Currency Updates:
The Australian Dollar (AUD): The pair traded in a bearish tone to a low of 0.9319. Yellen’s testimony weakened the USD, her tip to recent housing weakness and continued sloppy labour sent U.S yield tumbling. AUD/USD lifted off the lows and hit 0.9343 where it sat late in the session. Oz job data is due later today and the f/c to deteriorate slightly. If it comes in weak, then gains may be erased and key support near 0.9200 may be retested.
The AUD/USD: Bids near the 21-DMA and late April highs 0.9315/20 halted the overnight slide. Tech gives a bullish tint to the pair as the pair hold above the 21-DMA again while daily and weekly RSI are biased up. Bulls are looking for a run to the weekly cloud base (0.9425) and April’s high (0.9461) but caution is warranted.
EUR/USD: Ranges in the overnight session remains subdued (1.3912-1.3939 with NY seeing the pair open near 1.3925. An early lift took hold as headlines that Putin was ready to discuss a solution to Ukraine hit the wires. NY could only manage to match Asia’s high. Above f/c Q1 US labor costs boosted US yields a bit & EUR/USD slid lower. Yellen’s testimony sank US yields & USD/JPY and dragged EUR/JPY from near 142.00 towards 141.40. EUR/USD followed & tested the o/n lows. The low held but little bounce was seen as some longs felt it prudent to unload some EUR/USD as a precautionary measure ahead of the ECB. The pair sat near 1.3915 late in the day. The market expects little from the ECB tomorrow. Some are looking for tweaks in the bank’s inflation outlook while Draghi may continue to prime the market for action for the June meeting. EUR/USD may then resume its ascent and make a run for the 2014 high and barriers at 1.3975 & 1.4000. There is some chatter in the mkt that a break of 1.40 may see a spike towards the Oct ’11 high (1.4248) as l-t bears may capitulate
USD/JPY For the sixth time in four months, USD/JPY prices have fallen into the lower 101.00s and found demand there from Japanese importers and a shrinking number of spec traders looking for values as well. But unlike the preceding four pullbacks, this one comes after a lower recovery high. The Nikkei’s 13.8% y-t-d loss and the drop in USD/JPY y/y % change from +28% last May to about 1% today are clearly making specs nervous and should make the BOJ nervous, too. Current range is 101.20-102.00, with a bit more supply by 102.20. Thursday sees expiries 101.30 (490M), 101.50 (355M), 101.60 (584M), 101.80 (280M), 101.90 (575M), 102.00 (2.5BLN), 102.50 (1.2BLN). Note that implied vols in USD/JPY have picked up marginally on the weaker spot tone, but market is not short gamma until nearer 100.00 to limit vol demand. EUR/JPY dipped further into its Cloud and breached the up TL from Apr ’13 lows, but is ending up near unchanged into the ECB tomorrow and after Putin’s comments were eventually discounted as more propaganda.
Looking Ahead – Economic Data (GMT)
• 23:01 UK RICS Housing Survey Apr f/c 56, 57-prev
• 01:30 AU Employment Apr f/c 6750, 18100-prev
• 01:30 AU Full Time Employment Apr -22100-prev
• 01:30 AU Participation Rate Apr f/c 64.70%, 64.70%-prev
• 01:30 AU Unemployment Rate Apr f/c 5.90%, 5.80%-prev
• 02:00 CN Exports YY Apr f/c -1.70%, -6.60%-prev
• 02:00 CN Imports YY Apr f/c -2.30%, -11.30%-prev
• 02:00 CN Trade Balance Apr f/c 13.90b, 7.71b-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
