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US FX Market Open – Wednesday, September 14, 2016: USD/JPY hits 103.35 on BOJ easing spec

Posted by Marge Maresca on Sep 14, 2016 7:52:22 AM

 

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Overnight Events

• USD/JPY +0.11%, EUR/USD +0.07%, GBP/USD +0.17%
• DXY -0.09%, DAX +0.4%, Brent +0.17%, Iron -0.4%
• UK Aug Claimant Count +2.4k vs rvsd -3.6k prev, 1.8k exp
• UK Jul ILO Jobless rate 4.9% vs 4.9% prev, 4.9% exp
• UK Jul Avg Earnings +2.1% vs 2.3% prev, 2.1% exp
• CH Sept ZEW Inv. Sentiment +2.7 vs -2.8 prev
• EZ Jul Ind. Prod. -1.1% vs rvsd +0.8% prev, -0.9% exp
• BoJ to explore delving deeper into neg rates
• BoJ mull making neg rates centre piece of future easing – Nikkei
• BOJ to highlight merits of target JGB ylds up to 10 yrs - sources - Rtrs
• Japan PM Abe – Econ escaping deflation
• Abe  BoJ policy spreading to real  economy
• Most Japanese reg bks will lose money on lending in '25 – Nikkei
• China CB working on Shanghai-London stock connect – Securities Times
• AU 30-year bond debut seen drawing solid demand – Rtrs
• AU Sept Westpac/MI consumer confidence index +0.3% to 101.4, +8% y/y

Currency Summaries

EUR/USD  
• EUR/USD snooze continues just 1.1215-42 in Europe
• EZ July IP a soft -0.5% yy but better than the feared -0.7% yy
• Potential EUR negative-Bayer agree USD 66bln all cash Monsanto buy
• EUR 27bln Italian bond redemptions and coupons may also weigh
• Slight UST/Bund spread widening evident ahead Fed: http://reut.rs/2cqEba3
• EUR shorts a downside brake. Stock drops highlight EUR safer asset  

USD/JPY  
• USD/JPY range has been 102.43-103.35
• Saw 103.35 top on BoJ easing hopes
• decent sell orders on platforms between 103.35/45
• Subsequently weighed down by falling TL from June now @103.49
• Cloud spans 103.48-105.18, difficult for USD/JPY bulls to sustain gains
• 103.58 - 76.4% retrace of the 104.32 to 101.20 Sept fall

EUR/CHF
• EUR/CHF bear bias and tech signal in the offing Wed
• Early push to a new recent high of 1.0985 then drop to 1.0949
• Hourly cloud and 200HMA below at 1.0944 and 1.0938
• Technically looking offered again
• Swiss ZEW Inv sentiment rebound noted
• USD/CHF also heads south after early gains
• Spot 0.9790 to 0.9749 and held by the 200HMA
• Chart: 1) http://reut.rs/2cGpgeq  2) http://reut.rs/2cGpdzg

GBP/USD  
• GBP/USD topped out circa 1.3228 early Europe after more GBP/JPY gains
• 1.3228 = 38.2% of Tuesday fall from 1.3328 (post-UK CPI high) to 1.3166
• Prior GBP/JPY gains helped inflate cable from 1.3164 (Asia low)
• EUR/GBP is trading within strike of a large 0.8500 option expiry for NY cut
• 0.8383 was European am low after solid UK jobs data (0.8483 = Mon high)

USD/CAD
• USD/CAD elicited early Europe support at 1.3128 after breaking below 1.3146
• 1.3128 = 38.2% of Tuesday rise from 1.3030-1.3190. Asia low: 1.3146
• Offers tipped circa 1.32 (Aug high). 1.3200 expiry for NY cut, $450mn strike

AUD/USD      
• AUD/USD elicited support just shy of 0.7458 after sliding from 0.7496
• 0.7458 = Asia low. More bids tipped around 0.7443 (Tuesday’s 7wk low)
• 0.7496 was early Europe high as AUD/JPY climbed to 77.40

NZD/USD
• NZD/USD pushed its recovery envelope from 0.7235 to 0.7289 during Europe am
• 0.7235 was Tuesday’s 12-day low. 0.7238-0.7268 was Asia range
• NZ Q2 GDP data due 6.45pm ET. Growth of 1.1% f/c

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)

• 1 week expiries roll over BoJ now, tomorrow get RBNZ and FOMC
• 1 week USD/JPY vol jumps 11.0 to 19.0 or 216 from 125 pips
• O/n GBP vols around 100 pips break even in to MPC Thurs
• USD/JPY vols firm with spot on BoJ easing speculation
• AUD vols peak for now. EUR/USD propped by broader vol buying

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

• 12:30 Import Price Idx Aug mkt -0.1% m/m; prev +0.1%, -3.7% y/y
• 12:30 Export Price Idx Aug mkt +0.1% m/m; prev +0.2%, -3.0% y/y
• 14:30 EIA Weekly Petroleum Status Report

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

• 15:45 FedTrade operation 30-yr Fannie Mae/Freddie Mac max $2.550 bln
• 18:30 FedTrade operation 30-yr Ginnie Mae max $1.550 bln

 

Topics: US FX Market Open

 

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