The US dollar begins the fourth quarter on a mixed note.  The dollar-bloc currencies are trading higher, helped by stabilizing commodity prices and the slightly better than expected Chinese manufacturing PMI (49.8 vs 49.6 expected after 49.7 in August).  Australia’s manufacturing PMI also ticked up to 52.1 from 51.7. Sentiment toward the dollar-bloc has improved. Technically, it looks like the Antipodeans and the Canadian dollar put in near-term bottoms.

The better than expected July GDP figures from Canada yesterday helped solidify ideas that the central bank’s mini-easing cycle (two rates cuts this year) is over. The US dollar set new 11-year highs near CAD1.3460 earlier this week and now is pushing lower.  Initial support is seen near CAD1.3235 but look for CAD1.3180. A break of this latter area could spur a re-test on the CAD1.30 area.  

The Australian dollar’s near-term technical tone is also improving. A potential double bottom near $0.6940 suggests potential toward $0.7150. The New Zealand dollar needs to overcome the $0.6450 area to raise prospects for a move toward $0.6580.   

Sterling’s nine-day declining streak may be snapped today. The manufacturing PMI came in at 51.5 while this is slightly lower than the August reading (51.6), it was better than the 51.3 consensus forecast.  In this nine-day drop, sterling has fallen 5.2 cents to just below $1.5110.  Sterling suffered another nine-day decline in late-August through early-September. Then sterling lost about 6.5 cents to $1.5165. 

To be sure, the technical tone is still fragile. Sterling recorded an outside down day yesterday. While there has not been any follow through selling today, upside momentum, a snap-back, has yet to materialize. A narrow range has prevailed, and sterling struggles near $1.5150.  To lift the tone, a move above the $1.5200-15 area is needed. 

Japan’s Tankan was soft, but not sufficiently so to boost speculation that the BOJ could ease as early as next week.  Sentiment among the large manufacturers declined (12 from 15) while the large non-manufacturers reported unexpected improvement (25 from 23).  Sentiment among the small producers held up better than expected.  Importantly, capex plans were lifted to 10.9% from 9.3%. The consensus warned of a decline to 8.7%.    Separately, we note that the manufacturing PMI edged to 51.0 from the 50.9 flash reading.  

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