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US FX Market Open –Tuesday, August 9, 2016: U.S Dollar bid but battling the doldrums

Posted by Marge Maresca on Aug 9, 2016 7:35:47 AM

 

Currency2-1.png

Overnight Events

• USD/JPY -0.12%, EUR/USD flat, GBP/USD -0.5%
• DXY +0.04%, DAX +0.5%, Brent -0.2%, Iron +1.0%
• CH Jul Unemployment 3.3% Adj vs 3.3% prev
• DE Jun Trade Bal. EUR21.7 bln vs 22.2 prev, 22.2 exp
• UK Jun Ind. Output y/y vs 1.4% prev, 1.6% exp
• UK Jun Mfg Output y/y vs 1.7% prev, 1.3% exp
• UK Jun Trade Bal. –GBP vs -9.9 bln prev, -10.0 bln exp
• UK Jul BRC R.Sales +1.1% vs -0.5% prev
• EU States agreed to cancel budget fines for Spain/Portugal – new deadlines
• China July CPI +0.2% m/m, +1.8% y/y, +0.1% and +1.8% eyed
• BoE MPC McCafferty – More rate cuts on way if economy worsens Times
• McCafferty-  GBP fall could see CPI “overshoot” relative to target
• AU July NAB business conditions index +8, confidence +4, June +11, +5

Currency Summaries

EUR/USD  
• Tight 1.1071-1.1096 range today. DXY tests  Fri's 96.522 hi to cap  
• Support minimal ahead of Fri's 1.1046 low, but plenty of resistance atop
• Hourly cloud caps, base 1.1098, falling to 1.1082 later (top steady 1.1104)
• Falling 100HMA 1.1120, 200HMA 1.1135, daily cloud 1.1171-1.1264
• Option expiry 1.1100 in 463mln
 
USD/JPY
• Corp' bids 102.00 and 101.70-60 to underpin. 102.28/53 today's range
• More gains for Nikkei - close up 0.69% after 2.44% Mon' . DXY tests Fri's high
• 200HMA 102.21. Hourly cloud thickens later - top rises from 101.85 to 102.35
• Resistance at 104.02-105.45 daily cloud. 21DMA 104.11
• Bigger expiries - 825mln 102 today, 1.4bln 103 Thurs, 1.8bln 102.50 Friday
• EUR/JPY consolidates 113.35-62. Mon's 112.99- 113.75 range contains
 
EUR/CHF
• EUR/CHF extends climb to 1.0906 and eyes 200DMA at 1.0919
• Marginally less risk on but USD/CHF up with broadly stronger USD
• Swiss July jobless data in line at 3.3% adjusted
• Thin markets possibly amplifying FX moves but ranges remain tight
• Chart: http://reut.rs/2bg59iL
 
GBP/USD  
• GBP/USD slid thru 1.30 in Asia on the back of dovish McCafferty steer
• 1.2963 = 4wk low during Ldn am-to-date (1.2979 was Asia low)
• EUR/GBP has risen to 0.8549 (4wk high) on the back of dovish McCafferty
• 0.8547 = 1.17 GBP/EUR. 0.86 & 0.8629 (July high) among bull targets
 
USD/CAD  
• USD/CAD met fresh headwind pre-1.32 after vaulting 1.3186 (Asia high)
• 1.3190 was European am high. 1.3155 = subsequent low. 1.3153 = Asia low
• WTI oil $43/barrel at 6.10am ET vs sub-$40/barrel lows last week
 
AUD/USD
• AUD/USD revisited 0.7663 (Asia high) during the European am
• Search for yield = prime source of support for AUD
• Higher commodity prices are another AUD-positive
• Dalian iron ore rose to fresh 2yr high in Asia
• Offers tipped at 0.7675 (0.7676 was July high)
 
NZD/USD
• NZD/USD was helped off 0.7111 (early Europe low) by yield chasers
• 0.7161 (rally high from Monday’s 0.7088 low) resistance
• RBNZ OCR announcement Wednesday 5pm ET, 25bp cut to 2.0% expected

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)

• August holiday thinned markets impact flow/pressure vols
• RBNZ Thurs’ props related gamma. 1mth EUR vols get ECB
• 3mth vols up a few ticks as expiry rolls over US election result
• 1mth USD/JPY settles mid 9’s but off 5.5 vols since BoJ
• EUR and AUD vols by 2yr lows. Cable 1mth lows since Jan

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

• 12:30 Productivity Q2 mkt +0.5% q/q  prev -0.6%
• 12:30 Unit Labor Costs Q2 mkt +1.8% q/q, prev +4.5%
• 12:55 Redbook Wkly Same-St Sales Idx(prev +0.3% y/y
• 14:00 W/sale Inventories Jun mkt +0.0% m/m, prev +0.1%
• 14:00 W/sale Sales Jun mkt +0.4% m/m, prev +0.5%
• 15:45 FedTrade ops 15-yr Fannie May /Freddie Mac max $650 mln

 

 

Topics: US FX Market Open

 

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