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On Wednesday the 5th of September, trading on the euro closed up. Market volatility was high during both the European and US sessions. At the beginning of the European session, the single currency live currency rates dropped against the dollar from 1.1608 to 1.1543. In the US session, the euro bulls pushed the session high up from 1.1608 to 1.1640. The greenback came under pressure from a rising pound, which occurred on the back of a Bloomberg report that the UK and Germany have decided to give up certain demands, which should make it easier for the sides to reach a deal. This unexpected piece of news fits in with my market expectations, although I haven’t accounted for volatility. Day’s news (GMT+3): 09:00 Germany: factory orders (Jul). 15:15 US: ADP employment change (Aug). 15:30 Canada: building permits (Jul). 15:30 US: nonfarm productivity (Q2), unit labour costs (Q2), initial jobless claims (31 Aug). 15:45 Eurozone: ECB's Lautenschläger Speech. 16:45 US: Markit services PMI (Aug). 17:00 US: ISM non-manufacturing PMI (Aug), factory orders (Jul). 17:30 US: EIA crude oil stocks change (31 Aug), FOMC member Williams speech. Fig 1. EURUSD hourly chart. Current situation: Now let’s look at the hourly chart. While the pair has deviated from my weekly projection, I haven’t removed it from the chart because the rate has now returned to its projected level on the hourly cycles. I’ve double-checked the cycles and nothing has changed. The pair just strayed from the weekly projection for a bit. Given yesterday’s pricing model, I’m prepared to entertain the possibility of a double top formation, although the general technical picture suggests a jump to the 67th degree. 1.1605 will act as a support today. The market has been swinging for the last few days, so don’t expect volatility to subside and be ready to see some full retracements of previous movements. I don’t really have any trading ideas to apply to my forecast. I think that today, everyone will be preparing for tomorrow’s nonfarm payrolls report.

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Financial News September 1, 2015 USD-CNY to be range-traded in near term Things do not look much better in the Euro zone. Long term inflation expectations react in a clearly visible manner to the developments of the oil price. It would be desirable to reach a situation where long term inflation expectations were independent of short term effects, as a sign of confidence into the ECB's ability to manage inflation. While that is clearly not the case, the rising oil price is causing inflation expectations to rise again. Anyone accepting that inflation expectations play a significant role in the economic process of inflation generation will have to come to the conclusion that the inflation outlook in the euro zone remains depressed, at least as long as a continuous rise in commodity prices (unlikely) or a continuous euro depreciation create a constant flow of inflation momentum. "At some stage sooner or later the ECB would then have to react. Later is more likely than sooner. It will have to become sufficiently clear that the medium term inflation target is being missed before the European central bankers change their QE programme (i.e. extend or expand it). That will then cause euro weakness through a different channel. Whichever way it will happen, in the end the different alternatives will all lead to a weaker euro", says Commerzbank. This outlook would only come under threat if the rest of the world was in a similar situation, as all currencies obviously cannot depreciate at the same time. However, the Fed's relaxed approach signals, Nobody is going to take action against the appreciation of the US dollar, at least this currency will be able to shoulder the burden of appreciation. No surprises from RBA The RBA is not expected to change its key rate today, and it didn't. It is not a non-event. What was decisive was how prominent a position RBA governor Glenn Stevens would give to the developments in China in his statement. Of course they were mentioned, but the major part of the statement was unchanged. It would therefore seem that the Australian central bankers see no need for a radical revaluation of the situation. "So compared with the concerns of some market participants who feared the need for further monetary policy easing at least medium term, this was news that will support AUD at current levels", says Commerzbank. Market Review September 1, 2015 The Reserve Bank of Australia left official interest rates unchanged at 2.00%, as widely expected, and for a fourth meeting after a month of turmoil on financial markets and amid rising concern about China's economy. The central bank maintained a neutral bias and noted that "further information on economic and financial conditions" are needed to determine the assessment of outlook and monetary policy. Moreover, RBA governor Glenn Stevens noted China's economy continued to weaken, with commodity prices falling, partly because of increased supply from Australian producers. In addition, Mr Stevens repeated that he expected the Federal Reserve to begin hiking interest rates this year, without specifying the timing. AUD/USD remained in tight range and near the 0.7100 area. Released from Australia during the Asian session, Building Approvals rose 4.2% versus the estimated 2.9% and current account deficit widened sharply to AUD -19.0B versus the estimated AUD -15.9B. Released during the Asian session this morning, New Zealand Overseas Trade Index rose 1.3% beating the estimated -1.9%, Japan Capital Spending rose 5.6% missing the estimated 9.0% and Final Manufacturing PMI came in at 51.7 versus the estimated 51.9. Released during the early European session, Spanish Manufacturing PMI came in at 53.2 missing the estimated 53.9 and causing insignificant impact on the EUR/USD, which is currently trading higher than yesterday, near the 1.1270 area. The main events for the day will be the German Unemployment Change, the United Kingdom Manufacturing PMI and Net Lending to Individuals, Eurostat Unemployment Rate, the Canadian GDP, and the United States ISM Manufacturing PMI and Final Manufacturing PMI. Additional economic releases will be New Zealand GDT Price Index. Data releases to monitor: USD: Total Vehicle Sales, ISM Manufacturing Prices, IBD/TIPP Economic Optimism, Construction Spending, ISM Manufacturing PMI, Final Manufacturing PMI. CAD: GDP. EUR: Italian Manufacturing PMI, French Final Manufacturing PMI, German Unemployment Change, German Final Manufacturing PMI, Final Manufacturing PMI, Italian Monthly Unemployment Rate, Italian Quarterly Unemployment Rate, Unemployment Rate. GBP: Manufacturing PMI, Net Lending to Individuals, M4 Money Supply, Mortgage Approvals. NZD: GDT Price Index. Trade Idea of the Day USD/JPY Currently the pair is trading at 120.43. Traders must monitor the 122.36 resistance level and the support level of 116.17 for possible breakouts. A possible scenario would be a movement towards the 120.00 support level where a break may lead to the 119.30 area. An alternative scenario could be a movement towards the 121.05 resistance level where a break could lead to the 121.65 area.

The yen remained under pressure in Friday’s Asian session after being pushed lower by Bank of Japan Governor Kuroda who appeared before the Japanese “Diet Committee” to talk about monetary policy. He reiterated the Bank of Japan’s commitment to undertake necessary policies to fight deflation. Such policies tend to have a weakening effect on the yen. The yen fell to a four-year low against the euro in early Asian session trading, and touched a four-month low versus the US dollar. EURJPY hit a session high of 136.54 yen before ending the session at 136.19 while USDJPY peaked at 101.34. The dollar is expected to remain firm against the yen due to expectations of Fed tapering early next year, and maybe even sooner. Helping boost dollar against yen was Thursday’s US jobless claims data which surprisingly fell by 21,000 to a seasonally adjusted 323,000, beating expectations for a decline of 9,000. EURUSD traded in a range in Asia between $1.3462 and $1.3488, held steady after comments by ECB Chief Mario Draghi’s who dampened prospects of negative interest rates when he spoke yesterday. Draghi will be speaking again today so markets will be watching closely. GBPUSD hit a high of 1.6204 in Asia, supported by Thursday’s strong UK factory orders data. The Aussie extended lower today to $0.9166 after yesterday’s sell-off was initiated by comments from RBA Governor Glenn Stevens. He said yesterday that he was open to currency intervention to weaken what he believes is a high Australian dollar exchange rate.