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US FX Market Open – Wednesday, June 15, 2016: CONSOLIDATION AS BREXIT ISSUE SIMMERS

Posted by Marge Maresca on Jun 15, 2016 7:36:38 AM



Overnight Events

• UK May Claimant Count -0.4k vs +6.4k rvsd prev, 0.0k exp
• UK  ILO Jobless Rate 5.0%, 5.1% exp, lowest since 2005
• UK Apr Earnings 3m y/y +2.0% vs 2.0% prev, 2.1% exp
• EZ Apr Trade Surplus E 27.5 bln vs 28.6 bln prev
• JPMorgan research UK campaign to leave in the lead
• MSCI declines to add China A-shares, South Korea to global benchmark
• BMG hoax poll data. Pollster says poll not released yet
• Brexit would force Japan Inc to adopt twin-track strategy in Europe – BTS
• Japan ChiefCabSec Suga – Desirable for UK to stay in EU
• PBOC – To fend off potential risks managing FX reserves, currently  appropriate – Rtrs
• Australia Jun Westpac/MI consumer confidence index -1.0% to 102.2, +7.2% y/y

Currency Summaries

• Another day, another dull EUR/USD range, 1.1298-1.1235 in Europe
• Trading suppressed ahead today's FOMC decision but also ahead UK referendum
• Further risk reduction closer to UK vote likely to see EUR/USD shorts pared
• 21/100-DMAs 1.1220/1.1230 & daily cloud base 1.1219 weigh intraday
• Levels pivotal on NY closing basis:

• USD/JPY range has been 105.94-106.40
• Offers are still in size ahead of 106.50
• Spot is stuck below 106.46 pivot point
• More JPY safe haven flows possible into UK referendum next Thu
• Decent demand at Gotobi Tokyo fix, Japanese importers were out in force
• Short-covering was another reason for USD/JPY rise
• EUR/JPY has seen 118.73-119.44

• EUR/CHF staged strong rebound against Tues 1.0884-1.0791
• 1.0846 session high as CHF and EM-risk profit taking sets in
• Cross remains a sell but near 3% drop since June 3 overdone
• USD/CHF continues sideways inside its daily cloud
• Spot plays 0.9630-0.9663 range
• Chart:

• GBP/USD rose to 1.4124 after better than expected UK data at 4.30am ET
• Earnings came in higher than expected, ILO jobless rate fell to 11yr low
• 1.4187 was pre-UK data high. 1.4094-1.4148 was Asia range
• EUR/GBP fell to 0.7892 on the better than expected UK data
• Ipsos MORI & Survation Brexit polls due Thursday

• USD/CAD rose to 1.2879 in Asia as WTI fell to 3wk low of $47.55/barrel
• Ensuing fall to 1.2827 influenced by rise in risk appetite
• 1.2822 was Tuesday’s North American session low. 1.2881 = 55DMA

• AUD/USD has risen to threaten 0.7411 amid a rise in risk appetite
• 0.7411 was Monday’s high. 0.7334 was Asia low
• Recent talk of stops above 0.7420 (0.7421 was June 9 low)
• Australian May jobs data due 9.30pm ET. Employment f/c +15k

• NZD/USD has risen to 0.7046 amid a rise in risk appetite
• 0.6963 was 1wk low in Asia. Fonterra dairy auction result due circa 10am ET
• NZ Q1 GDP data due 6.45pm ET. +0.5% f/c vs +0.9% in Q4

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)

• Recent G10 vol rally over, sellers return for now as risk recovers
• FOMC/BoJ tonight, but O/n JPY vol still drops 30.0-24.0 (135-110 pips)
• 1mth USD/ JPY 13.8 vs 15.0 and EUR/USD 1mth 12.0 from 13.6 Tuesday
• Even GBP vols off extremes, tho losses obviously limited pre Brexit
• Cable vol spreads remain high and wide and flow consequently limited

Economic Data(Source:Bloomberg)


Topics: US FX Market Open


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