FX Market Update 15-2

Market Briefs 

  • EUR/USD -0.2%, USD/JPY +0.2%, GBP/USD -0.2%, DXY +0.2%,
  • DAX +0.2%, Brent -0.4%, Gold -0.2%, Copper +0.3%
  • EZ Dec Eurostat Trade NSA 28.1bln vs prev 25.9bln. 22.8bln f/c
  • UK Dec earnings growth, +2.6% vs prev +2.8%. +2.8% f/c
  • UK Jan claimant count unemployment -42.4k vs prev -20.5k rvsd. +0.8k f/c
  • ONS says claimant count volatile due to rollout of universal credit system
  • Markit UK household finance index falls to 42.5, from 43.6
  • Swedish repo rate unchanged at -0.50%. Floden against extended FX intervention mandate
  • Riksbank’s Ingves – Swedish crown has not strengthened all that much since Dec
  • M&A: JP SoftBank has agreed to buy Fortress Investment for USD 3.3bln
  • Ex-BOJ Shirai: BOJ must raise yield target, slow bond buying – Rtrs
  • BOJ Gov Kuroda no plan to raise BOJ yield trgts just because global interest rates are rising – Rtrs

Looking Ahead – Economic Data (GMT)

  • 12:00  MBA Weekly Mortgage Application Indices
  • 13:30  Retail Sales (Jan) mkt +0.1% m/m, prev +0.6% m/m
  • 13:30  — Retail Sales ex-Autos (Jan) mkt +0.4% m/m, prev +0.2% m/m
  • 13:30  — Control Group Retail Sales (Jan) mkt +0.3% m/m, prev +0.2% m/m
  • 13:30  CPI (Jan) mkt +0.3% m/m, +2.4% y/y; prev +0.3% m/m, +2.1% y/y
  • 13:30  — CPI ex-Food and Energy (Jan) mkt +0.2% m/m, +2.2% y/y; prev +0.2% m/m, +2.2% y/y
  • 13:30  Real Average Weekly Earnings (Jan) mkt -0.2% m/m, prev +0.1% m/m
  • 13:30  Empire State Manufacturing (Feb) mkt 7.25, prev 6.50
  • 14:15  Industrial Production (Jan) mkt 0.0% m/m, prev +0.8% m/m
  • 14:15  — Factory Output (Jan) mkt +0.2% m/m, prev +0.2% m/m
  • 14:15  Capacity Utilization (Jan) mkt 75.5%, prev 75.5%
  • 15:00  Business Inventories (Dec) mkt +0.4% m/m, prev +0.7% m/m
  • 15:00  Atlanta Fed Business Inflation Expectations prev +2.0% y/y
  • 15:00  NAHB Housing Market Index (Feb) mkt 67, prev 67
  • 15:30  EIA Weekly Petroleum Status Report
  • 16:00  Cleveland Fed Median CPI (Jan) prev +0.2% m/m
  • n/a    Atlanta Fed GDPNow (Q1) prev 2.7% q/q AR
  • 21:00  TIC Data

Looking Ahead – Events, Other Releases (GMT)

  • 14:45  FedTrade operation 30-yr Fannie Mae/Freddie Mac (max $1.475 bn)
  • 15:00  Fed Chair Yellen delivers semiannual monetary policy report
  • 17:00  FRB Boston’s Rosengren at NYABE luncheon event; NY
  • 17:45  FRB Philadelphia’s Harker on the economic outlook; Philadelphia, PA
  • 00:15  FRB New York’s Dudley participates in moderated chat at predictions event; NY

Currency Summaries

EUR/USD

  • EUR/USD eases to new 1.0543 low under daily cloud base 1.0564
  • Very steady slow-paced fall should enhance the downtrend
  • EZ bond markets less stressed bar Greece, (yields up on delays)
  • US rate rise outstrips bunds weighing EUR/USD
  • All eyes to US retail sales and CPI for next move

USD/JPY

  • USD/JPY 114.29-60 in Europe. Quietly bid ahead US retail sales/CPI
  • Hawkish comments from Ex-BOJ Shirai help to cap USD/JPY
  • Shirai spoke of raising 10 year yield target, slower pace bond buying
  • Still 2 yr US/Japan rates widen to new extreme:
  • Heavy offers seen ahead 115.00. Stops likely over 55-DMA 115.03
  • Bids 113.80-114.00. Momentum favours bulls

USD/CHF

  • USD/CHF spurred higher by the general dollar rally ahead U.S CPI
  • DXY  +0.2%. 5th session of higher daily highs for USD/CHF at 1.0098
  • Close above Kijun at 1.0055 Tues. Trade wholly above there today
  • EUR/CHF 4th day of lower lows, closer to last week’s 1.0632 base
  • 1.0657-1.0640 in the European AM

GBP/USD

  • GBP/USD fell to 1.2420 (8-day low) on sub-f/c UK wage growth data at 4.30am ET
  • 1.2445 was pre-UK data low (1.2443 was Tuesday’s low)
  • EUR/GBP rose to threaten 0.85 on softer than expected UK wage growth
  • 0.8467 was pre-UK data low. 0.8455 = 200DMA (threatened earlier this week)

USD/CAD

  • USD/CAD offers are tipped at 1.31: 1.3097 was Asia high, 1.3107 = Tuesday top
  • 1.3066 (European am low) & 1.3057 (pullback low from 1.3107) supports
  • Raft of North American data + more Yellen testimony in pipeline
  • Canada Dec mfg sales will be revealed at 8.30am ET, +0.2% f/c vs +1.5% in Nov

AUD/USD

  • AUD/USD extended north to an intra-day high of 0.7687 during the European am
  • Fresh offers are touted ahead of 0.77: pre-figure offers capped Tuesday gains
  • 0.77 break risk will increase if Australian jobs data comes in better than expected
  • Employment f/c +10k, jobless rate f/c 5.8%. Data due 7.30pm ET

NZD/USD

  • NZD/USD pushed its recovery envelope from 0.7135 to 0.7188 during European  am
  • 0.7135 was 25-day low Tuesday after greenback rose on Yellen testimony
  • AUD/NZD scaled a 16wk peak of 1.0708 in Asia (1.0702 was Tuesday’s high)

FX OPTIONS

  • Yellen risk pared, risk on and low realised all weigh on vols
  • USD/JPY 1mth lowest since Oct and down 2.2 since Friday
  • EUR/USD 1mth demand from last weeks low since Nov at 7.7
  • 3mth attracts dip buyers – French election continues to underpin
  • 1Mmth GBP/USD tests pre xmas and post US election low 9.2
  • AUD/USD vols 2yr lows but losses slowing.  0.7700 barriers eyed
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