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(M2) Correction Extends


Late Session Rebound


(M2) Corrective Cycle Remains In Play


(M2) Gains Still Considered Corrective

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  • The negative close of Wall Street Friday has fed through into Monday's NY crossover, with index futures again pointing lower and indicating more near-term pain for equity longs. The price action has favoured haven currencies so far, with the greenback, CHF and JPY the early beneficiaries.
  • The nearing Fed meeting remains the focal point for markets, with outside expectations that the FOMC will shift to a focus on quantitative tightening as soon as this Wednesday. This has kept the USD Index close to last week's highs, narrowing in on first major resistance at the 96.02 50-dma, a break above which would open gains toward YTD highs of 96.462.
  • The outperformance in the CHF puts the EUR/CHF cross at new cycle lows of 1.0318 and the lowest level since mid-2015, with 1.0315 and 1.0296 the next levels to watch. Markets will continue to speculate over the involvement of the SNB at these levels, which may look to smooth any erratic declines.
  • Risk off trades puts growth and commodity-tied currencies at the bottom of the pile, with AUD, NOK and NZD among the session's poorest performers.
  • Preliminary US PMI data takes focus going forward, with markets expecting both the manufacturing and services metrics to decelerate from the prior. There are no major central bank speakers, with the FOMC remaining in their pre-meeting media blackout period.
MNI London Bureau | +44 203-865-3809 |
MNI London Bureau | +44 203-865-3809 |

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