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US FX Market Open – Thursday, March 30, 2017: Marginal new EUR/USD pullback low

Posted by Marge Maresca on Mar 30, 2017 7:37:53 AM


Overnight Events

• EUR/USD -0.25%, USD/JPY +0.1%, GBP/USD flat, DXY +0.1%
• DAX +0.1%, FTSE -0.05%, Brent -0.5%, Gold -0.2%, Copper -0.6%
• Dollar near 1-week high, buoyed by euro weakness - Rtrs
• EZ Mar Economic sentiment 107.9 vs prev 108. 108.3 f/c
• EZ Mar Consumer confidence final -5.0 vs prev -5.0. -5.0 f/c
• German state of Saxony CPI +0.2 pct m/m, +1.8 pct y/y in Mar vs prev 0.5%/2.4%
• Britain does not expect 50 bln stg Brexit bill-Davis - Rtrs
• Britain not threatening Europe over security cooperation-Davis - Rtrs
• FR Hollande tells May talks on future EU-UK relations must wait - Rtrs
• ECB Nowotny: Important to analyse future economic development - Rtrs
• ECB Liikanen: Our commitment to forward guidance remains
• CH KOF indicator 107.6 pts in Mar vs f/c of 106.0. Feb rvsd to 106.9
• South Africa's ruling party leaders split over Gordhan's fate - Rtrs

Currency Summaries

• EUR inches down as inflation comes off hard
• Spanish HICP 2.1% yy in March from 3% & compared 2.7% f/c
• German state CPIs tumble, all now below ECB's 2% target
• Risk German CPI now misses the 1.9% yy f/c, was 2.2% in Feb
• EUR/USD 1.0731 low after 1.0741-72 in Asia. 200-HMA 1.0800 key above
• Support @ Mar 16 low @ 1.0705. EUR 1.9bln expiries @ 1.0700

• USD/JPY said to have decent offers at 111.50
• These offers coincide with tenkan line at 111.50
• Rose from 111.01 in early Asia to 111.43, before relapsing to 110.94
• Was bid due to Tokyo fix demand
• Close above weekly cloud 111.39 top at the end of NY session Fri defers
• Stale USD/JPY longs render downside vulnerable

• EUR/CHF offered from open. Sellers relentless but 1.07 proving tough
• Plays 1.0724-1.0696 Europe. Drop under figure likely short lived
• Lower in line with EUR/USD but SNB committed to new 'soft floor' at 1.07
• USD/CHF of its best but holds firm. 0.9957-0.9979 Europe
• Wed close above Fri 0.9959 high bullish. 50% Fibo resist at 0.9992
• Swiss KOF indicator rises to 107.6 pts in March vs f/c of 106.0
• GBP/USD elicited support pre-1.2400 during European am before rising to eye 1.2450
• 1.2450 option expiry for NY cut, GBP 433mn strike. 1.2451 was Asia high
• EUR/GBP fell from 0.8660 to threaten 0.8625 during the European am
• 0.8625 was Wednesday’s low after EUR hurt by Reuters’ ECB wariness piece

• USD/CAD is consolidating losses influenced by Wednesday’s oil price gains
• 1.3345 = high water-mark for USD/CAD since Wednesday’s 1.3323 low

• AUD/USD elicited support just shy of 0.7650 during the European am
• Offers expected near 0.77 (0.7676 was Wednesday’s high & Asia high)
• AUD/NZD has scaled a 9-day peak of 1.0937 after vaulting 1.0927
• 1.0927 was Wednesday’s high (1.0795 was Monday’s low).

• NZD/USD dropped to threaten 0.7000 in early European trade
• 0.7045 was early Asia high. 0.6993 was Wednesday’s low


Clock is ticking for Czech National Bank's FX floor
Czech central bank rate decision due 11:00 GMT with press statement to follow at 12:15 GMT: no change in rates the market call. Plenty of speculation surrounding the EUR/CZK 27.00 floor exit but the CNB has indicated a date later than Q1. Having amply communicated the likely exit date the CNB may still want to have a surprise element, either inter-meet or slightly earlier than indicated. Hard to see any move before the latest inflation report release in May. So, no move Thursday but market will start to gear up for May/June. An outside chance that after the floor exit short EUR/CZK profit taking meets CNB reserve adjustment/intervention with limited direction the result. However, consensus is for eventual CZK appreciation once an over heavy market becomes less crowded. Market calls for 25.50 to 26.00 once price normalizes.

Today’s events

Option Expirations(Source:ThompsonReuters)

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.  

• Firmer USD/Weaker EUR and French election risk prop EUR/USD vol/puts
• USD/JPY vols have retraced Mon’s gains as 110.00 barriers left intact
• Cross/JPY vol setbacks highlight risk recovery – AUD/JPY 1mth off 2.0
• AUD/USD and USD/CAD front end vols back near recent/2 year lows
• Short dated Cable vols have retraced  gains seen on Tue/Wed GBP drop

Economic Data (GMT) - (Source:ThompsonReuters)

• 13:30  Initial Jobless Claims (Mar 25 week) mkt 248k, prev 261k
• 13:30  Continued Claims (Mar 18 week) mkt 2.020 mn, prev 1.990 mn
• 13:30  Real GDP (final Q4) mkt +2.0% q/q AR, prev +1.9% q/q AR
• 13:30  Real Final Sales (final Q4) mkt +1.0% q/q AR, prev +0.9% q/q AR
• 13:30  Core PCE Price Index (final Q4) mkt +1.2% q/q AR, prev +1.2% q/q AR

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

• 14:45  FRB Cleveland's Mester speaks at risk conference; Chicago, IL
• 16:00  FRB Dallas' Kaplan in moderated discussion at capital markets summit; Washington, DC
• 16:15  FRB San Francisco's Williams remarks at community development event; New York, NY
• 19:30  FedTrade 15-year Fannie Mae/Freddie Mac securities (max $525 mn)
• 21:30  FRB New York's Dudley on financial literacy; Sarasota, FL


Topics: US FX Market Open


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