Currency Updates:
AUD/USD Europe didn’t allow the pair to take back any losses after Stevens’ comment and the weak Oz retail sales data. The Europe high was limited to 0.9383 and the pair sat just below that as NY got going. The big beat on the jobs report sent US yields and the USD soaring. AUD/USD collapsed, pierced the 55-DMA and in no time hit a new s-t trend low of 0.9327. Bears couldn’t press further though as bids into the lows of June 6 & 18 were thick. US bond yields began giving back after the 10 year yield couldn’t break the 200-DMA. AUD/USD lifted off the lows as bears lightened up into the long US weekend. Late in the day the pair sat near 0.9350. Techs have turned bearish and more downside may be due. Day/week RSIs are biased down and a bearish engulfing candle forms on the weekly chart. Wider yield spreads bolster the bear view as well. If 0.9320 support breaks bears set their sights on the 0.9195/0.9210 area where the 200-DMA and lows from April & May sit.
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ASIA FX MARKETS OPEN FRIDAY, JULY 4, 2014 NFP LIFTS USD, NOT ENOUGH TO BREAK RANGES Market Briefs Looking Ahead – Economic Data (GMT) Looking Ahead – Events, Other Releases (GMT) Currency Summaries |
USD/JPY A stellar US jobs report gave USD/JPY a fresh leg up amid rising Tsy yields and despite some overnight Nikkei weakness. Stops were run above 102 after the down TL from last month’s high was cleared along with the daily Kijun. The focus turns to the Cloud top at 102.47. Rallies dating back to March have featured fleeting moves beyond the Cloud top. With 1-mo vols at 4.4, it’s clear the mkts see the Fed & BOJ basically in a holding pattern for a while. And while USD-JPY 2-yr yld spreads are at multi-year highs, 10-yr spreads remains below even this April’s high. The assumption is even belated Fed tightening will be enough to keep inflation and L-T rates under control. Importantly, today’s Tsy yield rise was not large enough or enduring enough to keep JPY & USD-funded carry trades under pressure. GBP/JPY made new post-crisis rebound highs, EUR/JPY was little changed and AUD/JPY managed to claw back some of its heavy two-day losses from bad local data and Stevens’s more dovish comments. Some of this may have been pre-weekend book-squaring, but there’s little sense of fear the Fed, ECB or BOJ will kill carry trades any time soon.
Looking Ahead – Economic Data (GMT)
• No Significant Data
Looking Ahead – Events, Other Releases (GMT)
• No Significant events
