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US FX Market Open – Wednesday, May 4, 2016: STERLING AGAIN UNDONE BY UNCERTAINTY

Posted by Marge Maresca on May 4, 2016 7:43:24 AM

 

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Overnight Events

• USD/JPY +0.2%, GBP/USD -0.36%, EUR/USD -0.12%
• DXY +0.23%, DAX -0.8%, Brent -0.2%, Gold -0.7%
• DE  Final Apr Service PMI 54.5 vs 54.6 prev, 54.6 exp
• EZ Final  Apr Service PMI 53.1 vs 53.2 prev, 53.2 exp
• EZ Mar Retail Sales -0.5% m/m vs +0.3% rvsd prev, -0.1% exp
• EZ Mar Retail Sales +2.1% y/y vs 2.7% rvsd prev, 2.5% exp
• UK Apr Construction PMI 52.0 vs 54.2 prev, 54.0 exp
• UK Shop Prices -1.7% y/y in April Vs -1.7% in March – BRC
• New Zealand Commodity Price Index -0.8% in April - ANZ Bank

Currency Summaries

EUR/USD  
• EUR/USD 1.1470-1.1512 in Europe
• EUR/crosses higher, 0.3% vs GBP, 0.2% CAD & NZD, 0.8 MXN, 1% vs ZAR
• EZ services PMI 53.1 in April vs flash 53.2
• EZ April composite PMI unchanged versus flash at 53.0
• Support 1.1440-60. Resistance 1.1520-40. Bias up
• Risk averse markets may underpin safer assets akin EUR (DAX -0.75%)   

USD/JPY
• USD/JPY range has been 106.54-107.45
• Spiked to 107.45 in Asia, talk large buy stop above 107.00 was triggered
• Topped out close to pivot point @107.41, but risk for a test of 107.98 Fibo
• 105.55 was the new multi-month low on Tue, rumours of a large bid @105.50
• Lack of liquidity due to Japan's "Golden Week" holiday exaggerates moves
• EUR/JPY sees 122.59-123.51

EUR/CHF
• USD/CHF fighting a strong Tuesday bull signal
• Hammer candle into mild confirmation today but not convincing
• Dollar swing to the topside early Europe but faded fast
• Jittery stocks and mixed commodities leaning on risk
• Spot plays  0.9537-0.9575: Chart: http://reut.rs/24pM6ek
• EUR/CHF trying to lift but again not convincing
• Cross plays 1.0972-1.0993
 
GBP/USD   
• GBP/USD early push over & failure above 200-HMA: http://reut.rs/1Ttvrvg
• One way traffic since as pound undone by uncertainty
• More close Brexit polls. BMG 45 leave 43 stay. TNS 39 in/36 out
• More poor data, almost three year low construction PMI
• FTSE dives 1.2%, miners hit by weaker commodities
• Risk averse conditions hit GBP/CHF & GBP/JPY: http://reut.rs/24pX6s2    

USD/CAD
• USD recovery and Oil setback saw sharp USD/CAD recovery Tues'
• 1.2461 setback low Tues' to 1.2777 in London today
• USD and Oil still driving the pair and remain closely eyed
• DXY 91.92-93.23 recovery Tues, 93.27 today. Oil 45.0 vs 46.40 Tues’
• Market awaits Cnd trade data today, double payrolls Friday

AUD/USD     
• Post RBA slide from 0.7710 based 0.7467 in Asia today. Corp bids 0.7460's
• Recovery stalls 0.7517 since. Weak commods, firmer USD weigh now
• Daily cloud may help limit deeper declines - AUD inside first time since Feb
• Daily cloud 0.7508-0.7275. needs close above to change bearish outlook

NZD/USD
• NZD hit beside AUD after RBA cut Tues - sub 0.70 to 0.6875 today
• Firmer USD limits recovery attempts to 0.6915
• AUD/NZD off Tues 1.0790 low to 1.0889, but looking heavy again
• Cross capped by 109.55 cloud base. Scope to 26 Feb low 106.70

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)

 • AUD/USD vols/AUD puts underpinned by post RBA spot slide
• USD/JPY vols/JPY calls off highs as spot recovers from 105.55
• Postioning light below 105.00 barriers, break there to fuel vol/JPY calls
• USD/CNH 1mth vol new low since August deval at 4.0
• GBP performance lifts vols. Closer polls boost post Brexit vols
• EUR/USD vol losses limited despite spot setback. 1mth gets ECB

Economic Data(Source:Bloomberg)

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Topics: US FX Market Open

 

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