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Forex Trading, Market News & Technical Analysis


Posted by Marge Maresca on Mar 22, 2016 7:30:12 AM


Overnight Events

• Explosions hit Brussels airport, metro station at least 13 killed – Belgian media - RTRS
• China Vice Fin Min Zhu – No secret US-China exchange rate agreement – RTRS
• China considers Tobin tax to contain capital outflows – FX regulator – RTRS
• Saudi policy-making body approves economic reforms – SAGIA head - RTRS
• Japan Fin Min Aso – No need now for fresh fiscal stimulus, underlying fundamentals firm – RTRS
• Japan Econ Min ishihara – NIRP effect not yet clear, must monitor for 3 months – RTRS
• BoJ Dep Gov Nakaso – Possible for rates to go farther into negative territory, can’t say how far – RTRS
• Japan Lower House approves reflationist Sakurai for BoJ Policy Board – RTRS
• Ex-Norinchukin MD Takahashi appointed new GPIF head from April 1 – RTRS
• Japan Mar Nikkei Mfg PMI flash 49.1 vs 50.1 prev
• EZ Mar Markit mfg flash PMI 51.4 vs 51.2 prev, 51.3 exp
• EZ Mar Markit serv flash PMI 54.0 vs 53.3 prev, 51.3 exp
• EZ Mar Markit comp flash PMI 53.7 vs 53.0 prev, 53.0 exp
• German Mar Markit mfg flash PMI 50.4 vs 50.5 prev, 50.8 exp
• German Mar Markit serv flash PMI 55.5 vs 55.3 prev, 55.0 exp
• German Mar Markit comp mfg flash PMI 54.1 vs 54.1 prev
• German Mar Ifo business climate 106.7 vs 105.7 prev, 106.0 exp
• German Mar Ifo current conditions 113.8 vs 112.9 prev, 112.6 exp
• German Mar Ifo expectations 100.0 vs 98.8 prev, 99.5 exp
• German Mar ZEW economic sentiment 4.3 vs 1.0 prev, 5.0 exp
• German Mar ZEW current conditions 50.7 vs 52.3 prev, 53.0 exp
• UK Feb CPI 0.2% m/m vs -0.8% prev, 0.4% exp
• UK Feb CPI 0.3% y/y vs 0.3% prev, 0.4% exp
• UK Feb Core CPI 0.4% m/m vs -1.0% prev, 0.5% exp
• UK Feb Core CPI 1.2% y/y vs 1.2% prev, 1.2% exp
• UK Feb RPI 0.5% m/m vs -0.7% prev, 0.5% exp
• UK Feb RPI 1.3% y/y vs 1.3% prev, 1.3% exp
• UK Feb PSNB Ex Banks GBP 7.089bn vs -11.21bn prev, 5.8bn exp
• UK Feb PSNB GBP 6.485bn m/m vs -11.81bn prev, 5.25bn exp
• Paddy Power cuts Brexit odds to 13/8, from 2/1 Monday & 9/4 a week ago
• Moody’s warns UK budget signals negative for rating - RTRS
• Chancellor Osborne looks set to miss budget target for 2015/16 – RTRS
• London Mayor Johnson says abandoned welfare cuts were a mistake - RTRS

Currency Summaries
• Brussels terror attacks spur EUR/USD sell-off
• 1.1260-1.1188 in Europe. 1.1235-40 at time of Brussels bombs
• Base comes in just ahead 200-HMA @ 1.1182
• Data supportive EUR. IFO 106.7 from 105.7. EZ composite PMI 53.7 from 53.0
• 100-HMA (1.1252) reverts to resistance:
• USD/JPY dropped from 112.22 in Asia to hit 111.38 in London
• Flows into the yen after the Brussel explosions on to risk aversion
• Made light work of Japanese bids which were topped @111.75
• Offers from 112.25, US name tipped
• Tech outlook remains negative, expect eventual break below 111.00
• EUR/JPY fell from 126.27 to hit 124.67, matching Fibo level

• EUR/CHF 1.0915-1.0876 in reaction Brussels terror attacks
• A recently more active SNB likely to smooth CHF on such news
• Low close prior EUR/CHF to the highs Mar 1/3 1.0877/74
• 200-DMA key @ 1.0820. Certain to be SNB sensitive
• Record trade surplus to cast doubt on over strong CHF

• GBP/USD fell to 1.4253 as the USD caught a safe-haven bid on news from Brussels
• 1.4366-1.4398 was Asia range, before two explosions at Brussels airport
• Greenback higher up the safe-haven currency ladder than GBP
• 1.4310 = rally high from 1.4253. EUR/GBP rose to 0.7857 into IFO beat at 0900GMT

• USD/CAD rose to 1.3138 as USD caught safe-haven bid on news from Brussels
• 1.3061 = subsequent low. 1.3055 = early Europe low (pre-Brussels airport news)
• Canada budget will be presented today               

• AUD/USD fell 70 pips from 0.7621 amid flight to USD safety on Brussels news
• 0.7621 was early Europe high, after upbeat Stevens. 0.7569 = Asia low

• NZD/USD based at 0.6721 after greenback caught safe-haven bid on Brussels news
• 0.6721 approximates to 10DMA. 0.6718 was last Thursday’s low (early Asia)

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)

• Risk aversion props vols after Brussels Explosions
• Curves were heavy prior and current gains only limited
• USD/JPY 1mth vol tested 2016 low at 8.65 before regaining 9.1
• BoJ threat and 110 barriers seen holding d/side and pressing vols
• CNH vols met demand last week after heavy losses through Feb’
• 3mth GBP based vols will jump Wed’s as expiry gets Brexit vote

Chart - USD/CAD weakness set to continue (Source:ThompsonReuters)
USD/CAD recovery was halted by the 10-DMA which comes in at 1.3166, keeping the overall bias on the downside. Fourteen-day momentum remains negative, indicative of the underlying bearish structure. There's increasing risk of a test of the 2016 1.2924 low, a break and close below which will accelerate falls to October 2015's 1.2832 low. Sustained trading below the 200-DMA, currently at 1.3335, highlights the underlying bearish structure. The 200-DMA is very close to 1.3341 – 23.6% retrace of the 1.4689 to 1.2924 fall - which means resistance is heavy above 1.3300. We remain bearish, only a daily close back above the 10-DMA will signal a pause in losses. Chart:

Economic Data – (Source:Bloomberg)



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