of remaining labor slack, or surprise increase in inflation expectations. The latest FOMC rate projections suggest that Fed is still on course for another hike in December, and three more next year. Fed fund futures are pricing in 77.8% chance of a December hike.

ECB Praet markets allow ECB to slow down assess purchase

ECB chief economist Peter Praet said yesterday that in more normal market conditions investors may become "more patient" and be "better able to evaluate the stimulus that can be expected to come from a purchase plan that is to be executed over a more extended time interval." On the other hand, in highly uncertain conditions, "front loading the accumulation of a given stock of purchases more forcefully signals the central bank's commitment to inject the degree of accommodation necessary to support the recovery." With relatively calm markets now, ECB could opt for extending the asset purchase program with reduced monthly purchase for a longer period of time.

RBA left rate unchanged at 1.50% as expected

RBA left interest rate unchanged at 1.50% today as widely expected. In the accompanying statement, RBA Governor Philip Lowe noted that recent data are "consistent with the Bank's expectation that growth in the Australian economy will gradually pick up over the coming year." Also,  "a large pipeline of infrastructure investment" will also be " supporting the outlook". However, "wage growth remains low" and "is likely to continue for a while yet". RBA only warned that appreciation in the exchange rate "would be expected to result in a slower pick-up in economic activity and inflation than currently forecast."

On the data front

Australia building approvals rose 0.0% mom in August. Japan consumer confidence improved to 43.9 in September, monetary base rose 15.6% yoy. UK construction PMI and Eurozone PPI are the main features in European session.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.7798; (P) 0.7823; (R1) 0.7850; More...

AUD/USD breaches 0.7798 again today but there is no follow through selling below 0.7807 near term support. Intraday bias remains neutral first. As noted before, considering bearish divergence condition in daily MACD, firm break of 0.7807 support will indicate near term reversal. Outlook will then be turned bearish for 55 week EMA (now at 0.7674) first. Meanwhile, rebound from 0.7807 will retain bullishness. Above 0.7907 minor resistance will turn bias back to the upside for retesting 0.8124 high.

In the bigger picture, rise from 0.6826 medium term bottom is seen as corrective pattern. In case of further rally, strong resistance should be seen at 38.2% retracement of 1.1079 to 0.6826 at 0.8451 to limit upside. Meanwhile, firm break of 0.7807 is the first signal that such correction is focused. Break of 0.7328 will bring retest of 0.6826 low.

Economic Indicators Update

The NZD/USD drops further on the short term and is almost to hit the fifth warning line (wl5) of the ascending pitchfork. I’ve said in the previous week that the rate should take out the warning line (wl5) if will reach it. Technically, it should drop further after the retest of the sliding line (sl).

USD/CAD increases further on the short term and is almost to hit the upper median line (uml) of the descending pitchfork. Technically, it should take this out if will reach it. A valid breakout will confirm an increase at least till will reach the 1.2678 and the median line (ML) of the major descending pitchfork.

The currency pair increased further and resumed the upside movement. Is trading in the green and looks poised to take out a major resistance level. USD/CHF increases further as the USDX resumed the yesterday's impressive bullish candle. The USDX has managed to jump above the 93.68 previous high and now is trading above the 93.81 horizontal resistance. A valid breakout will confirm a larger rebound in the upcoming weeks and a USD dominance.

The USDX is expected to increase further as the Federal Reserve is expected to hike the rate in December.

The USD/CHF will be driven by the technical factors today, the US is to release only the Total Vehicle Sales indicator, which is expected to increase from 16.1M to 16.9M, but remains to see if will have any impact.

Price is pressuring the upper median line (uml) of the descending pitchfork. Has jumped above this dynamic resistance, but remains to see if will really have a valid breakout. USD/CHF has managed to come back above the up sloping red line, signaling that the bulls are very strong on the short term.

I've drawn an ascending pitchfork to catch a larger upside movement, you can see that the median line (ml) represents a very strong resistance level, it was rejected several times in the last weeks. Price could increase further even if will stay under this dynamic resistance.

For the 24 hours to 23:00 GMT, the AUD rose 0.12% against the USD and closed at 0.7834.

LME Copper prices declined 0.5% or $30.0/MT to $6455.0/MT. Aluminium prices declined 2.1% or $43.5/MT to $2067.0/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7815, with the AUD trading 0.24% lower against the USD from yesterday's close.

Earlier today, the Reserve Bank of Australia (RBA) kept key interest rate unchanged at a record low 1.5%, as widely expected. In a post-meeting statement, Governor Philip Lowe highlighted that unemployment rate in Australia was unlikely to fall quickly while adding sluggish wages was going to be a problem for some time. He also stated that the impact of a stronger Australian Dollar is expected to contribute to continued subdued price pressures in the economy.

Overnight data indicated that Australia's seasonally adjusted building approvals rebounded 0.4% MoM in August, less than market consensus for a gain of 1.0%. In the previous month, building approvals had recorded a revised drop of 1.2%. Moreover, the nation's new home sales rebounded by 9.1% on a monthly basis in August. In the prior month, new home sales had registered a revised drop of 15.4%.

The pair is expected to find support at 0.7794, and a fall through could take it to the next support level of 0.7773. The pair is expected to find its first resistance at 0.7838, and a rise through could take it to the next resistance level of 0.7861.

Going forward, Australia's AiG performance of service index for September, slated to release in overnight, will be on investors' radar.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the EUR declined 0.31% against the USD and closed at 1.1738.

Meanwhile, data indicated that the Euro-zone's unemployment rate unexpectedly remained steady at an eight-year low of 9.1% in August, while markets had anticipated for a drop to 9.0%.

Moreover, the region's final Markit manufacturing PMI was revised lower to a level of 58.1 in September, compared to a preliminary print indicating an advance to a level of 58.2. However, the PMI remained at a nearly seven-year high level. In the previous month, the PMI had registered a reading of 57.4.
Separately, Germany's manufacturing sector expanded to a level of 60.6 in September, confirming the flash estimate. In the previous month, the PMI had registered a level of 59.3.

The greenback gained ground against a basket of major currencies, following a pair of upbeat US economic reports.

The US ISM manufacturing activity index surprised with an unexpected rise to a level of 60.8 in September, accelerating at its fastest pace in more than thirteen years, amid a sharp rise in new orders and raw material prices. Markets had expected the index to fall to a level of 58.1, after recording a reading of 58.8 in the prior month. Further, the nation's construction spending rebounded more-than-anticipated by 0.5% on a monthly basis in August, following a revised drop of 1.2% in the prior month. Markets had expected construction spending to climb 0.4%.

In other economic news, final print of Markit manufacturing PMI was revised higher to a level of 53.1 in September from a preliminary print indicating a rise to a level of 53.0. The PMI had registered a level of 52.8 in the previous month.

In the Asian session, at GMT0300, the pair is trading at 1.1713, with the EUR trading 0.21% lower against the USD from yesterday's close.

The pair is expected to find support at 1.1683, and a fall through could take it to the next support level of 1.1654. The pair is expected to find its first resistance at 1.1761, and a rise through could take it to the next resistance level of 1.1810.

Going forward, market participants will closely monitor the Euro-zone's producer price index for August, slated to release in a few hours.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the GBP declined 0.65% against the USD and closed at 1.3276, on the back of bearish manufacturing sector report from the UK.

Data revealed that Britain's Markit manufacturing PMI eased more-than-expected to a level of 55.90 in September, offering latest sign of the growing hit to the British economy from Brexit uncertainties. In the previous month, the PMI had registered a revised reading of 56.7, while investors had anticipated for a fall to a level of 56.2.

In the Asian session, at GMT0300, the pair is trading at 1.3250, with the GBP trading 0.2% lower against the USD from yesterday's close.

The pair is expected to find support at 1.3195, and a fall through could take it to the next support level of 1.314. The pair is expected to find its first resistance at 1.3340, and a rise through could take it to the next resistance level of 1.3430.

Going ahead, investors will draw their attention to UK's Markit construction PMI for September, slated to release in a few hours.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.12% against the JPY and closed at 112.72.

In the Asian session, at GMT0300, the pair is trading at 113.07, with the USD trading 0.31% higher against the JPY from yesterday's close.

In economic news, Japan's monetary base registered a less-than-expected rise of 15.6% YoY in September, compared to market expectations for an advance of 16.7%. In the prior month, the monetary base had climbed 16.3%.

The pair is expected to find support at 112.68, and a fall through could take it to the next support level of 112.28. The pair is expected to find its first resistance at 113.32, and a rise through could take it to the next resistance level of 113.56.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD rose 0.4% against the CHF and closed at 0.9743.

Macroeconomic data indicated that Switzerland's real retail sales slid 0.2% on an annual basis in August, after recording a revised flat reading in the prior month.

On the contrary, the nation's SVME manufacturing PMI unexpectedly climbed to a level of 61.7 in September, defying market consensus for a drop to a level of 60.5 and compared to a reading of 61.2 in the previous month.

In the Asian session, at GMT0300, the pair is trading at 0.9775, with the USD trading 0.33% higher against the CHF from yesterday's close.

The pair is expected to find support at 0.9713, and a fall through could take it to the next support level of 0.9650. The pair is expected to find its first resistance at 0.9811, and a rise through could take it to the next resistance level of 0.9846.

Amid no macroeconomic releases in Switzerland today, investors will look forward to global macroeconomic events for further direction.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.