The USD has been the only currency for forex trader to turn to in more than a year, as major economies of the world kept weakening, which sent their currencies down. The US economy was holding up well until a few months ago, which left the USD as the only major currency to buy. But, the US economy has weakened in recent months and the ISM manufacturing report last Tuesday showed that this sector fell deeper in contraction, increasing fears that US manufacturing might end up like German manufacturing, which is in deep recession.

The slowdown in US ISM non-manufacturing PMI on Friday added further to thos fears and the USD had one of the worst weeks in quite some time. Although, today the USD seems a bit better off. The Buck gained against most major currencies during the Asian session and early European session apart form safe havens. We heard rumours early in the Asian session that China is not willing to discuss all issues that the US has brought forward and wants a narrower deal, which hurt the sentiment and sent risk currencies lower, helping the Buck make some gains.

The European Session

• German Factory Orders – Factory orders have been mostly negative in Germany for more than a year. The factory orders report released last month from Germany showed a big decline of 2.7% for July. That was revised higher to -2.1% today but that’s still a major decline in orders. Today’s report was expected to come in negative again for last month and it did so, but the decline of 0.6% for August was bigger than expectations of -0.4%, which means that the slippery slope continues for Germany.
• Eurozone Sentix Investor Confidence – Eurozone Sentix investor confidence was released a while ago this morning. It was expected to deteriorate a bit to -12.0 points, but it missed expectations, coming at -16.8 points. This indicator improved in September,from -13.7 points to -11.0, which was a positive sign after several months on a declining trend. So, the weakening trend continues for the Euroxone economy.
• UK PM Johnson Spokeswoman Speaking on Brexit – The spokesperson of Boris Johnson appeared earlier today, saying that the first step is to sit down with EU for detailed discussion. When asked if Friday is the deadline says, she said that the Prime Minister has been clear on the time pressures. They are not seeking a time limited backstop.
• UK BRC Retail Sales Monitor YoY – The retail sales monitor has been coming in negative in three out of the last four months. Today’s report was expected to be negative again, showing a 0.8% decline YoY for September. But, it missed expectations, showing a larger decline of 1.7%.

The US Session

• Johnson is Clear to Pull UK Out at the End of the Month – There was a petition to force Boris Johnson to extend Brexit again beyond October 31 the the deadline is. Today was the court decision for this petition. But, the court ruled that BoJo is not legally bound to seek another Brexit extension at the end of the month if no deal is reached by then.
• White House Memo With Topics of Discussion on US-China Trade Talks – The White House press secretary confirmed that US-China talks will resume on Thursday with Vice Premier Liu He to meet with Lighthizer and Mnuchin. They released  a memo with six key points for the US to be discussed at the meeting; Forced technology transfer, Intellectual property rights, Services, Non-tariff barriers, Agriculture, Enforcement.
• Kashkari Happy FED Is Cutting Rates – FED member Kashkari commented a while ago, saying that the economy faces more risks and he is happy the FED is cutting interest rates. But, he doesn’t  know yet how much more the Fed should cut rates.

Trades in Sight

Bearish USD/JPY

• The trend turned bearish last week
• The sentiment turned negative overnight
• The 20 SMA is providing resistance on the H4 chart

The 20 SMA has turned into resistance today

USD/JPY turned bearish last week after the US ISM manufacturing fell deeper in recession. USD/JPY lost around 200 pips and it is still near the lows. But it has pulled off a retrace today after opening with a bearish gap last night, as China said to want a narrower trade deal, which might leave out some key issues for the US. Although, the retrace seems almost complete now and the 20 SMA (grey) is providing resistance at the top. We are already short on this pair from last week.

In Conclusion

The USD was gaining during the European session today, but things have reversed a bit since I started writing this forex signals brief. The USD is retreating now against risk currencies, as well as against safe havens. So, the USD is still not out of the woods yet.