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US FX Market Open – Thur, September 29, 2016: NOK charge a standout after OPEC output curbs

Posted by Marge Maresca on Sep 29, 2016 8:02:15 AM


Overnight Events

• EUR/NOK falls to 9.00 from 9.1145 Wed and 9.2410 week ago
• USD/JPY +0.70%, EUR/USD -0.01%, GBP/USD -0.23%
• DXY +0.17%, DAX +0.65%, Brent -0.75%, Iron +1.35%
• NOK/SEK backs away from a 1.0675 15-mth high
• OPEC Wed move triggers strong NOK demand: EUR/NOK hits 9.00
• SAR taken to 3.7565 vs USD and 1-year fwds pushed out to 625 bps
• U.S Congress rejection of Obama veto: Saudi Sept 11 bill now law  hits Saudi mkts
• Fed’s Harker- Normalising of monetary policy a good thing for business inv
• Harker – Moving slowly but surely towards 2.0% infl. target
• Commerzbank To cover restructuring will cease dividends for time being Rtrs
• Japan Aug retail sales -2.1% y/y, -1.8% eyed, negative growth since Feb
• Japan Honda sets monthly production records worldwide – JCN
• RBNZ – Housing poses financial stability risk, NZD high – Rtrs
• BoJ’s Kuroda will adj policy when necessary, may expand monetary base

Currency Summaries

• Europe see EUR/USD trapped in another tight range 1.1210-31
• Fed hold but wider US/EZ rate diffs:
• German CPI likely to beat f/c after state CPIs pick up YY
• German institutes up 2016 growth f/c, trim 2017
• EZ economic sentiment rises to 104.9 in September from 103.5
• EUR 2.8bln vanilla expiries today 1.1150-1.1250   

• Stop fest & lack of Japanese exporter supply sees USD/JPY hit 101.75
• 101.76 - 61.8%/ of the 102.79 to 100.09 fall - has capped
• USD/JPY rose from a session low of 100.65
• Japanese exporters are seen as done for month/quarter/fiscal half ends
• Yen weakened after OPEC deal saw bout of risk taking
• Rise in spot give market better levels to sell for another attempt on 100.00

• EUR/CHF still struggling for direction
• Holding just above daily cloud top at 1.0869
• 100DMA at 1.0914: Cross plays 1.0886-1.09
• Risk markets easier and CHF attracting flow
• USD/CHF mid-thin cloud early threatens base break into NY
• Plays a tight 0.9701-0.9723
• Chart:

• GBP/USD dropped to threaten 1.2980 as Capita shares tanked
• UK outsourcing company said clients delaying investment decisions on Brexit
• 1.2980 was Wednesday’s low. 1.3059 was Asia high
• EUR/GBP rose to test 0.8640 as 30% Capita share price fall hurt GBP
• 0.8640 was Wednesday’s high. 0.595-0.8628 was Asia range

• USD/CAD pushed its recovery envelope from 1.3048 to 1.3116 during Europe am
• 1.3048 was Asia low as WTI oil rose as high as 47.47/barrel (3wk peak)
• WTI $46.85/barrel at 6.10am ET. 1.3269 was Wednesday’s high, pre-OPEC deal

• AUD/USD elicited support at 0.7660 during the European am
• 0.7660 = 76.4% of 0.7645 (Wednesday’s low) to 0.7711 (Asia 3wk peak)
• Dalian iron ore scaled 3wk peak in Asia too
• Profit-taking on longs helped deflate AUD/NZD to 1.0530 low in Asia
• 1.0585 = 6wk high for cross Wednesday (1.0267 was low last week)

• NZD/USD eased to 0.7263 amid greenback gains during the European am
• 0.7304 = Asia high. 0.7234 was Wednesday’s low, pre-OPEC deal
• NZ Herald-Rabobank says NZ milk price could hit NZ$6 next year

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)

• 1mth expriy gets 1 Nov BoJ – 1mth JPY vols higher
• Gains limited compared to previous BoJ’s – nothing expected
• 1mth risk reversals sold 1.0 from 1.5 JPY calls, helped by weaker JPY
• EUR/USD vols struggle to stay afloat as ranges hold – curve by 2yr lows
• CAD vols ease a touch post OPEC/weaker spot. 1mth AUD 2yr low

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

• 12:30 Initial Jobless Claims 24 Sep mtk 260k, prev 252k
• 12:30 Continued Claims 17 Sep mkt 2.130 mln, prev 2.113 mln
• 12:30 Real GDP Q2 final mkt +1.2% q/q AR, prev +1.1%
• 12:30 GDP Price Idx Q2 final mkt +2.3% q/q AR, prev +2.3%
• 12:30 Advance Goods Trade Balance Aug prev -$59.3 bln
• 12:30 Advance Wholesale Inventories Aug prev 0.0% m/m
• 12:30 Advance Retail Inv ex-Autos Aug prev -0.3% m/m
• 14:00 Pend Hse Sales Idx Aug mkt 111.3, 0.0%; prev 111.3, +1.3%

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

• 12:50 FRB Atlanta's Lockhart speaks at Future of Florida Forum; Orlando, FL
• 14:00 Fed Governor Powell addresses community bkg conference; St. Louis, MO
• 18:00 FRB Minneapolis's Kashkari- town hall on econ development; Rapid City, SD
• 20:15 FRB Kansas City's George  Forum for Minority Bankers; Kansas City, MO
• 21:10 Fed Chair Yellen in conversation at minority bks conference; Washington, DC



Topics: US FX Market Open


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