USD Dips to New 8-Month Low, Risk-off as Chinese Banks Cancel Debt | IFCM UAE
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USD Dips to New 8-Month Low, Risk-off as Chinese Banks Cancel Debt - 23.10.2013

US employment report showed that September Non-Farm Payrolls were surprisingly at 148K, way below expectations of 182K while the August NFP was revised upward from 169K to 193K. Unemployment rate dropped slightly from 7.3% in August to 7.2% in September, while since June the rate dropped by 0.4%


US Jobless Rate and Employment


Following the unexpectedly weaker Non-Farm Payrolls the greenback was losing broadly against its major peers with the US dollar index falling to more than 8-month fresh lows at 79.10 approaching some major support levels around 79.00. Moreover, the AUDUSD jumped yesterday to new peaks at 0.9750 as risk appetite remained strong due to asset tapering moving further in 2014. The pair was further supported today by Australian advancing more than projected CPI data, to 1.2% in the 3rd quarter from 0.4% in the previous quarter.


However, in the most recent trading the Aussie sank suddenly and heavily against the greenback due to China’s biggest banks, writing off bad debt in the first half of 2013 amounted to 22.1 ($3.65B) billion yuan, up from 7.65 billion yuan ($1.26B) one year earlier. The latter spread risk averse in financial markets and induced riskier currencies to retreat, thus AUDUSD bottomed at 0.9642.


Elsewhere, the USDJPY has been under heavy selling pressure earlier today as the traders were favoring safer assets amid top Chinese banks tripled their bad debt write-off in the first half. In addition to that, recent US shutdown coupled by weak employment report and short term fiscal deal increases speculation that US growth would be well below expectations spreading uncertainty. Thus the pair declined to support at 97.22 beginning a new downside structure heading towards its 3-month low at 96.58.


USDJPY
USD Dips to New 8-Month Low, Risk-off as Chinese Banks Cancel Debt


Finally, the Swiss franc also strengthened as risk averse triggered with the USDCHF falling to almost a new 8-month low at 0.8938. More interestingly the AUDJPY dipped suddenly by 1.95% from 95.62 to 93.75, nonetheless in our opinion the uptrend remains valid with recent fall providing a nice long repositioning opportunity. Looking ahead, eyes are focusing on BOE minutes of Oct. 10th meeting and later on watching the Bank of Canada Rate statement.
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