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US FX Market Open – Tuesday, February 14, 2017: Dollar generally softer ahead of Yellen

Posted by Marge Maresca on Feb 14, 2017 7:21:29 AM

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Overnight Events

• EUR/USD +0.2%, USD/JPY -0.3%, GBP/USD -0.5%, DXY -0.1%,        
• DAX +0.1%, Brent +0.9%, Gold +0.3%, Copper +0.6%
• Copper firmer after hefty overnight gains on supply woes - Rtrs
• China iron ore extends gains to 3-year high, upbeat steel outlook - Rtrs
• Britain unlikely to trigger Article 50 at March EU summit-Brexit minister - Rtrs
• Pressure mounts on France's Fillon as party lawmakers rebel - Rtrs
• BoJ Gov Kuroda – Global yield rises alone won’t trigger rate hikes
• EZ Q4 GDP flash est 0.4% m/m, 1.7% y/y vs prev 0.5%/1.8%. 0.5%/1.8% f/c
• EZ Dec Ind production -1.6% m/m, 2.0% y/y vs prev 1.5%/3.2%. -1.5%/1.7% f/c
• GB Jan CPI -0.5% m/m, 1.8% y/y vs prev 0.5%/1.6%. -0.5%/1.9% f/c
• GB Jan PPI core output +0.5% m/m, +2.4% y/y vs prev 0.0%/2.1%. 0.3%/2.2% f/c
• DE Jan CPI final -0.6% m/m, 1.9% y/y vs prev -0.6%/1.9%. -0.6%/1.9% f/c
• DE Q4 GDP flash SA 0.4% q/q vs prev 0.1% rvsd. 0.5% f/c
• CH Jan CPI 0.0% m/m, 0.3% y/y vs prev -0.1%/0.0% rvsd. 0.3% f/c
• CH Jan Producer/Import price 0.4% m/m, 0.8% y/y vs prev 0.2%/0.0%

Currency Summaries

EUR/USD
• Asia range 1.0592-1.0624. Repelled by hrly cloud base 1.0634 early London
• Support 1.0584 - 50% of 1.0340-1.0829. Daily cloud base 1.0565
• Bids touted 1.0590-80, stops 1.0540. Closed sub 55DMA 1.0604 Mon - bearish
• Awaiting Yellen, any mention of live March/3 hikes 2017 and d/side vulnerable
• Overnight implied vol break evens pricing a mere 55 pips however
• Yields and DXY steady - latter well within Mons 100.58-101.11 range
• No reaction to ZEW, EU political risk more of a concern - French polls watched
• 3mth implied vols sharply higher since capturing French election result

USD/JPY
• Japanese exporters to 114.00 and importers down to 113.00 contain
• U.S yields slip from Mon's high: 2s @ 1.2059: Chart: http://reut.rs/2kF0OJM
• 1.1bln 113.50 expiry today and 4.5bln 114's today/Wed
• EUR/JPY weakest of crosses, through s-t supports, 120.68 to 120.23
• BoJ Gov Kuroda – Global yield rises alone won’t trigger rate hikes
• USD/JPY capped by 30DMA @ 114.04 and 112.86 10DMA below
• Hourly cloud contains European action: 113.20-113.61
• Chart: 1) http://reut.rs/2lEOX2x 2) http://reut.rs/2lFuYkf

USD/CHF
• USD/CHF failed to sustain gains above kijun-sen at 1.0055
• Softer dollar & failure to close above the line last 2 sessions taking its toll
• Pullback low at 1.0032 but holds above 100-DMA at 1.0017
• EUR/CHF 1.0675-1.0660 in Europe as tight range play persists
• Makes lower day highs-rally attempts ltd ahead of last wk's 1.0685 peak

GBP/USD
• GBP/USD fell three-quarters-of-a-cent to threaten 1.2440 on sub-f/c UK CPI data
• Up 1.8% vs +1.9% f/c. Core CPI & RPI sub-f/c too (4.30am ET). 1.2440 = Feb 10 low
• 1.2515 was pre-UK inflation data low vs 1.2548 late Asia high after Flynn exit news
• EUR/GBP rose nearly half-a-penny to threaten 0.8528 on sub-f/c UK CPI data
• 0.8528 = 76.4% of 0.8550-0.8457 & 38.2% of 0.8644-0.8457. 0.8457 = 6wk low Monday

USD/CAD
• USD/CAD is trading within strike of a large 1.3050 option expiry for the NY cut
• $1.275bln strike. 1.3039-1.3057 was European am range. 1.3055 = Monday low
• Monday low plumbed after CAD boosted by positive Trump/Trudeau meeting
• Bids expected near 1.3000 (1.3008 was last week’s low, Feb 6)

AUD/USD
• AUD/USD extended north from 0.7637 to threaten 0.7689 during the European am
• 0.7637 = Asia low. 0.7689 was last Friday’s high. 0.7688 was Monday’s high
• Offers tipped ahead of 0.77 option barrier level, stops tipped above 0.7700/05

NZD/USD
• NZD/USD met headwind pre-0.72 after firming from 0.7169 (Asia low)
• More offers tipped ahead of 0.7219 (Monday’s high)
• AUD/NZD is consolidating recent gains at 3mth highs just under 1.07

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)

• Market awaits Yellen, Break evens for o/n vols not excessive
• EUR pricing 55 pips and USD/JPY 85 pips in to the event
• USD/JPY 1wk-1mth vols new lows for 2017 as 113 handle holds
• Big JPY expiries 113-114 today/Wed. EUR/USD curve steady
• 3mth well inflated since capturing French elections last Wed
• AUD curve extends 2yr lows. Hit on CNH vols today

Economic Data (GMT) - (Source:ThompsonReuters)

• 13:30  PPI Final Demand (Jan) mkt +0.3% m/m, 1.5% y/y; prev +0.2% m/m, +1.6% y/y
• 13:30  -- PPI Final Demand ex-Food and Energy (Jan) mkt +0.2% m/m, +1.1% y/y; prev +0.1% m/m, +1.6% y/y
• 13:55  Redbook Same-Store Sales Index (weekly)  prev +0.7% y/y

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

• 13:30 Richmond Fed Lacker speaks at U.Delaware forum, Newark, DE
• 15:00 FOMC Chair Yellen semi-annual Senate testimony, Washington, DC
• 18:00 Dallas Fed Kaplan at Houston luncheon
• 18:15 Atlanta Fed Lockhart speaks in Huntsville, AL

 

Topics: US FX Market Open

 

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