----------- -----------

Forex trading plan for September 2

The market’s risk sentiment remains unstable. Worse than expected manufacturing data from China on Tuesday morning once again provoked decline in stocks increasing demand for safe-haven euro and yen. US ISM manufacturing PMI came out lower than expected (51.1 vs. 52.6 forecast). This is the lowest reading since August 2013.

At the beginning of this week, traders were once again considering the possibility of the Federal Reserve’s rate hike. Note that the expectations of the market are very data-dependent. Watch the upcoming releases: weaker figures will hurt USD. On Wednesday, traders will be watching ADP non-farm employment change (12:15 GMT): it is believed that this labor market indicator provides hints for more important non-farm payrolls (NFP) due on Friday.

EUR/USD rose, but failed to fix above the 200-day MA. Support is at 1.1200, 1.1150 and 1.1100 (key level) ahead of 1.1017. Resistance is at 1.1300, 1.1330 and 1.1380/1.1400. Advance of the single currency will likely be limited ahead of the European Central Bank’s meeting on Thursday.

GBP/USD is trying to hold above 1.5300 after it closed below the 200-day MA on Monday (1.5365). This level is now acting as resistance together with 1.5410/00. British manufacturing PMI was slightly lower than expected. Britain will release construction PMI at 08:30 GMT. Support is 1.5245, 1.5200 and 1.5170.

USD/JPY reversed down from 121.50 and slid to support at 119.60. Further support is at 118.90 and 118.30. As the uncertainty about the Fed’s policy remains, advance of the pair will be limited.

AUD/USD was testing levels below 0.7100. The Reserve Bank of Australia left the benchmark interest rate unchanged at 2%. On Wednesday Australia will release Q2 GDP data. The nation’s economic growth is expected to slow down from 0.9% to 0.4%. Support is at 0.7000 (psychological level), 0.6989 (April 28 2009 low) and 0.7200. Resistance is at 0.7100 and 0.7150.

EUR/JPY Fundamental Analysis – September 2, 2015 - Forecast

The EUR/JPY added 16 points as the euro gained on the weak US dollar and better than expected Chinese PMI data.  China's official PMI, released earlier in the day, slipped to 49.7 in August - the weakest level since August 2012 - down from 50 in July and in line with expectations. This is the first time the official PMI has fallen below 50 in six months, according to Nomura.

The official PMI is skewed towards state-owned enterprises and large companies, while the Caixin PMI focuses more on small and medium-sized firms.

With investors gripped by fear the global economy could be tripped by slowdown in China, even rises in U.S. debt yields rise on Monday following Fischer's comments and spike in oil prices did not provide the dollar much of a boost.

The euro and Japanese yen posted monthly gains against the dollar on Monday as both currencies benefited from a global stock-market panic and concerns that the Federal Reserve might wait until the end of the year — or longer — to raise interest rates.

Some analysts were ready to brand the euro a “safe haven” currency after its performance against the dollar during last week’s global stock-market selloff. But Matt Weller, senior technical analyst at Forex.com, explained that the shared currency’s gains were the result of how the market was positioned going into the selloff.

AUD/USD Fundamental Analysis – September 2, 2015 - Forecast

The AUD/USD jumped 18 points after Chinese data did a bit better than expected and the US dollar fell. The pair is trading at 95.58 as traders are unsure of what the Fed will do.  The Aussie is trading at 0.7131.

Australia’s dollar held losses near a six-year low versus the greenback after a gauge of Chinese factory activity contracted.

The Aussie dropped versus its major peers before the Reserve Bank of Australia decides policy later Tuesday, as traders watch for comments from Glenn Stevens on the exchange rate. The RBA governor refrained last month from indicating the currency was overvalued for the first time in more than a year as policy makers held the benchmark interest rate at a record-low 2 percent. Australia’s dollar dropped the most since May last week as a stock rout in China increased concerns about growth.

The surplus on Australian goods and services contracted, which would detract 0.6 percentage points from growth in the June quarter measure of gross domestic product (GDP).

Meanwhile, approvals for the construction of new homes rose 4.2 per cent in July, which was better than market expectations of a three per cent rise.

And Chinese manufacturing activity fell into contraction in August, with the official index slumping to a three-year low.

NZD/USD Fundamental Analysis – September 2, 2015 - Forecast

The NZD/USD soared 38 points to trade at 0.6378 after Chinese data printed a bit better than forecast and the dollar eased. The New Zealand dollar fell as investors sell higher yielding currencies in anticipation of interest rate hikes in the US.

Investors are selling currencies such as the kiwi as they unwind so called 'carry trades' where they sell a lower-yielding currency to buy riskier, higher-yielding ones for better returns.

The US dollar strengthened as traders position themselves for a potential interest rate hike in the US next month.

"Certainly at the moment, the higher yielders are being sold and the low yielders are being bought," said OMF senior dealer, foreign exchange, Stuart Ive.

"That's just the unwinding of the carry trade as the market increasingly expects the US to raise rates in the near future; investors are repositioning themselves waiting for that to take place."

Activity in China's manufacturing sector slowed markedly in August, twin surveys showed on Tuesday, the latest sign that the world's second largest economy is fast losing momentum.

The final Caixin/Markit manufacturing purchasing managers' index (PMI) slipped to 47.3 in August, the lowest reading since March 2009 and down from 47.8 in July. The reading, however, was a touch better than the flash reading of 47.1.

A print above 50 indicates an expansion in activity while one below points to a contraction.

USD/JPY Fundamental Analysis – September 2, 2015 - Forecast

The USD/JPY dipped 47 points to trade at 120.76 as the greenback eased. The dollar slipped against the yen and euro on fears that China´s economic malaise could drag on global growth, reversing a rally that had been fuelled by hopes of a September US rate rise.

Speaking at the weekend on the sidelines of the Fed´s central banking symposium in Jackson Hole, Federal Reserve vice chairman Stanley Fischer acknowledged that the turmoil rooted in China had raised some questions about the economic situation, even if US data remains good.

 "The change in the circumstances which began with the Chinese devaluation (of the yuan) is relatively new and we are still watching how it unfolds. So I wouldn´t want to go ahead and decide right now (on a September rise)," he said in a CNBC interview. "We´ve got a little over two weeks before we make the decision and we´ve got time to wait and see the incoming data and see what exactly, what is going on now in the economy."

 Fischer´s remarks were taken as a sign that the US central bank was still considering a rate rise as early as next month.

EUR/USD Fundamental Analysis – September 2, 2015 - Forecast

The EUR/USD added 43 points after strong German manufacturing PMI numbers today. The greenback continued to tumble as traders are unsure of what to make of the Federal Reserve. The euro is trading at 1.1256. Rising output and orders helped Germany's manufacturing sector expand at its fastest pace in sixteen months in August, adding to signs that exports may help fuel growth in Europe's largest economy in the third quarter.

Markit's purchasing managers' index (PMI) for manufacturing, which makes up about one fifth of the German economy, rose to 53.3 from 51.8 in July.

That was above the 50 line that separates growth from contraction and slightly higher than a preliminary estimate of 53.2.

"Survey data for the third quarter so far suggest that Germany's goods-producing sector is in better shape than last quarter," said a Markit economist.

The seasonally adjusted unemployment rate for the 19-nation region dropped to 10.9 percent in July from 11.1 percent in June, Eurostat, the European Union’s statistics office in Luxembourg, said on Tuesday. That’s the lowest since February 2012 and below the median forecast of 11.1 percent in a Bloomberg survey of economists.

The data comes days before European Central Bank policy makers meet in

Frankfurt on Thursday, where they’ll have to grapple with the impact of China’s economic slowdown and downside risks to inflation. In June, the ECB predicted euro-area growth of 1.5 percent this year and 1.9 percent in 2016.