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US FX Market Open – Friday, November 11, 2016: USD/JPY backs away from 107.00

Posted by Marge Maresca on Nov 11, 2016 7:23:17 AM

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Overnight Events

• USD/JPY peaks again just ahead of 107.00
• USD/JPY -0.6%, EUR/USD -0.17%, GBP/USD +0.8%
• DXY -0.07%, DAX -0.25%, Brent -1.0%, Iron +6.0%
• DE Final Oct HICP 0.7% y/y vs 0.7% prev, 0.7% exp
• DE Final Oct CPI 0.8% y/y vs 0.8% prev, 0.8% exp
• UK Sept Construction o/p +0.2% y/y vs rvsd +0.8% prev, -0.4% exp
• Moscow Exchange says suspends trading on FX market
• Moscow Exchange says trade on FX market to resume 1310 Msk
• Reports eight Asian central bank intervened to support ccys
• ADB Nakao – US rate hike won’t impact Asian economies much
• Pres-elect Trump for positive involvement in Asia trade-inv – Rtrs
• Global bks watching for Trump to roll back financial regs – Nikkei
• Japan FinMin Aso – No comment on FX levels, FX stability necessary
• Mkts sense of urgency, exceptional for JPY to 5 yen in 2 days –Rtrs
• Reuters Nov Tankan mfg index +14, highest since Aug ’15

Currency Summaries

EUR/USD  
• EUR/USD trades lower to 1.0854 on the back of EUR/GBP slump
• Barriers @ 1.0850 hold against defying spec sellers
• Corp buying (hedge) adds to support
• Short-term techs & UST/Bund rate divergence weigh
• EUR sales liked to CB rebalancing likely
• 1.0850, 1.0825 & 1.0800 barriers support. March low 1.0821
• Resistance @ Nov 10 high 1.0954, 21-DMA 1.0973 & 1.1038  

USD/JPY  
• USD/JPY falters in the face of heavy 107.00 supply
• 107.00 is said to have option barriers situated there, not sure the size
• Corporate offers & defense from option names ahead of 107.00 has capped
• Focus is on 106.00, below which could well trigger some stops
• Range this session has been 106.03-106.93
• Nikkei futures negative, corresponds with the fall back in USD/JPY
• 45/72H log correlations between USD/JPY & Nikkei futures +0.80/+0.88

CHF
• EUR/CHF finally reflecting risk/em slump despite SNB
• Cross dips from 1.0760 to 1.0711 and remains heavy
• Risk aversion kicks in majorly as Trump event risk finally bites
• USD/CHF and GBP/CHF still taking the fight to the Swissy
• Spot climbs again after 0.9833 retrace but still below 0.9896 Thurs top
• GBP/CHF nudges above daily cloud, 55DMA and upper Bolli to 1.2513
• Chart: 1) http://reut.rs/2fio0xH  2) http://reut.rs/2fHtrog

GBP/USD
• GBP/USD scaled a 5wk peak of 1.2673 after more shorts covered on 1.2600 break
• Prior GBP short-covering aided two cent rise to 1.2585 Thursday
• GBP helped north by hopes of enhanced US-UK “special relationship” under Trump
• EUR/GBP extended south to a 7wk low of 0.8567 during the European am
• 0.8502 is 50% retracement of 0.7600 (June 23 low) to 0.9403 (Oct 7 high)

USD/CAD
• USD/CAD firmed to a high 7 pips shy of 1.3525 during the European am
• 1.3525 = 8mth Wednesday high on Trump shock. 1.3550/75 resistance beyond
• Offers touted at 1.3550 (Mar 1 high). 1.3575 = 50% of 1.4689-1.2461
• There are a cumulative 3 yards of 1.3500 option expiries next week

AUD/USD    
• AUD/USD fell to 0.7576 after matching its 0.7630 Asia high early Europe
• 0.7560 was Asia low as AUD suffered as proxy for Asia EM currency losses
• Thursday’s low was 0.7568 after AUD/USD slumped from 0.7741

NZD/USD
• NZD/USD topped out at 0.7307 after rallying off 0.7235 (late Asia low)
• 0.7246 = ensuing pullback low. 0.7305 was Wellington afternoon high
• AUD/NZD extended north to 8-day high 3 pips shy of 1.0650 during European am
• Large 1.0650 option expiry Friday, A$822mn strike

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)

• EUR/USD: 1.0900 (1.35B), 1.1000 (1.0B). EUR/GBP: 0.8850 (344M)
• USD/JPY: 104.50 (1.1B), 105.00 (1.3B), 105.30-40 (632M), 105.50 (950M)
• USD/JPY: 106.45-50 (976M), 107.00 (819M). EUR/JPY: 115.00 (287M)
• USD/CAD: 1.3350 (429M), 1.3400 (290M), 1.3600 (201M)
• AUD/NZD: 1.0200 (600M), 1.0420 (260M), 1.0500 (230M), 1.0650 (822M)

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

• 15:00 U of Michigan Cons/Sent prelim Nov mkt 87.5, prev 87.2
• 15:00 Current Conditions prelim Nov mkt 103.4, prev 103.2
• 15:00 Expectations prelim Nov mkt 77.3, prev 76.8
• 18:00 Baker Hughes Oil Rig Count prev 450, +9 w/w

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

• n/a   Holiday - Veterans Day banks closed, stock markets open
• 16:15 New York Fed GDP Nowcast Q4 prev +1.6% q/q AR

 

Topics: US FX Market Open

 

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