Currency Updates:
AUD/USD After Asia failed to break the pair above structural resistance in the 0.9330/40 area Europe slid the pair down near 0.9315 before a bounce had it just above 0.9320 into NY’s open. An early NY lift faded quickly as the USD firmed. AUD/USD slipped to houlry support near 0.9310. That support broke on the Ukraine/Russia headlines and a low of 0.9298 was hit. The effects of the headlines were short lived though. A rebound in risk, lead by equities, allowed AUD/USD to recover some ground. The pair rallied and sat near 0.9325 late in the day. Traders now look to the the RBA for their AUD directional cues now as there is only second tier Oz data due next week. The RBA minutes are released Tuesday and Stevens gives a speech on Wednesday. Jawboning to try and get AUD lower is likely. The US CPI on Tuesday will impact from the USD side. A topside surprise may have the Fed wondering if they’ll need to give more weight to prices at future Fed meetings.
EUR/USD Those traders long EUR/USD and hoping for a short squeeze into the weekend were foiled again. Europe lifted the pair off hourly support near 1.3360 and had it just above 1.3390 into NY’s open. The lift continued in the early hours of NY trade and the pair hit a high of 1.3412 which sat just below the 200-WMA and 21-DMA both of which sit near 1.3417. The headlines of increased tension out of Ukraine & Russia put a safe have bid into the USD & JPY. EUR/USD dived towards 1.3375 while EUR/JPY slipped below 136.80. The headline effect wore off quickly though and risk made a comeback. EUR/JPY rallied towards 137.15 and EUR/USD lifted towards 1.3400 and sat just below that level late in the day. The pair remains in its consolidation phase but may break out of it next week. The US gives us July CPI, minutes of the last Fed meeting and the Kansas City Fed’s Jackson Hole Symposium. Thursday brings EZ PMIs for August. Soft PMI results may see EUR/USD break lower form the consolidation and take out 1.3295/1.3325 support. If broken bears have their hopes up for a quick run near 1.3100.
USD/JPY A sleepy session for the yen was turned on its head in late London trading after the Ukraine headlines began to hit risk and lift the yen. USD/JPY had worked its way up to 102.72 and into the front end of suspected exporter offers stretching up to 103 before the shake-out down to 102.13 session lows, by the 21- & 100-DMAs. Prices then reverted toward the middle of the day’s range, but the risk mood was muddied for the day, making major net gains tough. EUR/JPY’s intraday berth widened to 136.77-137.61 amid the derisking melee, but it, too, rebounded well. CAD/JPY’s morning surge to just beyond 50% of the Jul-Aug slide and July 30-31 highs by 94.48 segued into a post Ukraine-news plunge to 93.51; the top of the down TL from July that prices broke above on Wed. It, too, reverted to its intraday mean. The battered GBP/JPY pierced the 200-DMA support that had sufficed Thur and in the wake of the BOE’s latest tightening dodge. In general, the mkts remain torn between stretching for yield/risk, using the yen as a funder, and running for safety as the risk:reward worsens for holding paper with rising duration. Japan’s July Trade data is out Tuesday
Looking Ahead – Economic Data (GMT)
• 01:30 CN China House Prices YY* Jul 4.2%-prev
• 02:00 CN FDI (YTD) Jul 2.2%-prev
• 01:30 AU New Motor Vehicle Sales m/m* Jul 1.7%-prev01:30
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
