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FOREX: PBOC Stimulus Boosts Equity Sentiment & Recovery for EURJPY

FOREX
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  • Despite today’s poor German IFO data adding to the weaker-than-expected flash PMIs on Monday, the Chinese stimulus announcement overnight has boosted sentiment in equity markets, which in turn has provided support for the single currency, and in particular EURJPY (+0.80%).
  • The cross briefly traded back above 161.00 in recent trade, from a 159.24 low overnight, and is now approaching the 50-day EMA at 161.73, an average we have not traded above since late July.
  • EURUSD (+0.28%) has also been steadily grinding higher, rising back towards the US session highs from yesterday. Above here, 1.1169 is the high this week and a resumption of gains would refocus the market’s attention on 1.1202, the Aug 26 high and bull trigger.
  • Countering the narrative is EURGBP, which continues to consolidate at depressed levels, following a range breakout to the downside during yesterday’s session. Alongside the breach of key support at 0.8383, we have also breached 0.8340 overnight, the Aug 2 ’22 low, placing the pair at the lowest level since April 2022.
  • AUD would usually have thrived with today’s developments, however, with the RBA not discussing a rate hike at today’s meeting, the AUD (-0.04%) underperforms on the modestly dovish tilt.
  • The USD index is little changed on the session, with just US consumer confidence on the data calendar. Potential comments from hawkish Fed dissenter Bowman will be monitored, while BoC Gov. Macklem participates in a fireside chat.
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  • Despite today’s poor German IFO data adding to the weaker-than-expected flash PMIs on Monday, the Chinese stimulus announcement overnight has boosted sentiment in equity markets, which in turn has provided support for the single currency, and in particular EURJPY (+0.80%).
  • The cross briefly traded back above 161.00 in recent trade, from a 159.24 low overnight, and is now approaching the 50-day EMA at 161.73, an average we have not traded above since late July.
  • EURUSD (+0.28%) has also been steadily grinding higher, rising back towards the US session highs from yesterday. Above here, 1.1169 is the high this week and a resumption of gains would refocus the market’s attention on 1.1202, the Aug 26 high and bull trigger.
  • Countering the narrative is EURGBP, which continues to consolidate at depressed levels, following a range breakout to the downside during yesterday’s session. Alongside the breach of key support at 0.8383, we have also breached 0.8340 overnight, the Aug 2 ’22 low, placing the pair at the lowest level since April 2022.
  • AUD would usually have thrived with today’s developments, however, with the RBA not discussing a rate hike at today’s meeting, the AUD (-0.04%) underperforms on the modestly dovish tilt.
  • The USD index is little changed on the session, with just US consumer confidence on the data calendar. Potential comments from hawkish Fed dissenter Bowman will be monitored, while BoC Gov. Macklem participates in a fireside chat.