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US FX Market Open – Friday, May 27, 2016: DXY LOOKING AT BEST MONTH SINCE NOVEMBER

Posted by Marge Maresca on May 27, 2016 10:42:06 AM

dollstren2.png

Overnight Events

• USD/JPY -0.06%, EUR/USD -0.16%, GBP/USD -0.02%
• DXY set to record key month reversal: Need cls abv 93.018
• DXY +0.14%, DAX +0.12%, Brent -1.05%, Iron +2.0%
• UK May GfK Consumer Confidence -1 vs -3 prev, -1 exp
• CH Q1 Non-Farm Payrolls 4.878 mln vs 4.897 mln prev
• Sweden Apr Retail Sales +1.7% y/y vs 2.0% prev, 1.9% exp
• UK PM Cameron says G-7 discussed impact of Brexit
• China-PBOC to keep yuan basically stable
• G7 leaders declaration – Commits to growth, shuns FX devaluations
• Government sources – Japan PM Abe set to delay sales tax hike – Rtrs
• Japan PM Abe considering two-year delay in sales tax hike – Yomiuri
• Lipper – US-based stock funds record 4th straight week of withdrawals

Currency Summaries

EUR/USD  
• EUR/USD all stop ahead Yellen speech
• European range just 1.1173-1.1201
• EUR 1.2bn vanilla expiries @ 1.1150 might attract on an otherwise dull day
• US PCE & GDP revsions @ 12.30GMT a diversion during wait for Yellen
• Fed President not actually schedluled to talk about policy
• Perhaps today's wait becomes next week's wait for Jun 3 US jobs data

USD/JPY
• Sharp drop sub 110 to 109.54 early Tokyo as stops tripped in thin liquidity
• Recovery to 109.82 then back to 109.43, before regaining 110 early London
• 110.11 since, Early Asia high caps 110.23,  DXY off o/n lows, Nikkie futs +90
• Resistance Wed hi 110.45, Fri hi 110.59.  Support Tues/Mon lows 109.17/12
• Daily cloud spans 109.74-111.44.  No expiries today, 785mn 110 Fri’
• EUR/JPY 122.25-123.03. Support 9 May low 122.10/Resistance Wed’s 123.10 hi

EUR/CHF
• EUR/CHF struggling to make headway in a quiet market
• Up-coming Yellen panel discussion sapping mkt direction
• Cross plays a bearish inside day 1.1065-1.1078 range
• USD/CHF pullback from Tues 0.9937 peak stalls at 0.9880 10DMA
• Spot threatens to move out sideways into month-end
• Swiss Q1 NFPs little softer but not a market mover
• Chart: 1) http://reut.rs/1TGxS3w 2 http://reut.rs/1qNRo0C

GBP/USD   
• GBP/USD fairly choppy but ultimately directionless
• Initially the break of yesterday's low sees no follow-through
• On break at 1.4640 GBP/USD just 1.4636 then 1.4689
• Sell-off to 1.4621 follows but 1.4660 again before NA open
• Support @ 100-HMA & hourly cloud: http://reut.rs/1sSE8tr
• US PCE/revised GDP data and Yellen. UK/US off Monday  

USD/CAD
• 1.1bln 1.3000 and  490mln 1.3050 expiries today
• 1.2970-1.3048 today's range, gains helped by Oil setback from 50.51
• Key support by by Thur's 1.2912 setback low, 21DMA 1.2918

AUD/USD     
• Tight 0.7215-35 today, Support/resis'  Thurs 0.7162/0.7244 range
• 10DMA 0.7235, 200DMA 0.7255 help cap, 0.7260 Mon' recovery peak
• 0.7145 Mon's new setback low. Expiries 0.7220 (360M), 0.7250 (581M)

NZD/USD
• 0.6730-0.6758 range, Thurs 0.6766/Wed's 0.6774 hi's initial resistance
• 0.6768 is tenkan-sen resistance. Bias still lower toward RBNZ 9 June
• OIS 54% chance of rate cut to 2.0%. Thur's 0.6692 initial support
• 24/28 March double bottom 0.6671-70, break opens 16 Mar low 0.6576

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)

• 1 week expiry gets NFP now (ECB from yesterday)  to further underpin related vols
• EUR/USD vols heavy, low realised/range bound spot weigh – 3mth is 15mth low
• AUD/USD and USD/CAD vol curves in to 2016 lows
• USD/JPY vol setbacks stall for now – 1mth propped by BoJ and FOMC risk
• Brexit repriced lower – 2mth Cable 5.0 below last week’s multi year high

Topics: US FX Market Open

 

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