Currency Updates:
AUD/USD Frustrated AUD bears continued to cover some of their short positions in European and NY hours. Sales of EUR and NZD vs. AUD worked together with soft US yields to keep AUD/USD generally firm through both session. Europe pushed the pair from near 0.9360 and hit it sit just below 0.9380 into NY’s open. The soft US housing and permits data seemed to overshadow the improved claims data and had bond yields and the USD heavy. AUD/USD lifted to a 0.9392 high before it dipped to 0.9368 on the risk-off sentiment derived from the Malaysia Airline disaster. The dip faded though as US yields and the USD couldn’t manage a bounce. Late in the day AUD/USD sat just above 0.9380. Bears have some worries as the bounce off the daily cloud & 0.9320/30 support zone on July 16 saw upside follow through today and daily RSI turns up from near o/s. A test of 0.9400/10 resistance may take place in Asia if bears can’t retake control. A move above that zone may see s-t stops trigger and a test of key resistance near 0.9460 may take place.
EUR/USD A brief lift in early Europe saw the pair bounce off support near 1.3520 and touch 1.3540. Bears were lurking though and pushed the pair back below 1.3530 into NY’s open. US data was mixed with jobless claims improving but housing and permits data deteriorated. US yields and the USD turned heavy. EUR/USD got very little benefit though as it hardly moved back above 1.3530 before resuming its steady slide. The pair then hit a new s-t trend low (1.3516) after the Malaysia jet downing increased risk-off sentiment. EUR/JPY’s slide from above 137.40 towards 136.90 aided EUR/USD in hitting the new low. Bears couldn’t press their case further though as the mkt needs to digest the Ukraine issue further and solid bids remain into 1.3500. A small bounce had the pair near 1.3525 late in the day. A light data calendar overnight may see action limited again. S-T risks are likely skewed to the topside as short covering into the weekend may be the theme over the next session. The long-term trend remains bearish.
USD/JPY The yen was well bid throughout Thurs, initially on worries about what new Russian sanctions might do and on broader trimming of risk amid Fed normalization notions and stretched valuations in some asset classes. A poor US housing report was being shrugged off with help of falling jobless claims an a decent Philly Fed, allowing USD/JPY to stabilize in the mid 101.00, until word of the Malaysian flight downing triggered derisking and more yen buying across the board. USD/JPY holding above suspected PKO bids in the 100.95-100.25 range, but EUR/JPY has tumbled to its lowest since Feb 6 and below 137.00. This year’s 136.25 low is the next major prop. The cross and USD/JPY look top-heavy on the weeklies, having descended into those clouds and this week’s 101.80 high right at the weekly Tenkan that is below the falling Kijun. Amari sounds increasingly perturbed that the BOJ hasn’t launched QQE2 yet and the Reuters Tankan showed some pockets of domestic weakness. NZD/JPY fell to the broken down TL off the Apr high. AUD/JPY’s probing Cloud & 100-DMA supports. 173.17 key on close for GBP/JPY. USD/JPY vols marginally off record lows
Looking Ahead – Economic Data (GMT)
• 01:30 CN China House Prices YY Jun 5.60%-prev
Looking Ahead – Events, Other Releases (GMT)
• 23:50 JP Bank of Japan will release the minutes of June policy-setting meeting
