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US FX Market Open – Thursday, September 15, 2016: Focus on BOE: likely to keep easing door open

Posted by Marge Maresca on Sep 15, 2016 7:25:06 AM

 

boese.png

Overnight Events

• USD/JPY -0.07%, EUR/USD -0.01%, GBP/USD -0.02%
• DXY -0.02%, DAX +0.30%, Brent +0.7%, Gold -0.09%
• UK Aug Retail Sales -0.2%  m/m vs rvsd1.9% prev, -0.4% exp
• UK Aug Retail Sales +6.2% y/y vs rvsd 6.3% prev, 5.4% exp
• EZ Jul Trade Bal. E25.3 vs 29.2 bln prev, 25.0 bln exp
• EZ Aug Final Infl. 0.1% m/m vs -0.6% prev, +0.1% exp
• EZ Aug Final Infl. 0.2% y/y vs +0.2% prev, +0.2% exp
• DE Sept TR IPSOS PCSI vs 55.30 prev
• UK Sept TR IPSOS PCSI vs 49.20 prev
• Rtrs Poll-Median 35% see chance of UK recession vs 60% July poll
• CH SNB rate decision: Unchanged-Says CHF overvalued
• BOJ to weigh tougher hurdles for easing exit – Nikkei
• US fund investors kept buying bonds ahead of selloff – ICI
• NZ Q2 GDP +0.9% q/q, +3.6% y/y, +1.1% and +3.7% eyed
• NZ Aug BNZ/BNZ PMI 55.1, July 55.8

Currency Summaries

EUR/USD   
• EUR/USD 1.1219-53 in Europe after 1.1240-50 in Asia
• 1.1253 high followed swiftly by 1.1219 low
• No news, seems like someone bought to sell
• Once order done EUR/USD rotates back to starting levels
• US initial claims, Philly Fed and retail sales today
• EUR 3.4bln expiries 1.1200-85. Sufficient to anchor spot

USD/JPY  
• USD/JPY offers above likely to cap
• Offers remains above 102.50 & around 103.00 & Wed's 103.35 high
• Spot stages recovery today, has risen from 101.94 to 102.61
• Bounced as Japanese sell-flows subside
• USD/JPY bids remain below 102.00, but stops clustered sub 101.90

EUR/CHF
• No surprises from the SNB: Policy unchanged
• Had been speculation late Wed that SNB might surprise: Mkt ignored
• Little reason for the SNB to change
• SNB easy policy stance maintained to address overvalued CHF
• EUR/CHF a little firmer at 1.0958 but clear below 1.0985 Wed high
• 1.0939-1.0962 range seen so far Thurs
• Cross ranging but on balance a sell: Chart: http://reut.rs/2cKklsJ

GBP/USD
• GBP/USD fell to 1.3200 before UK ONS retail sales data at 4.30am ET
• 1.3245 = immediate high after the data came in better than expected
• EUR/GBP rose to 0.8508 pre-UK data, 0.8482 was low after release
• Ongoing Brexit concerns prime factor underpinning cross big-picture
• Van Rompuy predicts no substantive Brexit talks for 12 months (BBC)

USD/CAD  
• USD/CAD scaled a 7wk peak of 1.3236 early Europe courtesy of USD demand
• Asia range was 1.3192-1.3215 (1.3209 was Wednesday high)
• Lower oil prices & recent momentum for Trump helping weigh on CAD
• Back in June, Trump threatened to renegotiate or scrap NAFTA if elected

AUD/USD   
• AUD/USD elicited support just shy of 0.7443 (Tues 7wk low) in Asia
• 0.7487 = subsequent high water-mark (during the European am)
• Offers expected near 0.75 (0.7496 was Wednesday’s high)
• Large 0.7500 option expiry for NY cut, close to a yard strike

NZD/USD
• NZD/USD fell to 0.7241 early Europe courtesy of USD demand
• 0.7258-0.7301 was Asia range. 0.7235 was Tuesday’s low

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)

• 1 week vols now get FOMC and RBNZ on top of yesterdays BoJ capture
• 3 month expiry rolls over December FOMC to underpin there
• Vols elsewhere off Wednesdays highs as some calm returns to markets
• USD/JPY 1mth vol back at 13.2 from 14.0, 1mth EUR 7.1 from 7.4
• O/n Cable vol around 100 pips break even in to MPC, no change f/cast

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

• 12:30 Initial Jobless Claims 10 Sep mkt 265k, prev 259k
• 12:30 Continued Claims 03 Sep mkt 2.140 mln, prev 2.144
• 12:30 Retail Sales Aug mkt -0.1% m/m, prev 0.0%
• 12:30 Retail Sales ex-Autos Aug mkt +0.2% m/m, prev -0.3%
• 12:30 Control Group Retail Sales Aug mkt +0.3% m/m, prev 0.0%
• 12:30 PPI Final Demand Aug mkt +0.1% y/y; prev -0.2% y/y)
• 12:30 PPI Final Demand ex-Fd/Energy Aug mkt +0.1% m/m, -0.3% m/m
• 12:30 Philly Fed Business Outlook Survey Sep mkt 1.0, prev 2.0
• 12:30 Empire State Mfg Survey Sep mkt -1.00, prev -4.21
• 13:15 Industrial Production Aug mkt -0.3% m/m, prev +0.7% m/m
• 13:15 Factory Output Aug mkt -0.3% m/m, prev +0.5% m/m
• 13:15 Capacity Utilization Aug mkt 75.7%, prev 75.9%
• 14:00 Business Inventories Jul mkt +0.1% m/m, prev +0.2%

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

• 11:00 BoE Rate decision: Unchanged expected
• 15:45 FedTrade operation 30-yr Fannie Mae/Freddie Mac max $2.550 bln

Topics: US FX Market Open

 

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