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US Market Open – Wednesday, March 23, 2016: STERLING STAYS SOFT ON BREXIT FEARS

Posted by Marge Maresca on Mar 23, 2016 7:44:52 AM



Overnight Events

• Fed needs to ‘get on with’ rate hikes, Harker says - RTRS
•  BoJ Funo: Market risk aversion could weigh on sentiment – RTRS
•  BoJ Funo: CAPEX, suggests fiscal stimulus needed – RTRS
•  BoJ Funo: True FX one channel in which monetary policy effects economy – RTRS
•  BoJ Funo: Won’t hesitate to ease again if recovery threatened - RTRS
•  Japan Econ Min Ishihara: Up to PM Abe to decide on sales tax hike – RTRS
•  Japan Econ Min Ishihara: See no change to Japan’s solid economic fundamentals - RTRS
•  Japan Mar Reuters Tankan 6 vs 7 prev
•  Brussels bomb suspect arrested-Belgian newspaper DH – RTRS
•  Swiss Mar ZEW investor sentiment 2.5 vs -5.9 prev
•  Woodside scraps Australian Browse LNG project as glut bites - RTRS
•  GBP 3mth option expiry date now falls beyond June 23 Brexit referendum – FX Buzz
•  Latest ICM poll says 43% of Brits want to leave EU, 41% want to stay
•  Brexiteer Boris Johnson addresses Brexit risk in TSC testimony (

Currency Summaries
•  EUR/USD eases a little in slow moving European session
• 1.1180-1.1207 range. Bearish on break 200-HMA 1.1196
•  DAX up 1% weighing EUR via pressure EUR funded crosses
•  Longer-dated rate divergence weighs EUR/USD:Â
•  EUR 1.6bln 1.1195-1.1200 vanilla expiries may anchor spot
•  USD/JPY has risen 112.14-112.76
•  Japanese bids located at 112.10
•  Good name had bids below 112.20
•  Rates diverging across curve favouring higher USD/JPY
•  EUR/JPY has seen a 125.52-126.18
•  Cross has offers ahead of 126.27, Tuesday’s peak

•  EUR/CHF erases all losses which followed yesterday's risk aversion
•  Now risks bullish break over 21-DMA 1.0924:
• Swiss investor survey 10GMT. Down sharply Jan/Feb to -5.9 from 16.6 Dec
•  Stock markets buoyant suits CHF lower as a funding currency
•  Daily cloud base @ 1.0978 target above 21-DMA

•  GBP/USD has fallen to a 1wk low of 1.4157 amid Brexit fears
•  Latest ICM poll says leave campaign has 2% lead
•  EUR/GBP is consolidating Brexit fear-influenced gains sub-0.7910
•  0.7910 = March high last week. 0.7905 was Tuesday’s high

•  USD/CAD met headwind circa 1.3106 after heading north early Europe
•  1.3016 was yesterday’s North American session, before drop to 1.3028
•  1.3050, 1.3100 & 1.3120 option expiries today (closest-to-market)

•  AUD/USD has retreated to 0.7577 after profit-taking on longs since pre-0.7650 failure
•  0.7649 was Asia high, amid talk of raft of offers 0.7650-80

•  NZD/USD has fallen to a 1wk low of 0.6694 amid pipeline RBNZ cut speculation
•  0.6727-0.6769 was Asia range
•  Interest rate futures suggest 48% chance of another 25bp OCR cut next month
•  RBNZ cut OCR by 25bp to 2.25% earlier this month

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)

 •  EUR/USD: 1.1195 (410M), 1.1200 (1.2BLN), 1.1245 (255M), 1.1250 (644M)
•  USD/CHF: 0.9775 (100M)
•  USD/JPY: 112.10 (160M), 111.95 (360M), 111.85 (150M)
•  GBP/USD: 1.4050 (261M), 1.4250 (262M), 1.4330-35 (362M)
•  EUR/GBP: 0.7900-10 (165M)
•  AUD/USD: 0.7625 (249M), 0.7550 (162M)
•  NZD/USD: 0.6690 (128M), 0.6745 (198M), 0.6790 (200M)
•  AUD/NZD: 1.1195 (220M)
•  USD/CAD: 1.3050 (110M), 1.3100 (210M), 1.3120 (340M)

Chart - GBP/USD seeks a close below 1.4162/75 (Source:ThompsonReuters)
GBP/USD solid resistance weighed above 1.4500, the cloud which spans 1.4395-1.4660. Recall spot  failed one pip ahead of February 16 1.4515 high. A doji formed on last  Friday's candlestick line, which is indicative of indecision. A daily close below 1.4162/1.4175 (76.4% retrace of the 1.4053-1.4514 rise/Kijun line) - will weaken the structure for a retest of 1.4053 – March 16 low. 1.4000 is also be unmasked. Chart:

Economic Data(Source:Bloomberg)




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