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US FX Market Open – Friday, September 16, 2016: Looking to U.S. CPI to liven things up

Posted by Marge Maresca on Sep 16, 2016 7:28:41 AM

 

cpi-1.png

Overnight Events

• USD/JPY -0.07%, EUR/USD -0.08%, GBP/USD -0.27%
• DXY +0.14%, DAX -0.2%, Brent -1.4%, Gold flat at 1313
• Kuroda- will keep very easy monetary conditions to support econ recovery-Rtrs
• Japan PM adviser says benefits of BOJ's negative rates 'very big' - Rtrs
• BoJ may push back rate cut until later date: Goldman’s Baba – Bbg
• Japan FinMin Aso – Up to BoJ to decide specific policy
• Aso- coordinating  with BoJ to defeat defl. fiscal policy to play role – Rtrs
• Reuters survey – Japan Inc sees BoJ stimulus failing to spur inflation
• NZ Sept ANZ/RM consumer conf idx 121.0, Aug 117.7, highest since Jan
• Moody’s SA renewable debt mkt supported by positive credit developments
• RBS shares fall 3.2% after U.S Dept. Justice claim USD14 bln vs Deutsche bk
• EU officials- UK will give up on Brexit if negotiations tough enough-Telegraph

Currency Summaries

EUR/USD   
• EUR/USD 1.1220-40 in Europe and 1.130-51 in Asia
• EUR 3.6bln of option expiries 1.1200-1.1320 help to anchor spot
• US CPI the only event with the potential to shake things up
• Core Aug CPI f/c 2.2% unchanged from July & down from 2016 high @ 2.3%

USD/JPY  
• USD/JPY seen a narrow 101.70-102.13 range
• Technical outlook remains on downside
• Offers ahead of 102.50, but talk Japanese exporters mostly done for month
• Dip-buying interest from Japanese importers early Asia
• NY Expiries: 101.50 (310M), 102.00 (291M), 102.50 (410M), 102.70-75 (910M)
• Japanese official talk up benefits of easing, market shrugs

EUR/CHF
• EUR/CHF continues to churn within recent 1.10-1.09 range
• Price pivots around the 200DMA at 1.0930 and 1.0923-1.0939 today
• Subdued forex generally as mkt treads water ahead of Fed/BoJ next week
• USD/CHF mirror image of the cross with a bounce out of Thurs lows
• Spot plays 0.9713-0.9759 and technically goes higher
• Few new driver but soft U.S data boosting EM/Risk and knocking the CHF
• Chart: 1) http://reut.rs/2cAVAMs  2) http://reut.rs/2cAVhRT

GBP/USD  
• GBP/USD has fallen to 1.3167 as Deutsche Bank news impacts risk
• Deutsche Bank said DoJ asking it for USD 14bn to settle mortgages case
• 1.3237 was early Ldn high. Large 1.3250 option expiry for NY cut
• EUR/GBP has risen to 0.8526 amid a decline in risk appetite
• Asia low was 0.8487. Resistance at 0.8547 (1.17 GBP/EUR)

USD/CAD
• USD/CAD has risen to 1.3200 as lower oil prices weigh on CAD
• WTI 43.25/barrel at 6.25am ET, 65 cents lower on the day
• 1.3217, 1.3236 & 1.3255 are resistance levels beyond the figure

AUD/USD     
• AUD/USD has dropped to test 0.7498 amid a decline in risk appetite
• 0.7498 was Asia low. 0.7527 was Asia high

NZD/USD
• NZD/USD has eased to 0.7294 as Deutsche Bank news impacts risk
• 0.7331 was Asia high. RBNZ meets next week, expected to keep OCR at 2%
• Fonterra dairy auction/annual results next week too

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 well off highs seen earlier this week, low realised and holidays weigh
• Event risk in to BOJ, FED, RBNZ providing the only near term support
• EUR/USD 1wk daily realised vol just 2.7, implied still 8.25. 1mth tests 2yr low 6.7
• USD/JPY 1mth vol 12.25 from 14.0 this week, lowest since BoJ capture
• 1mth GBP/USD vol low since Jan’, 1mth EUR/GBP 2016 low
• AUD 1mth 9.15-11.4-9.9 since last Fri. NZD vol propped pre RBNZ for now

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

• 12:30 CPI Aug mkt +0.1% m/m; prev 0.0%, +0.8% y/y
• 12:30 CPI ex-Food/Energy Aug mkt +0.2% m/m; prev +0.1%, +2.2% y/y
• 14:00 U of Mich Cons Sent Idx Sep mkt 91.0, prev 89.8
• 14:00 U-Mich Current Conditions Sep prev 107.0
• 14:00 U-Mich Expectations Sep prev 78.7
• 15:30 Cleveland Fed Median CPI Aug prev +0.2% m/m
• 16:00 Flow of Funds Z.1 Q2
• 20:00 Treasury International Capital Statistics July

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

• 13:45 FedTrade ops 30-yr Ginnie Mae max $1.550 bln
• 15:45 FedTrade ops 15-yr Fannie Mae/Freddie Mac max $550 mln

Topics: US FX Market Open

 

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