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US FX Market Open –Friday, August 12, 2016: Majors steady while risk markets dip

Posted by Marge Maresca on Aug 12, 2016 7:56:51 AM

riskoff.png

Overnight Events

• USD/JPY +0.25%, GBP/USD +0.02%, EUR/USD +0.11%
• DXY -0.01%, DAX -0.3%, Brent -0.15%, Iron -0.10%
• DE Flash Q2 y/y GDP 3.1% vs tvsd 1.5% Q1, 1.5% exp
• DE Final Jul HICP 0.4% y/y vs 0.4% prev, 0.4% exp
• DE Final Jul CPI 0.4% y/y  vs 0.4% prev, 0.4% exp
• DE Jul W/sale Price Idx -1.4% y/y vs -1.5% prev
• UK Jun Construction O/P -2.2% y/y vs tvsd -1.6% prev, -2.7% exp
• EZ Flash Q2 GDP 1.6% y/y vs 1.7% prev, 1.6% exp
• EZ Jun Ind. Prod. 0.4% y/y vs rvsd 0.3% prev, 0.7% exp
• U.K still largest single investor in U.S-CBI
• AUD/USD headed above 0.80 as yield hunt intensifies-AFR
• Small German cooperative bank to charge wealthy clients to deposit-Rtrs
• China July industrial output +6.0 pct y/y (reuters poll +6.1 pct)
• China July retail sales +10.2 pct y/y (reuters poll +10.5 pct)
• China stats bureau- inv growth is slowing, but structure is improving

Currency Summaries

EUR/USD  
• 1.1132-59 range today. Daily cloud 1.1133-1.1264 – base support
• Wed's 1.1113 low, 21/30/200DMA's 1.1088/87/85 underpin
• Thurs high 1.1192, Expiries 1.1100 (544M), 1.1135 (221M), 1.1155-60 (300M)
• US Retail sales focal, not much priced - O/n vol 5.5 or 44 pips break even
• 1mth vol at 2yr low 6.8 – Aug lull/range bound spot impact

USD/JPY  
• 101.77-102.28 range. 685mln 102.00 expiry and 2.1bln 102.50 today
• 9/8 Aug highs 102.53/66, daily cloud base 102.88 resistance
• Thurs/Wed' lows 101.02/100.97. Last week low between 100.87-68 prop
• Initial sppt 21/100HMA 101.94/84, rising 200HMA 101.60, hrly cloud 101.73-30
• EUR/JPY 113.37-114.04 –scope to daily cloud base 114.41
 
EUR/CHF
• EUR/CHF Rebound out of 1.0856 early Europe low
• Push to 1.0881 found offers but activity slowing into NY
• Price taken marginally above daily cloud top but capped at 55DMA
• Equity markets flat to small down on the day and risk mkts weaker
• USD/CHF struggling to add to Thursday hammer signal
• Spot plays a tight 0.9738 to 0.9760 and trades back to 0.9755 open into NY
• Chart: http://reut.rs/2aG2vFR

GBP/USD  
• GBP/USD eased from 1.2979 to threaten 1.2936 during the European am
• 1.2936 was Thursday’s 1mth low. 1.30 (former support) is now resistance
• EUR/GBP topped out circa 0.8621 after rising from 0.8584 during European am
• 0.8621 = 1.16 GBP/EUR. 0.8624 was 5wk high Thursday. 0.8629 = July 3yr high

USD/CAD
• USD/CAD is holding sub-1.30 as it consolidates Thurs losses spurred by higher oil
• WTI $43.50/barrel at 6.15am ET after 178 cent gain Thurs
• 1.30 = former support level. 1.2965 = European am low

AUD/USD      
• AUD/USD met European am headwind pre-0.77 after firming from 0.7670
• 0.7670 = Asia low. 0.7705 was Asia high (before drop to 0.7670)
• AFR-‘ANZ sees $A headed above 0.80 as yield hunt intensifies’

NZD/USD
• NZD/USD revisited 0.7189 after easing from 0.7208 during the European am
• 0.7189 = Asia low. 0.7187 was low into RBNZ OCR verdict earlier this week

Today’s events

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.  

Option Expirations(Source:ThompsonReuters)

• Vols remain low in holiday thinned environment and range bound spot
• EUR/USD curve by 2 year lows. AUD/USD 1mth back at its own 2yr low
• USD/JPY big vol losses already since BoJ, downside scope limited now
• Cable Long gamma/GBP put positions cap vols and limit GBP decline
• US retail sales today but O/n options pricing minimal reaction in G10  

Chart - (Source:ThompsonReuters)

USD/JPY potential for consecutive Weekly Doji
Like EUR/USD, USD/JPY is struggling for firm direction and a tightening range is making calls tough. A 10-day range is highlighted by a flattened 10-DMA and flipped bull/bear Stochs in neutral territory. A thick daily cloud above, base at 102.88, is leaning on the price but again the cloud plays out sideways. Long-term averages are adding some weight and offering a bear bias to trades. Weeklies counter this with potential for consecutive Doji candles at the base of the recent 107.49-100.68 drop. Indecision here suggests limited near-term scope to the downside. On balance, a short-term sell around 102.80-90 but we would not be greedy on the target. Chart: http://reut.rs/2aG0Cct

Looking Ahead - Economic Data (GMT) - (Source:ThompsonReuters)

• 12:30 Retail Sales Jul mkt +0.4% m/m, prev +0.6%
• 12:30 Retail Sales ex-Autos Jul mkt 0.2% m/m, prev 0.7%
• 12:30 Retail Sales Control Jul mkt 0.3% m/m, prev 0.5%
• 12:30 PPI Final Demand Jul mkt 0.3% y/y; prev, 0.3%
• 12:30 PPI Final Dem ex-Food/Energy Jul mkt, 1.2% y/y; prev 1.3%
• 14:00 U of Mich Cons Sent Index Jul mkt 91.5, prev 90.0
• 14:00 U of Mich Current Cond Jul mkt 109.0, prev 109.0
• 14:00 U of Mich Expectations Jul mkt 78.1, prev 77.8
• 14:00 Business Inventories Jun mkt +0.1% m/m, prev +0.2%

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

• 15:15 New York Fed GDP Nowcast Q3 prev +2.6% q/q AR
• 15:45 FedTrade operation 30-yr Ginnie Mae (max $1.325 bln

Topics: US FX Market Open

 

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