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US FX Market Open – Friday, October 14, 2016: Risk on bias heading into U.S. sales data

Posted by Marge Maresca on Oct 14, 2016 7:23:50 AM

 

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Overnight Events

• USD/JPY +0.64%, EUR/USD -0.35%, GBP/USD -0.3%
• DXY +0.25%, DAX +1.65%, Brent +0.7%, Iron +3.0%
• BoE’s Carney says willing to tolerate some inflation overshoot
• Carney says inflation environment in UK is going to change Rtrs
• Certainly not a fan of EZ entry-Czech Finmin Babis-Hospodarske Noviny
• S.A Finmin Gordhan says he is here to stay - Rtrs
• Gordhan says has been subjected to political mischief - Rtrs
• CH Sept Prod Prices -0.1% y/y vs -0.4% prev, -0.2% exp
• EZ Aug Trade Bal. E18.4 bln vs 25.3 bln prev, 15.3 bln exp
• UK Aug Construction output +0.2% y/y vs -1.5% prev, +1.5% exp
• Japan Sept domestic corp goods prices -3.2% y/y, Aug -3.6%
• China Sept CPI +0.7% m/m, +1.9% y/y, +0.3/+1.6% eyed
• RBA warns banks of oversupply danger in apartment frenzy
• RBA banking system  in good shape, China focus of risk
• RBA concerns over rising debt-defaults –Rtrs

Currency Summaries

EUR/USD  
• EUR/USD 1.1029-1.1005 range in Europe
• Traders await US retail sales data, eyed fairly robust, control 0.4%
• Specs certainly longer dollars into the event, DXY up near 3% last 2 weeks
• Jul 25 low @ 1.0952 and 1.0950 barriers support
• Initial resistance @ Oct 12 high and 100-HMA 1.1065

USD/JPY
• USD/JPY range has been 103.61-104.41
• Spot pushed higher back through 104.10 in Ldn, possible order
• Recall 104.10 was Ldn's Thu peak
• Bulls have managed to force an hourly close above 104.33
• 104.33 is 76.4% of the 104.63 to 103.34 Thu fall
• An hourly close above 104.33 will challenge more exporter offers
• Pivot Chart: http://tmsnrt.rs/2dS4bin

EUR/CHF
• EUR/CHF holding soft towards middle of multi-mth range
• Thurs low of 1.0871 and 1.0876 so far today
• Second day of bidding in the 70s and bull signal potential
• Risk on markets just taking the edge off early CHF gains
• Cross plays 1.0876-1.0906
• Spot snaps back after Thurs losses: Bounce from 0.9856 to 0.9892
• Swiss Sept producer prices softer than expected
• Chart: http://reut.rs/2dYuJeC

GBP/USD
• GBP/USD rose to 1.2256 after Carney said BoE ‘not indifferent’ to level of GBP
• 1.2262 (Asia high) & 1.2274 (Thursday high) resistance. 1.2168 was early Ldn low
• Recent talk of stops above 1.2329 (Tuesday NY/Ldn high), 1.2365 & 1.2484
• EUR/GBP has fallen to 0.8991 since Carney’s GBP steer. 0.9047 = early Europe high
• Large 0.9000 option expiry for NY cut, E580mn strike

USD/CAD
• USD/CAD revisited 1.3185 in Asia & again during the European am
• 1.3185 was Thursday’s low. CAD benefitting from higher oil prices
• WTI circa $51/barrel at 6.30am ET. 1.3220/25 resistance

AUD/USD    
• AUD/USD extended north from 0.7506 to 0.7628 during the European am
• 0.7506 = Thursday low. AUD benefitting from higher commodity prices
• AUD/NZD rose to a 3mth high of 1.0758 during the European am
• 1.0656-1.0682 was Asia range. 1.0770 = July high

NZD/USD
• NZD/USD retreated to 0.7086 during the European am as AUD/NZD climbed
• 0.7132 was Asia high after stops above 0.7102 tripped (0.7102 = Thursday high)

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)

• USD/JPY: 101.00 (701M), 102.00 (1.2B), 102.40-50 (1.18BM), 103.75 (1.02B)
• USD/JPY: 105.00 (1.05B).  EUR/JPY: 114.00 (1.0B). AUD/JPY: 76.70 (955M)
• EUR/USD: 1.0925 (610M), 1.0000 (320M), 1.1150 (833M), 1.1170 (412M)
• EUR/USD: 1.1290-95 (1.26B), 1.1310 (768M)
• USD/CHF: 0.9700 (250M), 0.9900 (225M). AUD/USD: 0.7500 (586M)
• USD/CAD: 1.3150 (386M), 1.3180 (312M), 1.3195-1.3200 (917M)
• EUR/NOK: 9.02 (779M)

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

• 12:30  Retail Sales Sep mkt +0.6% m/m, prev -0.3%
• 12:30  Retail Sales ex-Autos Sep mkt +0.4% m/m, prev -0.1%
• 12:30  Control Group Retail Sales Sep mkt +0.4% m/m, prev -0.1%
• 12:30  PPI Final Dem Sep mkt +0.6% y/y; prev, 0.0% y/y
• 12:30  PPI Final Dem ex-Food/Energy Sep mkt +1.2% y/y; prev 1.0% y/y
• 14:00  U of Mich Consumer Sentiment Index Oct mkt 91.9, prev 91.2
• 14:00  Current Conditions Oct mkt 104.7, prev 104.2
• 14:00  Expectations Oct mkt 82.7, prev 82.7
• 14:00  Business Inventories Aug mkt +0.2% m/m, prev 0.0%
• 17:00  Baker Hughes Oil Rig Count

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

• 12:30  FRB Rosengren Boston Fed's 60th Conf "The Elusive Recovery"
• 16:30  Fed’s Yellen at conference on business cycles; Boston, MA

 

Topics: US FX Market Open

 

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