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US FX Market Open – Thursday, January 12, 2017: USD soft after Trump's lack of clarity

Posted by Marge Maresca on Jan 12, 2017 7:34:54 AM

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Overnight Events

• USD/JPY -1.1%, EUR/USD +0.6%, GBP/USD +0.47%
• DXY -0.56%, DAX -0.5%, Brent +1.0%, Iron +1.67%, Gold +1.16%
• DE 2016 GDP 1.9% vs 1.7% prev, 1.8% exp
• EZ Nov Ind. Prod. 3.2% y/y vs rvsd +0.8% prev, 1.6% exp
• IT Nov Ind. Prod. 3.2% y/y vs 1.3% prev, 2.0% exp
• SE Dec Core CPI +1.9% vs +1.6% prev, 1.8% exp
• Riksbank minutes Dec meet: more of a dovish line but SEK rallies
• Toyota Pres Toyoda meets with US VP-elect Pence in Washington, DC – Kyodo
• NAB marketing 7-year samurais, Daiwa-SMBC Nikko leads – IFR
• China NDRC approves $26.5 bln fixed-asset investment in December – Reuters
• China Commerce Min – Challenging, complicated trade outlook for ’17 –Reuters
• NZ Dec ANZ commodity price index +0.7% m/m,+16.5% y/y, dairy driven rise

Currency Summaries

EUR/USD  
• EUR/USD extends recovery to 1.0665 from 1.0643 Asia & 1.0454 low Jan 11
• Close over 55-DMA 1.0653 should neutralize bearish techs
• Dec 30 high @ 1.0700.  1.0707 38.2% retrace drop since US election
• Rates little changed with bund yields following UST yields lower
• Host of Fed speakers incl Yellen in focus: http://reut.rs/2iKbc1V
• Less Fed tightening priced: http://reut.rs/2iJFS3n

USD/JPY  
• USD/JPY fell from 115.50 trading to 113.75, ahead of the latest recovery
• Below 114.25 and 114.00 triggered stops
• Japanese bids remains in size below the market
• While technicals are bearish importer interest to buy remains strong
• Decent sized 1.1B 115.00 set to expire at the NY cut today
• EUR/JPY range has been 121.19-122.24

CHF
• US yields slip and USD follows after Trump's Wed press call
• Lack of yld-supporting policy comments by Trump left USD longs wanting
• USD/CHF closed NY at 1.0140 but soon lost its way in Asia
• 1.0248 into Trump talk, 1.0102 NY low and 1.0061 from 1.0158 NY recovery
• 30DMA Lower Bolli at 1.0050 ahead of key 1.0025 Dec 30 low
• EUR/CHF relatively steady as USD game plays out: 1.0711-1.0745
• Chart: 1) http://reut.rs/2ij5VgQ 2) http://reut.rs/2jGEZMW

GBP/USD
• GBP/USD extended north in early European trade, as more USD longs unwound
• 1.2317 = intra-day high vs 1.2170 Asia low. 1.2249 = pullback low from 1.2317
• USD longs unwound on Trump avoiding economic policy issues Wednesday
• 1.2273 was Wednesday high vs 3mth low of 1.2038 pre-Trump news conference
• EUR/GBP is respecting Wednesday’s 0.8648-0.8706 range amid USD focus

USD/CAD
• USD/CAD tripped stops sub-1.3081 en route to a 12wk low of 1.3028 during European am
• 1.3081 was Dec 14 low, pre-Fed’s hawkish dot plots. 1.3119 = Weds low. 1.3195 = Asia high
• Bids expected near 1.3000: 1.3000/05 = Sept 22/Oct 19 lows

AUD/USD     
• AUD/USD scaled a 4wk peak of 0.7516 during European am as more USD longs unwound
• 0.7353 was low before Trump news conference Wednesday. 0.7471= Wednesday high
• Stops tipped above 0.7525 (Dec 14 high, before Fed’s hawkish dot plot)

NZD/USD
• NZD/USD extended north to 0.7134 during European am as more USD longs unwound
• 0.7134 = 4wk high. 0.6962 was pre-Trump news conference low Wednesday

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 slide keeps vols and JPY calls at recent/cycle highs for now
• EUR/USD short dated setbacks meet demand – 1 week gets ECB
• GBP/USD vols peak for now as GBP recovers. EUR/GBP vols off highs
• AUD/USD vols finding support, but interest limited as wider ranges hold
• 5.5bln USD/JPY 115 expiries Thurs-Mon’. 7bln 1.05-1.06 EUR expiries Fri

Economic Data (GMT) - (Source:ThompsonReuters)

• 13:30  Initial Jobless Claims Jan 6 week mkt 255k, prev 235k
• 13:30  CA Nov Hse Starts Idx mkt 0.3%, 0.4% prev
• 13:30  Cont Claims Dec 31 week mkt 2.118 mln,  prev 2.112 mln
• 13:30  Import Prices Dec mkt +0.7% m/m, prev -0.3%
• 13:30  Export Prices Dec mkt +0.1% m/m, prev -0.1%
• 19:00  Federal Bdgt Dec mkt $25.00 bln def, prev Dec -$14.44 bln

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

• 13:30  FRB Chicago's Evans/Atlanta's Lockhart roundtable discussion; Naples, FL
• 13:30  FRB Philadelphia's Harker on the economic outlook; Malvern, PA
• 14:45  FedTrade operation 30-year Fannie Mae / Freddie Mac (max $2.350 bln
• 16:45  FedTrade operation 30-year Ginnie Mae (max $1.300 bln
• 17:30  FRB Atlanta's Lockhart repeats speech delivered on January 9; Naples, FL
• 18:15  FRB St. Louis's Bullard on U.S. econ and monetary policy; New York, NY
• 18:45  FRB Dallas’s Kaplan on the economy and monetary policy; Dallas, TX
• 22:30  Fed Chair Yellen addresses educators in Washington, and n/wide webcast

 

Topics: US FX Market Open

 

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