ASIA session review: Dollar holds stable

Data released: 

09:00 GMT EMU Industrial Production s.a. (MoM) (Aug) 1.0% 0.8% -1.0% 

09:00 GMT EMU Industrial Production w.d.a. (YoY) (Aug) -2.1% -2.4% -1.9% 

The dollar holds within the narrow rangese versus the major currencies amid the threat of default by the world’s largest economy later this week. 

Reports cited no sign of progress toward reaching a deal that would end the partial U.S. government shutdown and steer the nation away from a potential default on its debt obligations. 

Senate Republicans and Democrats met Sunday in a bid to broker a budget deal as the Republican-led House and President Barack Obama remained deadlocked. The Republicans want compromises on Obama’s health-care law, while Democrats have called for one-year deals for “clean” budget and debt-ceiling resolutions that have no cutbacks in funding the health-care program. 

The administration puts the deadline for Congress to authorize the Treasury to pay its bills at Oct. 17. 

EURO 

The better-than-expected EMU’s industrial production data gave the euro an ephemeral support, expanding at a monthly pace of 1.0% and contracting 2.1% over the last twelve month, vs. estimates at 0.8% and -2.4%, respectively. 

ECB Governing Council member and Malta's central bank head Josef Bonnici said on Monday that the ECB is prepared to introduce the negative deposit rate, although such a move could have adverse implications. 

"It may have some consequences which may have to be taken into account, but it is possible to go negative and we are prepared to go negative,” Bonnici declared, adding that “there are pluses and minuses to this negative rate." 

Furthermore, the Governing Council member assured that in the light of the ECB's current low interest rates, the reduction should not have so much significance. He also expressed confidence that inflation would stay “in a reasonable area between 1% and 2%." 

EUR/USD holds above $1.3500 initial resistance is around yesterday’s high on $1.3560, above - near $1.3600 (Oct 8 highs). Minor support somes at recent lows on $1.3480 with a break under widens losses to $1.3400. 

POUND 

The pound holds within the narrow range in absence of key data. 

GBP/USD eased after the test of $1.6000 and recovered again. Resistance extends to $1.6020, ahead of $1.6120 (Oct 8 high). Above $1.6260 (Oct 1 high) resistance is around $1.6340 (Jan 2 highs). Below $1.5910 support extends to $1.5880 with a break under widens losses to $1.5820 (Sep 24 lows). 

FRANC 

The franc holds tight. 

Data released showed Swiss Producer and Import Prices increased by 0.1% in September, slightly down from the 0.2% growth recorded in August, the Federal Statistical Office informed on Monday. This result is in line with consensus. 

On an annual basis Swiss Producer and Import Prices remained flat, following a 0.2% rise and against forecasts of a 0.3% slide. 

USD/CHF is back to Chf0.9100 after it challenged Chf0.9130 last week (also Sep 25 high). Below Chf0.9100 support comes at Chf0.9080 (Oct 4 highs) and Chf0.9020/10 (Oct 8 lows). Above Chf0.9130 resistance comes at Chf0.9230 (Sep 16 lows). 

YEN 

The yen rose for the first time in five days against the dollar as U.S. lawmakers struggled to reach an accord on raising the nation’s debt limit and restoring government operations, spurring demand for safer assets. 

USD/JPY retreats from Friday’s highs on Y98.50 with initial support comes at Y98.00 (23.6% Fibo of the rally from Monday’s lows). Below correction may widen to Y97.50 (50%) and Y96.50 (Monday’s lows). Above Y98.50 resistance is placed at Y99.00/10 (Aug 23 and Sep 26 highs). 

Source of information>>

More information>>