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US FX Market Open – Friday, April 7, 2017: U.S yields find a footing after U.S Syria strike

Posted by Marge Maresca on Apr 7, 2017 7:33:05 AM

syria.png

Overnight Events

• Dollar mixed early Europe as yields find a footing after U.S Syria strike
• USD/JPY -0.14%, EUR/USD -0.05%, GBP/USD -0.3%
• DXY +0.1%, DAX -0.45%, Brent +1.42%, Iron -7.0%
• EUR/CZK Steadies in the 26.600s following Thrs floor exit
• UST 10s yields dip below 2.30 but then recovers to 2.33
• Hamada: Japan should push back on US attack on yen policy - Rtrs
• CH SNB reserves jump CHF 15 bln in March
• CH Mar Jobless Rate u/adj 3.4% vs 3.6% prev
• CH Mar Adj Jobless Rate 3.3% vs 3.3% prev
• DE Feb Ind. Output 2.2% m/m vs rvsd 2.2% prev, -0.1% exp
• DE Feb Trade Bal. E21.0 bln vs rvsd 18.9 bln prev, 18.4 bln exp
• UK Mar Halifax Hse Prices 3.8% 3m/y/y vs 5.1% prev, 3.9% exp
• UK Feb Ind. Output 2.8% y/y vs rvsd 3.3% prev, 3.7% exp
• UK Feb Mfg Output 3.3% y/y vs rvsd 2.6% prev, 3.9% exp
• UK Feb Trade Bal. –GBP 12.46 bln vs rvsd -11.97 bln prev, -10.9 bln exp
• US launches over 50 Tomahawk missiles against Syria government
• Currency misalignment gains stature in Trump trade plans – Rtrs
• Trump dinner with Xi- to develop very good relationship over  time – Rtrs
• German FinMin Schaeuble sees IMF sticking with Greece program – Rtrs
• Reuters poll – AUD, NZD to take slow road lower
• US-Jpn talks to prevent China acquiring Westinghouse according to US official

Currency Summaries

EUR/USD  
• 1.0660 high in Asia after US air strike on Syria, off again since
• 1.0630 low early London, Thursday’s 1.0629 low holds for now
• US yield recovery weighs - 10yr 2.33 vs sub 2.30 dip to 2.2910 low o/n
• Support at the 100DMA 1.0624, daily cloud 1.0612-1.0585 underpins
• EUR 3bln 1.0600 expiry for NY cut could draw, related bids below
• Options pricing just 6.5 vol or 50 pips break even for NFP – low end of range

EUR/CHF
• Feb/Mar base in 1.0630s: Mar struggled to post bull mth after 1.0825 fail
• Shallow daily bear trend holding but currently bumping along top of cloud
• Added support from the 55DMA, at 1.0690: Chart: http://reut.rs/2ofNy2X
• Key levels below at 1.0673 cloud base and 1.0669 Apr 4 low
• Bias down but would risk long at mkt for 1.0755 with 1.0665 stop/reverse
• Swiss FX reserves jump points to active SNB: Up CHF 15 bln in March
• Light data diary next week with just Mar producer prices

GBP/USD
• GBP/USD has fallen to 1.2414 on the back of disappointing UK economic data
• UK Feb industrial, mfg & construction output numbers all weaker than expected
• UK Feb goods trade deficit bigger than expected too. 1.2447 was pre-data low
• 1.2400 is support level (1.2403 = Mar 30 low; 1.2397 = Mar 29 low after A50 trigger)
• EUR/GBP has risen to test 0.8468 (Thursday high) on the back of the soft UK data

USD/CAD
• USD/CAD threatened 1.3379 during European am after extending south from 1.3431
• 1.3379 was Wednesday’s low: 10DMA, 21DMA & 30DMA two-three pips below
• 1.3431 = Asia high on US/Syria news. WTI up to 1mth high just shy of 53 bucks/barrel
 
AUD/USD     
• AUD/USD is consolidating losses influenced by Friday’s 7% fall in Dalian iron ore
• 0.7517 was 4wk low in Asia (0.7513 = 100DMA). Bids tipped pre-0.7500

NZD/USD
• NZD/USD has traded an 18 pip range thus far Friday, 0.6961-0.6979
• US jobs report at 8.30am ET should exert fresh market-moving influence
• AUD/NZD plumbed a 1mth low of 1.0782 early Europe as softer commodities hurt AUD

Today’s events

Option Expirations – (Source:ThompsonReuters)

An expiring FX option heading into the New York Cut, if close enough to the strike price, can act as a magnet for selling/buying.  If the option is large, it can generate enough trading to move the market.  

• Minimal event risk priced for NFP,  low end of previous pre NFP scale
• Risk aversion saw further vol gains in Asia after US/Syria missile attack
• French election risk cover has taken a lot of liquidity from related markets
• 1mth EUR/USD and EUR/JPY vols gain another 1.0 since yesterday
• USD/JPY huge downside buyer – 4mth 107 paid 1.1bln at 10.4

Economic Data (GMT) - (Source:ThompsonReuters)

• 13:30  Nonfarm Payrolls Mar mkt +180k, prev +235k
• 13:30  CA Mar Unemployment rate mkt 6.7%, 6.6% prev
• 13:30  Private Nonfarm Payrolls Mar mkt +175k, prev +227k
• 13:30  Manufacturing Payrolls Mar mkt +15k, prev +28k
• 13:30  Unemployment Rate Mar mkt 4.7%, prev 4.7%
• 13:30  Average Hourly Earnings Mar mkt +0.2% m/m, prev +0.2%
• 13:30  Workweek Hours Mar mkt 34.4, prev 34.4
• 15:00  Wholesale Inventories Feb mkt +0.4% m/m, prev +0.4%
• 15:00  Wholesale Sales Feb +0.2% m/m prev -0.1%
• 18:00  Baker-Hughes Rig Count wkly prev 662; +10 w/w, +300 y/y
• 20:00  Consumer Credit Feb mkt $13.90 bln, prev $8.79 bln

Events, Other Releases (GMT) - (Source:ThompsonReuters)

• 16:45  FedTrade 30-yr Fannie Mae/Freddie Mac secs max $1.275 bln
• 17:15  FRB N.York's Dudley financial regs and potential reform;  NY

 

Topics: US FX Market Open

 

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