Euro Reverses Earlier Trend on Better Chicago PMI Data

Overnight it looked as if the theme for today was going to be aversion to higher risk assets because of the 7% drop in China’s Shanghai Index.

Overnight it looked as if the theme for today was going to be aversion to higher risk assets because of the 7% drop in China’s Shanghai Index. This theme was central to today’s activity until a better than expected Chicago PMI report shifted the sentiment.

The Japanese Yen is maintaining its overnight strength during the New York trading session. Overnight the Yen received a boost after a decisive victory by the country’s opposition party during an election over the week-end.

The GBP USD recovered from the weaker New York opening following the release of the friendly Chicago manufacturing data. News that U.K. house prices rose for the first time in two years is also supporting this market. Trading conditions are thin because of a U.K. holiday.

Weaker equity markets in Asia, Europe and the U.S. helped trigger a weaker opening for the EUR USD on the New York opening. This market erased all of its earlier losses when the better than expected Chicago PMI data was announced. Losses were also limited because of the news that European consumer prices dropped less than economists forecast in August. This news probably solidified the thought that the European Central Bank would not consider applying additional stimulus to the economy.

Lower crude oil and equity markets triggered weakness in the Canadian Dollar overnight. More selling pressure is being attributed to the weaker than expected Canadian GDP figure. Strong upside momentum is likely to drive the USD CAD to the last main top at 1.1124. A trade through this level will turn the main trend to up. The first major resistance target is a 50% price at 1.1177.

The AUD USD and NZD USD are basically trading flat in New York. Overnight these higher yielding currencies fell when the Chinese stock market dropped almost 7%. This triggered a flight to safety rally. U.S. stock markets opened sharply lower but inside of last week’s range. The inability to break the U.S. equity markets hard along with China’s index and the better news regarding U.S. manufacturing reversed the earlier down trend in the Australian and New Zealand Dollars.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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