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US FX Market Open – Wednesday, April 27, 2016: DATA AND COMMODITIES A PERFECT STORM FOR AUD

Posted by Marge Maresca on Apr 27, 2016 7:23:44 AM

stormau.png

Overnight Events

• AU Q1 CPI -0.2% q/q, +1.3% y/y,+0.3/+1.8%,eyed,
• AU Q1 core CPI below RBA target 2nd time in 15-yrs
• AFR’s Mitchell-RBA has perfect excuse to cut pre-election
• AUD/USD -1.8% Iron -5.45%, Copper -0.6%, AUD/CAD -1.89%
• EUR/USD +0.07%, USD/JPY +0.07%, GBP/USD +0.12%
• DXY -0.1%, DAX +0.21%, Brent +2.47%, Gold +0.25%
• DE May GfK Consumer confidence 9.7 vs 9.4 prev, 9.4 exp
• DE Mar Imp prices -5.9% y/y vs -5.7% pregv, -6.3% exp
• EZ Mar M3 5.0% yy vs 4.9% rvsd prev, 5.0% exp
• UK Apr CBI Distr Trades -13 vs +7 prev, +12 exp
• UK Prelim Q1 GDP +0.4% q/q vs 0.6% prev, 0.4% exp
• UK Prelim Q1 GDP +2.1% y/y vs 2.1% prev, 2.0% exp
• CH Mar UBS Consumption indicator 1.51 vs  downward rvsd 1.45
• Jpn life insurer frgn securities holdings at record high FY ‘15/16

EUR/USD  
• Pre-FOMC adjusting while crosses tread water: 1.1333 to 1.1304 drop
• Price closes in on 200HMA but sense there is scope for a deeper drop
• Dip buyers touted but EUR looks heavy and could see  1.1275 = 100HMA
• Market long EUR and deeper adjustments the risk
• Rates markets move to price more tightening: http://reut.rs/1WSedgA
• Chart: http://reut.rs/1QzUcUi 

USD/JPY
• USD/JPY range has been 111.03-111.40
• Spot faced heavy resistance ahead of 111.50 in late NY on Tue
• Failed circa 111.43 Fibo - 61.8% retrace of the 111.90-110.67 fall
• Offers were ahead of 111.50 in Asia, more close to 111.70
• Bids ahead of 111.00, thicker between 110.70-110.90
• NY Cut Exp: 110 (1B), 110.50 (797M), 111.00 (743M), 111.50 (444M), 112 (741M)
• EUR/JPY has seen 125.47-126.04 so far

EUR/CHF
• EUR/CHF bulls frustrated by daily cloud top
• Monday's hammer candle playing out nicely with a two-day confirmation
• Bid but cross needs to clear Friday 1.1016 high and 1.1005 cloud top
• Offers are touted in the 1.1000-10 area and bids 1.0995-00
• Spectre of SNB support continues to give direction
• Continue to target 1.1060: Chart: http://reut.rs/1QzRcaw
• UBS Mar Swiss consumption indicator rose to 1.51 vs 1.41 prev
• SNB's quarterly data and Jordan speech Fri are next key local events
 
GBP/USD   
• GBP/USD fell to a pre-UK GDP data low of 1.4547 amid talk of UK clearer selling
• 1.4621 was European am high (to follow 1.4555 early Europe low)
• EUR/GBP has fallen 40 pips from 0.7783 to threaten 0.7736
• 0.7783 was pre-UK GDP data high. 0.7736 = Tuesday’s low & Mar 14 low

USD/CAD
• USD/CAD fell to a European am low of 1.2575 as oil prices rose
• 1.2575 = new 9mth low. Stops tipped below 1.2570
• Bids tipped around 1.2550 & pre-1.2500 (mooted option barrier level)
• WTI oil circa $45/barrel at 6.15am ET, highest level for five months

AUD/USD            
• AUD/USD dropped to threaten 0.7600 early Europe as shock Oz CPI fall digested
• Spot was trading circa 0.7760 into 9.30pm ET data release
• AUD also been hurt by Dalian iron ore falling 6% for 2nd day in a row Wednesday
• Interest rate futures suggest 57% chance of 25bp RBA cash rate cut May 3
• Compares to 15% probability Tuesday. Cash rate 2% since 25bp cut in May 2015

NZD/USD
• NZD/USD has dropped to threaten 0.6836 on RBNZ OCR verdict event risk
• 0.6836 was pre-weekend low & Monday’s early Asia low
• NZD/USD was trading just above 0.69 into Oz inflation data shock
• Interest rate futures suggest 48% chance of 25bp OCR cut at 5pm 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)

• FOMC, RBNZ, BoJ tonight, RBA Tues more important after poor CPI
• Cost of O/n/Thursday vol 17.0 or 80 pips in EUR/USD
• O/n USD/JPY is 40.0/190 pips break even - highest in over 7 years
• O/n NZD/USD is 35.0 vols or 100 pips break even (50% chance RBNZ cut)
• O/n AUD 21.5 or 70 pips, but 1wk favoured over RBA - 15.0/126 pips
• Post Brexit GBP and EUR vol sell off has stalled for now

Economic Data(Source:Bloomberg)Apr27data-1.png

Topics: US FX Market Open

 

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