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Daily FX View: JPY Up On Risk Aversion; AUD Manages To Rally

EUR continues to underperform as strategists/economists forecasts ECB easing.

• Key risk today from U.S. mfg. ISM, Oct., est. 55.0, 10:00

• JPY outperforms 20 peers as equities generally decline
• USD/JPY lower in tightening range (now ~97-99); 5th consecutive week pricing both sides of 98
• Support: ~97 late-Aug., Oct. 25 lows; 96.57 Oct. 8 low
• Resistance: 98.68 Oct. 30 high; 99.17 Oct. 17 high

• AUD outperforms 21 peers, paring week's losses, helped by China PMI 50.9 vs est. 50.7, prior 50.2
• On daily chart, AUD/USD downtrend from Oct. 23 stalling as FX tests uptrend from Aug.

• EUR continues to weaken, down vs 19 peers overnight
• EUR/USD downtrend continues, may be start of longer-term decline
• Congested support below 1.35: 1.3473 Oct. 16 low; 1.3462 Sept. 25 low; 1.3452 Aug. 20 high

• GBP lower vs 15 peers; weighed partly by Oct. mfg. PMI 56.0 vs est. 56.4, prior revised to 56.3 from 56.7
• On daily chart, GBP/USD resuming downtrend after two doji days
• Support 1.5894 Oct. 16 low, 1.5752 June 17 high
• On weekly chart, cable overbought, turning lower
• MACD, RSI down from highs similar to 2011 peaks
• Stochastics slipping from high since 2010

• CAD outperforms 22 peers
• USD/CAD trending lower on daily chart
• Support 1.0271 Sept. 24, Oct. 22 low; 1.0182 Sept. 19 low
• Move lower supported by MACD, RSI, Stochs
• MACD falling; RSI down from high similar to Sept. peak; stochs at high around July peak

• USD/MXN pressing higher on daily chart
• Risks today: mfg. idx., Oct., 14:00, non-mfg. idx., Oct., 14:00
• FX working through resistance at 13.0380 Oct. 1 low, 13.0485 Oct. 24; subsequent resistance 13.3440 Oct. 3 high
• Move higher supported by MACD, stochastics crossing higher, RSI trending upward

• USD/BRL set to rally further after sharp Thu. rally
• Risks today: ind. prod., Sept., est. 1.3%m/m, 07:00; PMI mfg., Oct., 08:00; trade bal., Oct., est. $1200m, 13:00
• Upside targets: 2.2640 Sept. 27 high; 2.4549 Aug. 21 high
• Weekly upside momentum building
• MACD differential moderating from low since 2009
• RSI rallying from low since Apr.
• Stochastics up from low around Mar. trough

• NOTE: TJ Marta is an FX strategist who writes for First Word. The observations he makes are his own.