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US FX Market Open – Monday, January 30,2017: Steady FX in Europe: Dollar mixed to firmer

Posted by Marge Maresca on Jan 30, 2017 7:27:40 AM

 dollars1.png

Overnight Events

• USD/JPY -0.5%, GBP/USD -0.1%, EUR/USD -0.1%
• DXY +0.1%, DAX -0.1%, Brent +0.1%, Gold -0.05%
• Oil slides as strong U.S drilling activity weakens deal to cut output - Rtrs
• Firm $ weighs on gold, political uncertainty supports - Rtrs
• DE Saxony & Hesse inflation surprises at 2.3% and 2.4% yy respectively
• EZ Jan Econ Sentiment 108.2 vs prev 107.8. 107.7 f/c
• EZ Jan Ind Setiment 0.8 vs prev 0.0 rvsd. 0.2 f/c
• EZ Jan Consumer Confid final -4.7 vs prev -5.1. -4.9 f/c
• CH Jan KOF indicator 101.7 vs prev 102.1 rvsd. 103.3 f/c
• SNB domestic deposits rise to CHF 466.714bln fm prev 464.281 w/e Jan 27
• France's Macron gets boost from left as scandal-hit Fillon falters - Rtrs
• Germany says expects IMF to participate in Greece's bailout - Rtrs
• South Africa's rand, bonds weaken on cabinet reshuffle reports - Rtrs

Currency Summaries

EUR/USD
• EUR/USD 1.0725-1.0687 in Europe. Asia had rallied 1.0687-1.0741
• Reversal Asia's move perhaps thanks to rate divergence between Germany/EZ
• Some German states reported sharp rises in YY CPI, above ECB 2% target
• Higher yields, especially peripheral EZ, fuel weaker EUR today
• UST/Bund spreads narrowest since early Dec 2016: http://reut.rs/2k7QrPb  
• US PCE data next focus. Small rise f/c. US yields off last week's high ahead
• China holiday this week and coming US jobs data Friday suppressing activity

USD/JPY
• Recovered after Japan exporters, option players were good sellers
• Range today has been 114.27-115.01
• Despite Japan govt denial sources suggest Toyota meeting to come - Rtrs
• Dollar had started soft as US Immigration policy spooked markets - Rtrs
• Bids remain in size ahead of 114.00, but sell stops are clustered below
• Daily kijun line comes in @114.07, another reason to expect demand on dips
• BoJ & Trump/Abe meet may spike spot vol, but 112.50/116.50 binaries in play

USD/CHF
• USD/CHF congestion under 1.00. 0.9993 peak today in Europe
• Asian 0.9961 low close to last week's 0.9660 base (Tues)
• EUR/CHF weighed down by EUR/USD retreat from Asia's 1.0741 peak
• 1.07 prev sppt, now resistance rejected recovery attempts. 1.0674 low
• 1.0670 was last wk's base. Lowest since 1.0623 Jun 24 Brexit low

GBP/USD
• GBP/USD elicited support at 1.2510 after falling during the European am
• 1.2510 = 23.6% of 1.1983 (Jan 16 low) to 1.2674 (Jan 26 high). 1.26 = Asia high
• EUR/GBP met headwind circa 0.8547 after vaulting 0.8538 during European am
• 0.8547 = 1.17 GBP/EUR. 0.8538 was Friday’s high. 0.8504 was Asia low

USD/CAD
• USD/CAD met fresh headwind pre-1.3160 during the European am
• 1.3159 = traded high. 1.3155 = pre-weekend peak. 1.3116 = early Asia low
• 1.3145 & 1.3130-35 option expiries for NY cut, $300mn & $282mn strikes

AUD/USD 
• AUD/USD has traded a 24 pip range thus far Monday, 0.7541-0.7565
• US name has gone short AUD/USD as one of its trades of the week
• Stop on short at 0.7680, target 0.69. AUD/USD was last at 0.69 in Jan 2016

NZD/USD
• NZD/USD eased to an intra-day low of 0.7242 during the European am
• 0.7277 was Asia high. 0.7314 was last week’s 11wk high
• Japanese name says NZD 5% overvalued vs USD & 5-10% overvalued vs AUD

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)

• Liquidity and trade flow light amid China LNY holidays
• Event risk props shorter dated vols BoJ, FED, BoE, NFP
• 1mth EUR/USD well below realised – used to fund longer dates
• USD/JPY range binaries 112.50-116.50 supply some vol to front end
• Cable vols bounced from Wed’s lows, perceived value in longs now
• AUD/USD vol curve languishes near 2yr lows as interest wanes.

Economic Data (GMT) - (Source:ThompsonReuters)

• 13:00 DE Jan HICP – prelim, mkt -0.7% m/m, +2.0% y/y, prev +1.0%, +1.7%
• 13:30 U.S Personal Income (Dec) mkt +0.4% m/m, prev 0.0% m/m
• 13:30 U.S Personal Consumption Expenditures (Dec) mkt +0.5% m/m, prev +0.2% m/m
• 13:30 U.S PCE Deflator (Dec) mkt +0.1% m/m, prev 0.0% m/m, +1.6% y/y
• 13:30 U.S -- Core PCE Deflator (Dec) mkt +0.1% m/m, prev 0.0% m/m, +1.6% y/y
• 15:00 U.S Pending Home Sales Index (Dec) mkt 108.5, +1.1% m/m, prev 107.3, -2.5% m/m
• 15:30 U.S Dallas Fed Texas Manufacturing Outlook Index (Jan) prev 15.5

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

• 16:45 FedTrade operation 30-yr Ginnie Mae (max $1.225 bn)
• 19:30 FedTrade operation 15-yr Fannie Mae/Freddie Mac (max $675 mn)
• 20:00 Treasury market financing estimates

 

Topics: US FX Market Open

 

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