FX Market Brief 11-1

Market Briefs 

  • USD/JPY +0.45%, EUR/USD -0.3%, GBP/USD -0.4%
  • DXY +0.27%, DAX +0.3%, Brent _1.0%, Iron +3.62%, Gold +0.01%
  • 1.2091 = fresh 11wk low for cable after 1.2100 option barrier erased
  • France needs immigration quotas, presidential election frontrunner Fillon said on Wed
  • UK Nov Ind. Output +2.0% y/y vs rvsd -0.9% prev, +0.6% exp
  • UK Nov Mfg Output +1.2% y/y vs rvsd -0.5% prev, +0.4% exp]
  • UK Nov Trade Bal. Non-EU –GBP3.577 bln vs rvsd -2.116 prev, -3.0 exp
  • UK Nov Trade Bal. –GBP12.16 bln vs rvsd -9.885 bln prev, -11.2 bln exp
  • DoubleLine’s Gundlach – Trouble for equity mks if Tsy 10 yield  hits 3% – Rtrs
  • Senior BoJ off’l – Central banks have considerable impact on yields – Rtrs
  • Japan end-Dec foreign reserves $1.2169 trln, end-Nov $1.2193 trln
  • ANZ prices Y114 bln 7/10-year samurais, MUFJ and Mizuho leads
  • Banks forced to cover tracks of China’s FX regulator – Rtrs
  • France Pres-candidate Macron – Euro may not exist in ten years – Rtrs

Looking Ahead – Economic Data (GMT)

  • 12:00  MBA Weekly Mortgage Application Indices
  • 15:00  Atlanta Fed Business Infl. Expectations Jan prev +2.1% y/y
  • 15:30  EIA Weekly Petroleum Status Report

Looking Ahead – Events, Other Releases (GMT)

  • 14:15 BoE’s Carney to talks to Tst Select Committee
  • 16:00 Pres. Elect Trump Press Call
  • 18:00  Treasury auctions $20 bn reopened 10-year notes

Currency Summaries

EUR/USD 

  • Dollar in demand ahead Trump press conference at 16GMT
  • EUR/USD eases through European session to reach 1.0516
  • Opened 1.0550. High 1.0567. Jan 9 low (post NFP) 1.0511
  • EUR 1.5bln 1.0550 expiries. EUR 700mln @ 1.0500
  • No US data of note until PPI and retail sales Friday
  • Barrage Fed speak Jan 11/12 incl Yellen starts with Dudley 16.20GMT

USD/JPY 

  • USD/JPY envelope pushed to 116.46 peak from 115.67 low
  • Earlier talk was that there are stops clustered above 116.35
  • Those stops were mixed in with offers so reaction was muted
  • Japanese importers need to buy USD/JPY, exporters don’t as fully hedged
  • Natural demand for USD/JPY but technical outlook mixed
  • Recent 118.60/67 double top weighs, but failing to get much below 115.08
  • 115.08 – 61.8% retrace of 112.87-118.66 rise above 115.00 barriers

CHF

  • EUR/CHF beginning to turn over: Tech warning given Tuesday
  • Doji star last session and potential for the same today
  • All quiet on the Swiss fundamental front: Market waiting for Trump
  • Cross plays 1.0721-1.0737 and trades back on its 1.0730 open into NY
  • USD/CHF reflecting broader USD gains and reaches 1.0203 recovery high

GBP/USD

  • GBP/USD threatened 1.2082 during Ldn am after erasing 1.2100 option barrier
  • 1.2082 = Oct 25 base, low since GBP flash crashed (1.1491 = 31yr low Oct 7)
  • Drop from 1.2165 to threaten 1.2082 spurred by higher than f/c UK trade deficit
  • 1.2165 = knee-jerk high after UK IP data beat alongside UK trade data 4.30am ET
  • EUR/GBP rose to 0.8706 intra-day high after the higher than f/c UK trade deficit
  • 0.8664 = ensuing low. 0.8658 was Asia low, base since Tuesday’s 0.8763 2mth top

USD/CAD

  • USD/CAD retreated to 1.3219 after threatening 1.3257 (Tuesday top) in Asia
  • 1.3272 (100DMA) & 1.33 resistance beyond 1.3257. Two yard 1.33 expiry Friday

AUD/USD  

  • AUD/USD threatened 0.74 during European am after vaulting 0.7385 (Tuesday top)
  • 0.7396 = 4wk peak, quarter-cent retreat ensued. 0.74 expiry for NY cut, A$328mn strike
  • Stops were recently tipped above 0.7405. Asia low was 0.7354

NZD/USD

  • NZD/USD Option-related selling mooted as factor in 32 pip retreat from 0.7023
  • 0.7023 = European am intra-day high. Near half-yard 0.7020 expiry for NY cut
  • Three-quarter yard 0.7040/65 expiries for NY cut too. 0.6971-0.7000 = Asia high

OPTIONS

  • Cost of Trump cover via O/n vols
  • O/n (next day) expiry vol premiums give break evens over Trump speech
  • O/n EUR/USD around 14.0 – a break even of 62 pips
  • O/n JPY 22.0/106 pips. AUD/USD by far the cheapest at 13.5/41 pips
  • USD/CAD is 12.0 or 66 pips and NZD/USD 15.0/44 pips
  • O/n Cable also gets BoE Gov’ Carney – 17.0 vol or 86 pips
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s