FX Market Update 17-4

Market Briefs
* US Treasury – No major trading partner met all three thresholds for enhanced
engagement on currency manipulation in ’16 under ’88 law, China, Japan,
SoKorea, Taiwan, Germany and Switzerland to remain on monitoring list.
* Trump – Why would I call China a currency manipulator when they are working
with us on the North Korean problem? – Twitter, Reuters.
* Asian economies escape manipulator tag but expect more pressure on trade
– Reuters.
* CFTA IMM CTA data – USD net longs rebound from five-week low, JPY net shorts
lowest since Dec, 34.7k contracts, EUR shorts up to 18.9k, GBP shorts up.
* PBOC advisor Fan Gang – Eyes potential cuts to RRR – Yicai magazine.
* China Q1 GDP +6.9% y/y, +6.8% eyed, growth best since Q3 ’15, consumption
accounted for 77.2% of growth, 3.34 mln new urban jobs created, net exports
accounted for 4.5% of GDP, capital formation 18.3%.
* China Q1 fixed asset investment +9.2% y/y, +8.8% eyed, priv-sector +7.7%.
* China Q1 property investment Q4 ’16 +10.0%.
* China March industrial output +7.6% y/y, +6.3% eyed, best since December.
* China March retail sales +10.9% y/y, +9.6% eyed.
* South Korea – North Korea attempts but fails to launch missile – Reuters.
* US NSA McMaster – All options on table for North Korea – Reuters.
* French presidential race tightens further as vote looms – Reuters.

Looking Ahead – Economic Data (GMT)
12:30    US Apr Empire State manufacturing index, 15.0 eyed; last 16.4.
14:00    US Apr NAHB housing market index, 70.0 eyed; last 71.0.

Looking Ahead – Events, Auctions (GMT)
Australia-New Zealand, Hong Kong, most of Europe closed for Easter Monday.
06:15 BoJ Gov Kuroda speaks at Tokyo trust association annual meeting.
20:00 US Treasury int’l securities April flow data (TIC report).
See North American Open for a detailed listing of US/NorAm releases, events.

Currency Summaries
JPY

•    USD/JPY down a leg late Tokyo Friday, back through 109.00 to 108.85.
•    New York took it down another leg to 108.55, all in very thin trading.
•    Early Asia pop up to 108.97 before push down later 108.13, still thin.
•    Some demand at Tokyo fix but sated fast, importer bargain hunting.
•    As this demand waned, so too did USD/JPY, bias for lower.
•    Bids pre-presumed 108.00 option barriers, more to 107.00, at 105.00
•    107.86 Fibo 61.8% retracement of Nov 9-Dec 15 101.19-118.66 move.
•    EUR/JPY off hard too, 115.57 early high through 115.00 to 114.86.
•    On way towards full retracement of Oct 21-Dec 15 112.62-124.07 move.
•    GBP/JPY 136.42 to 135.54, 50% of 122.72-148.44 135.58, Fibo 61.8% 132.55.
•    AUD/JPY 83.23 to 82.87, on hold around ascending 200-DMA at 82.12.
•    NZD/JPY in 75.93-76.18 range, little interest, few flows.

EUR
•    EUR/USD quiet, in tight 1.0603-26 range, market thin, many sidelined.
•    USD/JPY broadly offered, EUR/USD supportive, EUR/JPY sales not though.
•    Market still heavy above 1.0625 100-DMA, daily tenkan 1.0629.
•    1.0584-1.0613 daily Ichi cloud supportive.
•    Option expiries tom – 1.0600 E3.4 bln, 1.0650 2.4 bln, 1.0700 1.6 bln.

GBP
•    Cable quiet in thin trade, 1.2527-45, better bid on USD weakness.
•    Essentially in range between 1.2422 100-DMA, 1.2626 200-DMA.
•    EUR/GBP heavy but few actual trades, Asia range 0.8461-71.
•    Ascending 55-WMA at 0.8430, key support.

CHF
•    USD/CHF quiet, few flows, Asia range 1.0041-55, Tokyo Friday 1.0047-59.
•    EUR/CHF steady, Asia 1.0664-68, down still path of least resistance?

AUD
•    AUD/USD better bid, Asia 0.7573-94, market thin on holidays.
•    Heavy pre-0.7600, 0.7606 Ichi cloud top, kijun 0.7612, 55-DMA 0.7624.
•    AUD326 mln option expiries today at 0.7540 strike, 1.3 bln 0.7550-55 tom.
•    Good China data, lower US yields supportive.

NZD
•    NZD/USD bid in thin Asia trade, 0.7001 to 0.7033.
•    Last push above 0.7000 capped at 0.7090 on March 21, 100-DMA 0.7079.
•    AUD/NZD heavy in thin trading, 1.0793-1.0807, Friday range 1.0809-35.

Equities, Other Asset Markets
•    Nikkei off early to 18,224 before bouncing later to 18,350.
•    At 18,333, index off 1 point on day, risk still not on despite bounce.
•    AXJ markets that are open off too – Shanghai 1.3%, STI 0.8%, TWI 0.2%.
•    KOSPI outlier again, +0.4% despite Korean peninsula tensions.
•    US Treasury 10s indicated 2.205%, 2s 1.183%, JGB 10s 0.007%, 2s -0.220%.

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