Equities Rebound, RBNZ Stands Pat, PMIs in Spotlight

USD KEEPS SHINING, BUT EQUITIES REBOUND SOMEWHAT

The US dollar continued to trade higher against all the other G10 currencies on Tuesday and during the Asian morning Wednesday. It gained the most versus AUD, NOK, SEK, and NZD in that order, while it recorded the least gains against CAD.

DAX — TECHNICAL OUTLOOK

We saw DAX moving heavily to the downside on Monday and then finding support at the 12500 hurdle, which continues to hold the price from moving lower. That said, the current rebound could be seen as a temporary correction before another possible leg of selling, especially if the index remains below the 12746 area, marked by the low of September 4th. For now, we will take a cautiously bearish approach.

RBNZ STANDS PAT, PREL. PMIS TAKE CENTER STAGE

Back to the currencies, the Kiwi gained nearly 50 pips against its US counterpart overnight, following the RBNZ decision, though the currency was still found lower this morning. The RBNZ kept its Official Cash Rate (OCR) and its Large-Scale Asset Purchase (LSAP) unchanged, repeating that further monetary stimulus may be needed in the foreseeable future, including a Funding for Lending Program, a negative OCR, and purchases of foreign assets.

EUR/NZD — TECHNICAL OUTLOOK

After finding good support near the 1.7445 hurdle, EUR/NZD started moving north again and is currently balancing above a short-term tentative upside support line taken from the low of September 18th. Although the rate is still trading below the 200 EMA on our 4-hour chart, the pair seems to be showing willingness to climb higher, as the RSI and the MACD are pointing slightly to the upside. If EUR/NZD continues to move above that upside line, we will remain positive, at least for now.

AS FOR THE REST OF TODAY’S EVENTS

The EIA (Energy Information Administration) report on crude oil inventories for last week is coming out. The forecast points to a 2.325mn barrels slide following a 4.389mn decline the week before. However, bearing in mind that the API (American Petroleum Institute) revealed a 0.691mn inventory build yesterday, we would consider the risks surrounding the EIA forecast as tilted to the upside.

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