Currency Updates:
AUD/USD The sideways trade in AUDUSD continued as global rates receded further in the wake of the miss in Japanese Household Spending pushed JGB yields to one-year lows. The AUD and other carry currencies remain locked between the benefits of lower rates, yet still wary that equity markets may be topping out. AUD bears seem willing to continue leaning against the April 10 highs at .9460 ahead of next Tuesday’s RBA. Carry strategies continue to win out by default as vol stays low and ranges across asset classes are constrained in typical summertime trading.
EUR/USD opened NYC 1.3611 -15 pips vs last night’s close, O/N range 1.3610/35. No strong flows and the presence of nearby strikes once again corralled EUR/USD. The NYC range was 1.3610/48 and we’re heading to the close at the highs. U-Mich beat f/c but had little impact. US equity marts are closing mixed, -0.25%/+0.20%, the Dow extending losses, the NASDAQ extending gains vs noon m-to-m. Today’s close was the highest since Jun 5th and In listless markets, 200-DMA at 1.3673, just below June 6th 1.3677 high should hold. Thick option calendar next week 1.3500/1.3625 may prevent spot from reaching those levels. ECB & NFP next week’s focus.
USD/JPY NY came in to a lower USD/JPY by 101.40, up slightly from the 101.31 o/n and new June lows. Losses in the Nikkei, after mixed O/N inflation and consumption data from Japan, added to the already sagging USD theme of the day. Tsy yields dipped again, though this time at the front instead of the back of the curve. Regardless, JGB yields fell faster, thus the USD/JPY correlation remains strongest with the Nikkei (futures -1.43% at this writing). Prices are finally headed for a close clearly below the 200-DMA, though some watch the 233-DMA, last at 101.25, as their L-T pivot. Though rumored official bids at 101.00-20 have held and the weekly Cloud top at 101.08 was untested, that top rises to 101.40 on Monday, about where prices are into the close. And EUR/JPY’s weekly Cloud top ascends to 137.88 next week v this week’s 137.92 low, so the margins for tech error appear thin. Monday’s Tankan survey will need to serve up some good news for the Nikkei to get yen pairs out of their recent slump. 100.62/63 are Sep ’13 swing high & 50% of the 95.81-105.45 rise & crucial USD/JPY support. Retail are selling yen, but exporters bids are being trailed tighter.
Looking Ahead – Economic Data (GMT)
• 22:45 NZ Building Consents* May 1.5%-prev
• 23:50 JP Industrial output prelim mm May f/c 0.9%, -2.8%-prev
• 23:50 JP IP Forecast 1 Mth Ahead May 1.7%-prev
• 23:50 JP IP Forecast 2 Mth Ahead May -2%-prev
• 0:30 AU TD-MI Inflation Gauge* Jun 0.3%-prev
• 1:00 AU HIA New Home Sales m/m May 2.9%-prev
• 1:30 AU Private Sector Credit* May f/c 0.4%, 0.5%-prev
• 1:30 AU Housing Credit* May 0.6%-prev
• 3:00 NZ NBNZ Business Outlook Jun 53.5%-prev
• 3:00 NZ NBNZ Own Activity Jun 51%-prev
• 5:00 JP Construction Orders YY May 104.9%-prev
• 5:00 JP Housing Starts YY May f/c -10.6%, -3.3%-prev
Looking Ahead – Events, Other Releases (GMT)
• 06:00 No Significant Events
