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Forex Trading, Market News & Technical Analysis


Posted by Marge Maresca on Jul 18, 2016 7:51:30 AM



Overnight Events

• Turkish military coup late Friday: Quelled over weekend
• TRY/TOM -1.7% vs Friday’s 5.0% gain at 3.0200 close
• TRY/TOM matching volumes good early Monday: Exceeds full day avg
• USD/JPY +0.60%, GBP/USD +0.2%, EUR/USD +0.1%, EUR/CHF +0.20%
• DXY +0.05%, DAX -0.3%, Brent +0.17%, Iron -6.0%, FTSE250 +0.8%
• Japan’s SoftBank to buy ARM Holdings for GBP24.3bln
• Fitch says Japan post-election stimulus may raise fiscal risks - Rtrs
• SNB sight depos wk end Jul 15; Domestic and total higher
• DE spokesman-Merkel has not spoken with Erdogan since weekend
• BoE’s Weale-Exploring question of how low rates can go: Warns on too low
• Weale-Not sure he would back an August rate cut
• Weale cited Swiss example where very low rates led to unforeseen circumstances
• UK Retail Footfall -2.8% yy in June, Biggest Drop since Feb 2014 – BRC
• UK Retail Footfall -4.6% yy in Wk of Jun 23 EU Vote, -3.4% yy in Week After
• Bank of England's Vlieghe Says there should be an Immediate Interest Rate Cut
• BOE's Vlieghe sees Period of Lower Growth in UK and Higher Inflation
• Turkish C/bank says Will Provide Unlimited Liquidity to Banks
• Turkish C/Bank: Commission on Daily Liquidity Options for Banks Will be Zero
• Turkish C/Bank: Will Closely Monitor Depth of Market and Price Developments

Currency Summaries

• EUR/USD a tad lower in Europe 1.1075-1.1038, 1.1075-1.1040 Asia
• Downside momentum gained Friday after strong US data has held
• Turkey instability also ups risk for neighbouring euro zone
• Puts a dent in EUR as a safer asset, irrespective big C/A surplus
• More 1.10-1.12 chop likely (bulk post-Brexit):

• USD/JPY toppish, range has been 105.14-106.02 so far
• Japanese exporter offers remain above 106.00 in size
• Stops said to be large above 106.25
• EUR/JPY has seen 116.40-117.06
• USD/JPY & EUR/JPY 48/72H log correlation +0.91/+0.90
• Speculation on how much of FX already done on SoftBank/ARM deal
• SoftBank to pay GBP 24.3B in cash for ARM
• GBP/JPY range 138.70-140.60

• Wed/Thurs drift boosted Frid by Turkey : Cross loses  0.7% to 1.0840
• Safety plays into CHF and YEN as risk sentiment takes a battering
• EUR/CHF had posted strong gains Mon/Tues and SNB support likely
• Domestic/total sight depos up in latest week: Fits with Mon/Tues rally
• Hard to see the cross breaking new ground n/t: 1.0800-1.0950 to contain
• Chart:

• GBP/USD rose to 1.3292 after relatively hawkish steer from Weale at 4.15 am ET
• The outgoing MPC member sees little urgency to cut UK interest rates
• 1.3267 was early Europe high as continent digested SoftBank/ARM M&A news
• EUR/GBP based at 0.83225 after GBP boosted by relatively hawkish Weale
• 0.83225 = 61.8% of Friday’s rise from 0.8265-0.8415. Asia high was 0.8376

• USD/CAD has traded a 31 pip range since the weekend: 1.2931-1.2962
• Large 1.30 expiry Tuesday ($630mn), offers expected near strike level

• AUD/USD met fresh headwind just above 0.7600 during the European am
• 0.7606 = European am high. 0.7602 = Asia top. 0.7604 = NY afternoon high Friday
• 0.7560 was pre-weekend low on Turkey coup news. 0.7577 = Asia low
• Chinese steel-related commodities futures dived on Monday
• Minutes from July 5 RBA meeting due Tuesday. Oz inflation data due Wednesday

• NZD/USD pushed its recovery envelope from 0.7068 to 0.7126 during the European am
• 0.7068 was plumbed after softer than expected NZ inflation data
• 0.7155 = pre-inflation data high. RBNZ update on economic assessment this week
• AUD/NZD rose to a 7wk peak of 1.0743 on the back of the sub-f/c NZ CPI data
• 1.0625 was Asia low. 1.0314 = 15mth low earlier this month (July 8)

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)

• ECB props EUR gamma – Thurs EUR/USD 13.4 vol or 107 pips
• EUR/USD vol slide stalls for now – 1mth 8.0, 3mth 8.25 – 18mth low
• USD/JPY vol gains stall with spot. 29 July BoJ focal – 18.5 vols/300 pips
• GBP vols rebound from post MPC lows. 1mth Cable 14.5 vs 12.75
• AUD/USD vol demand from 2016 lows. NZD favored on rate cut fears
• USD/TRY vols off highs as calm returns TRY recovers lost ground 

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

• 14:00 NAHB Housing Market Index Jul mkt 60, prev 60
• 20:00 TIC Data May

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

• 15:00 Treasury announces 4-week bills e: $45 bln
• 15:30 Tsy auctions $37 bln 3-mth and $32 bln 6-mth bills

Topics: US FX Market Open


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