Currency Updates:
The Australian Dollar (AUD): The ADP had little effect but US GDP miss put broad pressure on the USD. The AUD rallied above 0.9290 but the much better than f/c Chicago PMI and persistent firmness in EUR/AUD saw hourly support near 0.9250/55 tested.
AUD/USD: Europe lifted the pair to the 200-HMA but the gains were quickly erased as EZ CPI didn’t see bearish follow through for EUR. EUR/AUD leaped off the 21-DMA and aided AUD/USD’s tumble towards 0.9260 as NY started. Market now waits for China PMI, a poor data may see AUD test 0.9205/25 again and a better data could see stops above 0.9310/20 area run and put the April high back in play.
EUR/USD Bears were uninspired after EZ CPI was slightly below f/c and a massive short squeeze ensued. Asian buying of EUR/USD and models covering EUR/CAD & EUR/AUD shorts aided a rally to have the pair near 1.3825 as NY got going. ADP’s beat saw little mkt impact. US GDP’s miss nudged the rally further with only a brief pullback occurring after Chicago PMI was well above expectations. The pair hit a 1.3877 high & dipped toward 1.3860 ahead of the Fed. The Fed was steady with taper and had a slightly upbeat assessment of the US econ. A brief USD bounce saw hourly sup near 1.3855 tested but it held. US yields had been sliding ahead of the Fed and slid a bit more afterwards. EUR/USD retested the day’s high before settling just below 1.3870 late in the day. Bulls weren’t willing to challenge corp offers in the 1.3880-00 region as the US ISM due Thursday & NFP on Friday loom. The data points are more current than GDP and give a more accurate assessment of the econ. Should they reflect the weak GDP EUR/USD may break >1.3900 and try to run stops touted in the 1.3920/30 region.
USD/JPY: was on the rebound heading into the NorAm day, but was derailed by a huge miss in US GDP that overshadowed the 220k ADP result. The then hourly Cloud base by 102.30 had held in the wake of the BOJ meeting and local data releases, but the post-GDP dive from 102.64 took out those lows and eventually the daily Cloud base at 102.21 and the up TL off the April lows at 102.15. Upbeat Chicago PMI and an FOMC statement that was crafted to be as noncontroversial as possible persuaded some spec shorts that 102 figure support was safe for the day and booking profits was reasonable idea. That bounce has been modest thus far, not even reaching the Asia swing low by 102.30. Weighing on this and other yen pairs is the clear underperformance of the N225 futures vs the S&Ps. Windfall exporter profits will not be on offer for Japanese firms this year unless the yen begins falling in a major way again. The y/y % change in USD/JPY is +4.8% now vs +24% at the end of Nov & +28.2% last May. Japan’s PMI fell to 49.4 in April; its lowest since Feb ’13. Kyodo reported China & Russia will hold a military drill in May by the Senkakus. TPP talks persist.
Looking Ahead – Economic Data (GMT)
• 23:30 JP All Household Spding YY Mar f/c 1.00%, -2.50%-prev
• 23:30 JP All household spending mm Mar f/c 5.20%, -1.50%-prev
• 23:30 JP Jobs/Applicants Ratio Mar f/c 1.06, 1.05-prev
• 23:30 JP Unemployment Rate Mar f/c 3.60%, 3.60%-prev
• 23:50 JP Foreign Bond Investment w/e -463.9b-prev
• 23:50 JP Foreign Invest JP Stock w/e 194.0b-prev
• 23:30 AU AIG Manufacturing Index Apr 47.9-prev
• 01:30 AU Export Prices Q1 f/c 1.50%, -0.50%-prev
• 01:30 AU Import Prices Q1 f/c 1.80%, -0.60%-prev
• 01:00 CN NBS Manufacturing PMI Apr f/c 50.5, 50.3-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
