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US FX Market Open - Wednesday April 20 2016 - EUR/USD MAINTAINING ITS BID TONE

Posted by Marge Maresca on Apr 20, 2016 7:38:33 AM

 

 eurstr.png

Overnight Events

• EUR/USD +0.13%, USD/JPY -0.02%, GBP/USD -0.02%, AUD/USD +0.06%
• Brent -1.6%, DAX -0.3%, Nikkei +0.19%, DXY -0.13%, Gold +0.15%
• DE Mar Prod. Prices -3.1% y/y vs -3.0% prev, -2.9% exp
• UK Feb ILO Jobless Rate 5.1% vs 5.1% prev, 5.1% exp
• UK Feb Avg Earnings 3mth y/y 1.8% vs 2.1% prev, 2.3% exp
• UK Feb Avg Earnings Ex-Bonus 2.2% vs 2.2% prev, 2.2% exp
• CH Apr ZEW 11.5 vs 2.5 previous   
• BoJ Gov Kuroda (in Diet) – Closely watching market moves
• Japan PM Abe unlikely to call snap election due to quakes – Sankei
• Japanese govt could consider raising sales tax 1% at a time – Nikkei
• Japan Asahi reaches mega-E2.6 bln deal in Europe, pulls US bid – Nikkei

Currency Summaries

EUR/USD   
• EUR/USD traders wake up as pair trades session high @ 1.1380
• Asia just 1.1354-74. DAX now -0.3% after steep SSEC drop (2.3%)
• Apr 19 high 1.1385 and Apr 1.1391
• Lower CNY potentially boosting EUR: http://reut.rs/1SYOai2
• 200-HMA 1.1338 now underpins. One-month vols @ low since Dec 2014
• Expectations for ECB at a low ebb, just 80 pip move to break even

USD/JPY
• Japanese exporter offers @109.50 contained bulls Tues, peak was 109.49
• Offers still remain in size @109.50. Bids set between 108.70-75
• In Asia, USD/JPY long liquidation trumped Gotobi demand
• Japan banks were among sellers of USD/JPY
• Large strike @110.00 worth 1.8B set to expire at the NY cut
• EUR/JPY has risen from 123.55 to hit 124.19

EUR/CHF
• EUR/CHF demand touted in the 1.0910-20 area and stops below 1.0900
• USD/CHF talk of buy stops above 0.9660 and bids 0.9580-90
• On-going SNB presence to slow CHF appreciation but some leeway seen
• Better levels to buy cross and spot but n/t scope for gains seen limited
• CH Apr ZEW puts on 9-pts to 11.5
• Chart: 1) http://reut.rs/26ezyok 2) http://reut.rs/26ezqVO
 
GBP/USD   
• GBP/USD elicited fresh support just under 1.4350 after soft UK earnings/jobs data
• 1.4345 = intra-day low, 1.4408 = subsequent high. 1.4349 was early Europe low
• GBP eliciting support from recent good news polls for anti-Brexit campaign
• TNS poll Wednesday suggests 38% of Brits want to remain in EU vs 34% leave
• 28% undecided. Prior TNS poll said 35% for remain & leave with 30% undecided
• 0.7917 was EUR/GBP high after disappointing UK data. 0.7894 = ensuing low

USD/CAD
• USD/CAD was helped to an early Europe high of 1.2731 by lower oil prices
• Subsequent drop to 1.2658 influenced by CAD/JPY buying
• 1.2658 = intra-day low. 1.2630 was Tuesday’s 9mth low

AUD/USD   
• AUD/USD threatened 0.7827 (Tuesday’s 10mth top) after rallying off 0.7767
• 0.7767 was early Europe low after some profit-taking on long positions
• 0.7594 was “Doha drop” low Monday. 0.7849 resistance beyond 0.7827
• Large 0.7800 option expiries today & Thursday, cumulative A$1.4bn strikes

NZD/USD
• NZD/USD elicited support just under 0.70 early Europe after longs lightened
• 0.70 = former resistance level, vaulted for first time since June 2015 Tuesday
• Lightening of longs influenced by early Wellington failure to break 0.7055
• 0.7055 was Tuesday’s 10mth top. 0.6841 was Monday’s low

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 recovery hit vols Mon’-Tues’, but some demand appearing now
• EUR/USD in range, 1mth low since Dec 2014. ECB stalls further losses
• O/n EUR/USD pricing around 80 pips break even for ECB
• Buyers post BoJ topside apparent – premium for 2wk vols/JPY puts
• GBP vols fall as Pound gains. Post Brexit 3mth vol 1.0 off its 16.3 peak
• USD/CNH 1mth meets demand pre 4.0 (new low since Aug deval)

Economic Data(Source:Bloomberg)

Apr20data.png

 

Topics: US FX Market Open

 

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