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Forex Trading, Market News & Technical Analysis


Posted by Marge Maresca on Jul 12, 2016 7:51:49 AM



Overnight Events

• Stocks up, GBP up, Yen weaker across board, commodities up
• USD/JPY +0.9%, GBP/USD +1.45%, EUR/USD +0.45%
• DXY -0.37%, DAX +1.65%, Brent +2.33%, Iron +6.0%
• FTSE 250 +0.6%, Nikkei closed +2.46%, 11-mth high FTSE100
• DE Jun HICP final 0.2% y/y vs 0.2% prev , 0.2% exp
• DE Jun CPI Final 0.3% y/y vs 0.3% prev, 0.3% exp
• DE Jun W/Sale Price Idx -1.5% y/y vs -2.3% prev
• New UK PM May to make Brexit a success, to favor social order – FT
• UK Jun BRC LFL R.Sales -0.5% y/y, total sales +0.2%, May +0.5%, +1.4%
• BCC balance of mfg expecting improvement lowest since Q3 ’12
• Government Spokesman Sugu does not confirm size of stimulus - Rtrs
• Japan Foreign Min: Hague tribunal ruling on South China Sea final, legally binding - Rtrs
• Econ Min Ishihara: Will consider size of stimulus spending from now - Rtrs
• Ishihara: Extra budget to fund stimulus submitted in Autumn - Rtrs
• Japan to downgrade fiscal ’16 growth forecast, +1.7% to +0.9% - Nikkei
• Japan Inc – economy top priority, not constitution – Nikkei
• Tight family budgets crimping Japanese spending – Nikkei
• Abe eyes broader public pension coverage to bolster demand – Nikkei
• Australia Jun NAB biz conditions index +12, confidence +6, May +10, +3

Currency Summaries

• EUR/USD 1.1126 after GBP rallies 1.3% vs USD
• EUR/GBP long liquidation puts brakes on EUR/USD rise
• Unwind UST longs as some safety trades unwound also weighs
• UST/Bund spreads widen across curve, 11bp 2's 5bp 10's in a week
• Specs hold sizeable EUR shorts, added on Brexit:
• More unwinding looks very likely, squeeze possible on 1.12 break

• Signs of stable political environment in UK lifts overall sentiment
• USD/JPY has risen from 102.45 to hit 103.92 Tuesday
• Risk on as Japan Foreign Minister spoke on Hague South China Sea ruling
• Had earlier peaked at 103.64 to drop below 103.00 as few details emerged on Stimulus
• Clear Japan is still pondering size of stimulus
• GBP/JPY rises nearly 4 big figures from 133.05 to 137.00
• Global stocks are heading higher, Nikkei makes big gains this week
• EUR/CHF new 1.0908 high and closing in on 200DMA at 1.0919
• Sizeable shift in risk sentiment doing the SNB’s bidding
• Stocks, commodities and safety bed partner Yen much weaker
• USD/CHF hanging just under the 200DMA for third day
• Spot sideways but techs suggest bull continuation at play
• Chart: 1)   2)

• GBP/USD has been helped to a 1wk high of 1.3188 by GBP/JPY short-covering
• Short-covering influenced by a rise in risk appetite amid Japan stimulus hopes
• Cable offers expected around 1.32 (stops below 1.32 were tripped 7 days ago)
• EUR/GBP has fallen to a 1wk low of 0.8422 amid GBP short-covering

• USD/CAD fell to a European am low of 1.3023 as oil prices rose
• WTI $45.60/barrel at 6.15am ET, 80 cents higher on the day
• 1.3085 was Asia low. 1.3140 was Monday’s 7wk high, amid lower oil prices

• AUD/USD extended north to 0.7638 during the European am amid “risk on”
• Nikkei closed up 2.46% Tuesday to follow Monday’s 3.98% rise
• 0.7593 was AUD/USD high in Asia. Resistance 0.7650 (pre-Brexit high)

• NZD/USD scaled a fresh 14mth peak of 0.7318 during the European am amid “risk on”
• 0.7207-0.7270 was Asia range. 0.7308 was prior 14mth high (last Friday)
• McDermott to discuss how RBNZ makes OCR decisions 8.30pm ET

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)

• Minimal risk for BoC – unchanged expected. O/n vol 80 pips break even
• EUR/USD vols continue south as range bound spot impacts realised
• GBP premiums still bid for Thursday/Friday – post UK MPC
• Front end Cable and EUR/GBP vols in to new post Brexit lows
• USD/JPY vols propped, 1mth higher and JPY calls suffers as JPY weakens
• AUD/USD vols meet demand after retesting recent and 2016 lows

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

• 12:55 Redbook Weekly Same-Store Sales Index prev +0.6% y/y
• 14:00 W/sale Inventories May mkt +0.2% m/m, prev +0.6%
• 14:00 W/sale Sales May mkt +0.4% m/m, prev +1.0%
• 14:00 Job Openings/Turnover Survey May mkt 5.7 mln, prev 5.788

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

• 12:45 FRB St. Louis's Bullard speaks at NABE event; St. Louis
• 15:45 FedTrade operation 30-year Ginnie Mae max $1.325 bln
• 21:30 FRB Minneapolis's Kashkari town hall discussion; Marquette, MI
• 02:30 FRB Cleveland's Mester economic outlook/monetary policy; Sydney

Topics: US FX Market Open


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