The HSBC Flash Manufacturing PMI reading out of China came in better than generally expected at 51.9, with a previous print of 51.5. There was little initial reaction. However, at 9:00 P.M. on the dot risk took off like a rocket, which coincidentally was somewhat quelled an hour later by North Korea threatening to launch an actual rocket.
EUR/USD & GBP/USD still remain stuck in their respective ranges (1.3400 - 1.3250 and 1.5900 - 1.5800), but exhibited signs of weakness today as the IMF cut both the Eurozone's and the U.K.'s growth forecast. If EUR/USD drops to 1.3250, our target is 1.3150 based on the price inefficiency. If the Euro does break down tomorrow morning over the PMI numbers due to be released (here) then it's reasonable to expect EUR/GBP to follow it down, and give some support to GBP/USD. (Perhaps a bounce off of the .50 fib at 1.5790?) Also, if you're trading EUR/USD make sure you keep an eye out for government intervention in the EUR/CHF and EUR/JPY.
As we stated in yesterday's blog post, the best high yielding currency to go long in a 'risk on' play
would probably be the Kiwi. Sure enough, AUD/NZD continues to barrel to fresh lows
instilling strength in NZD/USD and keeping downwards pressure on
AUD/USD. The first major piece of event risk that should impact the AUD/USD tomorrow is the German PMI at 3:30 A.M. If that print is bad, European equities could start to dump (especially after the downgraded growth forecasts today.) That could in turn bleed over into the U.S. stock market session. Speaking of stocks, keep an eye on Apple (you can check the futures here.) It's unknown what effect the massive dumpathon in AAPL is going to have on U.S. stocks at 9:30 A.M. tomorrow; but I imagine it won't be pretty. The futures don't look good at the moment (track them here) and the gap lower could cause margin calls. Lastly, keep in mind that the 8:30 A.M. weekly U.S. unemployment number could generate another "omg QE is ending" moment if it comes in much better than expected.
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