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US FX Market Open – Wednesday, January 25,2017: Sterling the leader as USD falls again

Posted by Marge Maresca on Jan 25, 2017 7:35:47 AM

gbpdollarslide.jpg

Overnight Events

• USD/JPY -0.2%, GBP/USD +0.4%, EUR/USD +0.2%
• DXY -0.3%, DAX +1.0%, Brent -0.7%, Gold -0.5%  
• Germany BDI: sees $ surging by 5-10% against manjor world currencies this year - Rtrs
• Buba Dombtret: Given current infl data, have to live with low int rate until further notice - Rtrs  
• BoE Salmon: Expects further flash crashes in core global markets – Rtrs
• ECB Lautenschlaeger: Should soon start discussing exit from stimulus – Rtrs
• DE Jan IFO Business Climate Index 109.8 vs prev 111.0. 111.3 exp  
• DE Jan IFO Current Conditions Index 116.9 vs prev 116.7 rvsd. 116.9 exp  
• CH Dec UBS Consumption Indicator 1.50 vs prev 1.45 rvsd
• CH Jan ZEW Investor Sentiment 18.5 vs prev 12.9
• GB Jan CBI Manuf Orders +15 vs prev 0. +2 exp. Highest since Apr 2015

Currency Summaries

EUR/USD
• EUR/USD slightly higher in Europe alongside higher bund yields
• Europe range 1.0711-55 vs Asia's 1.0711-38. both under NA peak 1.0775
• 10 year bund yield matched Dec 2016 high of 0.45%
• German IFO ignored.  Fell to 109.8 in Jan from 111.0 and vs 111.3 f/c
• Few expiries today EUR 750mln 1.0700-50
• Daily cloud & 100-DMA key above: http://reut.rs/2krhEPK   

USD/JPY
• Standing 114.00 offers should offers supply. Daily tenkan comes in @114.07
• Thickening cloud spans 109.93-114.97, hurting nr-term bulls
• 1.8 yards worth of 114.00 strikes set to expire at the NY cut on Thu
• Tokyo saw a push very early to 113.99 on Gotobi fix demand
• Market subsequently fell to 113.37 on continuing concerns over Trump

USD/CHF
• USD/CHF pivots 1.00, cannot sustain gains above. 1.0026 high
• EUR/CHF bid, the cross has pulled away fm the 1.07 SNB perceived base
• CB likely bids there and below. Buying also seen in 1.0725/35 region
• Sucession of higher daily lows on the charts. 1.0750 Tues, 1.0745 today
• Tech resistance at 1.0754 (30-DMA Bolli top)

GBP/USD
• GBP/USD scaled a 6wk peak 2 pips shy of 1.26 after tripping stops above 1.2550
• Offers pre-1.2550 kept lid on cable Tuesday (1.2541 = Asia high). 1.2491  early Ldn low
• EUR/GBP fell to 0.8530 during the European am as more GBP shorts were jettisoned
• 0.8530 = 20-day low. 0.8579 was early Europe high. 0.8650 was Tuesday high

USD/CAD
• USD/CAD elicited support at 1.3118 after sliding from 1.3160 (European am high)
• 1.3118 = 200DMA. 1.3106 = Tuesday low/76.4% of 1.3019-1.3388
• Large 1.3185 option expiry for NY cut, $1.4bln strike

AUD/USD
• AUD/USD extended south to 0.7515 early Europe as sub-f/c Oz CPI digested
• 0.7515 = six-day low. 0.7597 was Asia high, pre-Australian CPI data
• 0.7552 = rally high from 0.7515. 0.7550 option expiry for NY cut, A$337mn strike
• AUD/NZD extended south to a 3wk low of 1.0383 during the European am
• 1.0471 was Asia high, before Australian CPI data. 1.0408 = Asia low

NZD/USD
• NZD/USD revisited 0.7261 (Asia high) after rising from 0.7225 (European am low)
• 0.7276 = 11wk high Tuesday. NZ Q4 CPI data due 4.45pm ET, f/c +1.2% y/y

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)

• Implied and realised vols heavy/lower as spot markets consolidate
• Impending China NY holidays don’t help, Minimal data risk until BoJ/FOMC
• EUR/USD 1mth vol lowest since Nov at 8.1 and 0.9 below daily realised vol
• Cable vols hit hard since UK PM Brexit speech and Article 50 – suggest value now
• Even USD/JPY vols falling as recent intraday spot volatility slows

Economic Data (GMT) - (Source:ThompsonReuters)

• 12:00  MBA Weekly Mortgage Application Indices
• 14:00  FHFA Home Price Index (Nov) prev +6.2% y/y
• 15:30  EIA Weekly Petroleum Status Report

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

• 19:30  FedTrade operation 30-yr Fannie Mae/Freddie Mac (max $1.725 bn)

 

Topics: US FX Market Open

 

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