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US FX Market Open – Friday, February 3, 2017: Relative FX stability ahead of U.S. NFPS

Posted by Marge Maresca on Feb 3, 2017 7:22:22 AM

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Overnight Events

• USD/JPY +0.3%, GBP/USD -0.4%, EUR/USD -0.2%    
• DXY +0.3%, DAX +0.1%, Brent +0.5%, Gold -0.2%  
• Dollar heads for fourth weekly fall ahead of payrolls - Rtrs
• Sterling sinks for second day after services dip - Rtrs  
• Gold retreats from 11-week peak ahead of U.S. payrolls data - Rtrs  
• DE Finmin-Responds to U.S critisism: Not responsible for EZ money policy
• Russia-CBR maintains 10% rate: CPI expectations going down gradually
• EZ Dec Retail sales vs prev -0.4%/2.3%. 0.3%/1.8% f/c
• EZ Jan Markit Comp final PMI 54.4 vs prev 54.3. 54.3 f/c
• EZ Jan Markit Serv final PMI 53.7 vs prev 53.6, 53.6 f/c
• GB Jan Markit/CIPS Serv PMI 54.5 vs prev 56.2. 55.8 f/c
• BOJ offers to buy benchmark 10-year JGBs in special operation - Rtrs
• Japan readies package for Trump to help create 700,000 U.S. jobs - Rtrs

Currency Summaries

EUR/USD
• Subdued trade in evidence ahead US jobs report
• EUR/USD edges lower. 1.0739-66 Europe after Asia's 1.0746-71
• Hedging of EUR 1.1bln 1.0750 expiries potentially anchoring
• NFP event risk sidelines majority of traders
• Buoyant start to 2017 for EZ with composite PMI a robust 54.4

USD/JPY
• V shape USD/JPY move on BoJ operations
• USD/JPY 113.15 to 112.51 before surge to 113.24 in Asia. Edged to 113.25 in Ldn
• Supply remains around 113.43 pivot
• BoJ initial operation disappointed, where forced to come in again
• Huge bids likely remains ahead of 112.00 option barriers. Supply @113.43 pivot
• Barriers survived assaults Thu & Tue, hitting 112.05 & 112.08 respectively
• 111.99 fibo supports - 38.2% retrace 101.19 to 118.66 rise
• Large stops said to be clustered below 111.99/112.00

USD/CHF
• USD/CHF inched higher, nearing top of Tues 0.9862/0.9966 range
• Plays 0.9919 to 0.9961 in subdued trade. Above cloud base at 0.9947
• 200-HMA near term resistance at 0.9961, 10-DMA at 0.9962
• EUR/CHF 1.0680-1.0704. 1st time above fig since brk lower last Thurs
• 1.0700 was previously perceived SNB'S soft floor

GBP/USD
• GBP wobbles after softer than expected UK services PMI data
• PMI drops to 54.5 in Jan from 56.2 in Dec
• Input costs highest since March 2011 blunting overly bearish reaction
• Cable 1.2523-1.2475 on data. European range 1.2538-1.2475
• Unusually large 1.2500 expiries at 1.2500 GBP 1.5bln may anchor

USD/CAD
• 1.3bln 1.3050 option expiry for 10am NY cut today, 1.3021-41 range so far
• Thurs 1.2981, Tues 1.2969 low since 9 Sept support (1.2909 that day)
• 1.2962 is 76.4% of 1.2765-1.3598 Aug-Dec rally to help underpin
• Resistance Thurs 1.3050, Wed's 1.3102, Tues 1.3124 hi, 200DMA 1.3133
• Light crude up on day but in ranges and countered by mild USD strength
• O/n vol at 8.0 suggests break even of 75pips over todays NFP

AUD/USD
• Gain consolidation for the Aussie following sizeable Thurs 0.7696  rally
• AUD/USD plays 0.7665 to 0.7640 and 0.7647 into New York
• USD staging decent recovery and DXY back above the 100.00 level
• AUD/USD has room to climb further but pullback to keep up-move healthy
• AUD draws safety flow as US monetary/fiscal/USD policy uncertainty grows
• Would be a buyer low 0.76s for high 0.77s but external risks remain
• Chart: 1) http://reut.rs/2kYONCK  2)http://reut.rs/2kZ0qK3

NZD/USD
• NZD heavily lagging AUD performance: Chart: http://tmsnrt.rs/2kZ1BsG
• Technically Doji action points to direction change potential: Falling tops too
• Relatively tight ranges and series of close knit lows supporting: 0.7223-43
• Further tight trade through Europe ahead of U.S NFP: 0.7264-0.7295
• RBNZ OCR/MPS update main domestic lead next week
• Likely reiterates NZD/TWI too hi, restates policy to remain accommodative

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)

• Limited risk premium for NFP today, JPY most expensive at 110 pips
• JPY gamma performs well of late to justify higher premiums
• Cable gamma another good performer keeping short dated vols bid
• AUD value buyers in 1mth from 2yr low 9.1. AUD puts cheapest in 2yrs
• Huge 1.5bln 1.2500 Cable expiry and 1.3bln 1.3050 USD/CAD
• EUR/USD O/n vol pricing 65 pips over NFP. Curve lowest since Nov

Economic Data (GMT) - (Source:ThompsonReuters)

• 13:30  Nonfarm Payrolls (Jan) mkt +175k, prev +156k
• 13:30  Private Payrolls (Jan) mkt +169k, prev +144k
• 13:30  Manufacturing Payrolls (Jan) mkt +4k, prev +17k
• 13:30  Unemployment Rate (Jan) mkt 4.7%, prev 4.7%
• 13:30  Average Hourly Earnings (Jan) mkt +0.3% m/m, prev +0.4% m/m
• 13:30  Workweek Hours (Jan) mkt 34.3, prev 34.3
• 13:30  Nonfarm Payrolls Benchmark Revision prev -206k SA
• 14:45  Markit Services PMI (Jan) flash 55.1, prev 53.9
• 14:45  Markit Composite PMI (Jan) prev 55.4
• 15:00  ISM Non-Manufacturing PMI (Jan) mkt 57.0, prev 57.2
• 15:00  Factory Orders (Dec) mkt +1.0% m/m, prev -2.4% m/m
• 15:00  -- Factory Orders ex-Trans (Dec) prev +0.1% m/m
• 18:00  Baker-Hughes Rig Count (weekly)

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

• 14:15  FRB Chicago's Evans on current econ conditions; Olympia Fields, IL
• 16:45  FedTrade operation 30-yr Ginnie Mae (max $1.225 bn)
 

Topics: US FX Market Open

 

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