FX Market Update 21-3

Market Briefs

  • EUR/USD +0.5%, USD/JPY flat, GBP/USD +0.9%, DXY -0.5%
  • DAX +0.1%, CAC +0.3%, Brent +0.7%, Gold -0.1%, Copper -0.8%
  • Dollar index dips below 100, first time since early Feb
  • Euro briefly tops $1.08 after French presidential debate – Rtrs
  • Macron still odds-on to win French presidency
  • UK Feb CPI +2.3% y/y vs +2.1% f/c. Highest y/y rate since Sept 2013
  • UK Feb PPI core output 0.0% m/m, +2.4% y/y vs prev 0.5%/2.5% rvsd. 0.2%/2.5% f/c
  • UK Feb PSNB 1.083bln vs prev -11.72bln rvsd. 2.500bln f/c
  • UK Feb PSNCR 12.875bln vs prev -22.74bln rvsd
  • Swiss Feb Trade surplus narrows to 3.3bln vs rvsd 4.83bln
  • Swiss economy f/c to grow 1.6% in 2017 vs 1.8% prev f/c – SECO
  • Swiss govt sees 2017 inflation at 0.5% vs 0.0% prev f/c
  • Greece won’t last in euro zone in long-run – Bavarian finmin – Rtrs
  • JP Aso: G20 accept importance of free trade – Rtrs

Looking Ahead – Economic Data (GMT)

  • 12:30  Current Account (Q4) prev -$113.0 bn
  • 12:55  Redbook Same-Store Sales Index (weekly) prev +1.3% y/y

Looking Ahead – Events, Other Releases (GMT)

  • 13:45  FedTrade 15-year Fannie Mae / Freddie Mac (max $600 mn)
  • 16:00  FRB Kansas City’s George on the economy and monetary policy; Washington, DC
  • 21:00  FRB Dallas’ Kaplan in taped interview with Reuters
  • 22:00  FRB Cleveland’s Mester on outlook and communications; Richmond, VA
  • 01:45  FRB Boston’s Rosengren addresses Asia banking supervision; Bali, Indonesia

Currency Summaries
EUR/USD

  • Macron seen performing better than Le Pen in debate, lifts EUR
  • 1.0719 to 1.0770 in Asia, extends to 1.0804 early London
  • Weekly kin-sen 1.0820 (not above since early Nov), 1.0829 feb 2 hi
  • 38.2% Fibo May 2016-Feb 2017 1.1616-1.0340 decline is at 1.0827
  • Above targets 8 Dec 1.0875 hi and 200-DMA 1.0891

USD/JPY

  • USD/JPY collapsed to 112.26 in Asia, some say on Fin Min Aso’s remark
  • Expect strong supply between Mon’s 112.89 high & 113.00 psychological level
  • Today’s session high has been 112.86
  • Option market still wary of the downside in USD/JPY
  • EUR/JPY rose from 120.66 to 121.84 on French polls
  • Presidential debate polls shows Le Pen didn’t make up ground on Macron
  • Japanese names through Asia have been buyers of EUR/JPY on dips in past 2 days

EUR/CHF

  • EUR/CHF up to 1.0755, its highest since last Monday’s 1.0825 peak
  • 1.0755 is the 50% retracement of last week’s 1.0825-1.0684 drop
  • Gets boost fm EUR/USD’s rise above 1.08 after French presidential debate
  • Likely that the SNB are working a EUR/CHF 1.07 soft floor again
  • USD/CHF dropped from 0.9990-0.9849 in Europe. 1.0003 Asia high

GBP/USD

  • GBP/USD extended north to test 1.2471 after above f/c UK CPI at 5.30am ET
  • 1.2471 = Feb 28 high. 1.2426 = pre-data high vs 1.2341 late Asia/early Europe low
  • UK CPI beat fresh boost for UK rate hawks after last week’s hawkish BoE hold
  • EUR/GBP extended south to 0.8655 (13-day low) after higher than f/c UK CPI
  • 0.8695 was pre-data release low vs 0.8725 early Europe high

USD/CAD

  • USD/CAD tested 1.3324 (Asia low) after retreating from 1.3365 (late Asia high)
  • Bids expected near 1.3300 (1.3304 = Friday/Monday low; 1.3299 = 100DMA)
  • Canada Jan retail sales data due 8.30am ET, +1.1% f/c vs -0.5% in Dec

AUD/USD

  • AUD/USD has risen from 0.7699 to threaten mooted offers at 0.7740-50
  • 0.7699 = Asia low. 0.7741 was Feb high. 0.7748 was  Monday’s 4mth high
  • Large 0.7750 option expiry Wednesday, AUD 1bln strike

NZD/USD

  • NZD/USD is consolidating recent gains ahead of the Fonterra milk auction
  • GDT auction result expected circa 10am ET: WMP futures signalling price fall
  • 0.7033-0.7061 = intra-day range-to-date. 0.7028-0.7080 = Monday’s range

FX OPTIONS

  • EUR/USD vol recovery peaks – 1mth 6.3 to 7.3
  • USD/JPY vols also attract sellers at post FED recovery highs
  • 2.5bln 112.75-113.05 USD/JPY expiries Thursday proving a draw
  • Cable 1mth bounce from 14mth low at 7.9 to 8.5 falters
  • AUD/USD vols underpinned by intraday spot moves for now
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