GOLD: Breaks Below $4,000; Eyes October Lows

The NZD/USD had a range today of 0.5634-0.5650 in the Asia-Pac session; it is currently trading around 0.5645. The pair finally broke below 0.5650 overnight and had a look back toward the 0.5600 area but it was unable to follow through at the first time of asking. It has come a long way in a short period of time so I would be reluctant to add fresh shorts down at these levels. Initial resistance is back toward 0.5685-0.5715 and above there the 0.5760-0.5810 area comes back into play. The US Dollar is showing signs of perhaps slowing down after such an impressive bounce, this could perhaps see some reversion play out and provide better entry levels. 

• MNI - NZ ANZ Survey Consistent With Limited Pricing Power, Uneven Recovery: ANZ NZ September business confidence and activity outlook printed at their lowest for Q3 with late month responses significantly weaker due to higher oil prices. 50bp of monetary tightening in Q3 is likely to have had an impact especially on retail responses. The RBNZ will be relieved that while costs rose again pricing intentions eased and inflation expectations were stable. It signals that many sectors still don’t have the pricing power to pass higher costs onto customers.
• Options : Closest significant option expiries for NY cut, based on DTCC data:  0.5850(NZD747m). Upcoming Close Strikes : none - BBG
• The NZD/USD Average True Range for the last 10 Trading days: 39 Points

Fig 1: NZD/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

The USD/JPY range today has been 156.38-157.46 in the Asia-Pac session, it is currently trading around 156.90, -0.25%. The pair dropped pretty quickly into the Japanese fix and then what looked to be some AUD/JPY selling after a soft AU CPI print added to its headwinds. The demand toward 156.50 was again around and the pair is now drifting back toward 157.00. The BOJ has seemingly dropped the ball and the initial green shoots for the Yen look in serious peril. The 149-152 area has now proved to be solid support again. The market punished those who turned long Yen and overall positioning looks to have been drastically reduced as the market gets chopped within this wider range. The 159.00-160.50 area technically looks quite important now and I suspect the BOJ/MOJ will be doing what they can to keep it below there. The first support is toward 156.50-157.00 which continues to provide support and then the 155.00 area. Can the BOJ/MOF stop a move back toward 160 and above, without any efforts from them to prevent it the move almost looks inevitable. Until then the Choppy 152-160 range looks set to continue.

• MNI - Japan IP Below Forecasts But Still Solid y/y Pace, Q3 Tankan Out Tomorrow : Japan Aug (preliminary) industrial production figures were weaker than forecast: we fell 1.7%m/m (after a 0.2% decline in July). In y/y terms we still rose 3.4% (against a 6.8% forecast and 3.9% July outcome). The PMI has moved off its highs recently, but is still suggesting a solid/resilient y/y pace for IP growth. Support continues to come from the external demand side, with export growth running at 19.3%y/y amid strong tech related exports and recovering exports to the US.
• MNI INTERVIEW: Ex-BOJ Sakurai Sees Dec Hike, 2% Terminal Rate. The Bank of Japan will probably wait until December before it raises its policy interest rate to 1.5% from 1.25%, but two further hikes are likely next year before it pauses to take stock of the economy and to weigh potential political resistance and possible financial system strains, former BOJ board member Makoto Sakurai told MNI.
• Options : Close significant option expiries for NY cut, based on DTCC data: 154.75($1.02b), 157.00($1.42b), 159.30($1.16b). Upcoming Close Strikes : 157.00($1.86b Oct 2), 158.00($2.31b Oct 2), 158.25($1.57b Oct 1) - BBG.
• The USD/JPY Average True Range(ATR) for the last 10 Trading days: 105 Points

Fig 1 : USD/JPY Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

The total value of social logistics in China rose 4.9% from a year earlier to CNY243.6 trillion in the first eight months, with the growth rate easing 0.1 percentage point from the Jan-Jul period, Securities Daily reported. Industrial logistics demand remained broadly stable, while emerging growth drivers contributed more to incremental demand, supported by strong output of robot reducers and industrial robots, said Meng Yuan, analyst at the China Logistics Information Center. Logistics demand is expected to accelerate in the fourth quarter as the industry enters its traditional peak season, Meng added.