Currency Updates:
AUD/USD A tight range held in Europe after the bounce post-China CPI. The pair traded in the 0.8310/40 range and sat near the upper limit heading into NY’s open. Early NY saw the pair push a bit high as the USD was generally soft. The pair hit 0.8348 but the NY gains began to erode. Sour risk sentiment emerged and JPY strength came along with it. AUD/JPY dropped from the 99.45 area and pierced 98.00. This dragged AUD/USD from NY’s high down to intra-day support in the 0.8280/90 area. The pair held near that support late in the day as the market now awaits the Oz jobs data. A weak result likely gets bears encouraged again as calls for RBA rates cut are likely to be upped. Soft Oz jobs should see yield spreads narrow further to add weight to AUD/USD. A retest of the 0.8200/20 support should then take hold.
EUR/USD The pair held to a relatively tight range in Europe. The top was contained by offers near 1.2400 while the base was defined by bids near the 200-HMA. The pair sat just above 1.2370 into NY’s open. Early action saw bulls apply pressure as broad based USD weakness emerged. A steady ascent took hold and intra-day stops above 1.2400 were run. The lift’s pace was upped after USD/JPY broke below s-t support near 119.65/70. EUR/USD shrugged off EUR/JPY’s slip from near 147.60 to below 147.00 and instead cleared the TL off October’s high and the 21-DMA to make a 1.2446 high. Offers into 1.2450 limited the rally to keep stops just above safe for now. Very little pullback was seen and the pair sat just above 1.2440 late in the day. The charts suggest the recent squeeze has legs as day/week RSIs are biased up after turning from oversold territory. Narrowing yield spreads support the squeeze view as well. EUR/USD bears will need a stellar US retail sales number tomorrow to get the downside back into the market’s focus.
USD/JPY The O/N rebound to retrace 50% of the 121.86-117.90 slide proved an opportunity for longs looking to get out amid broadening derisking flows. Tues’s lows were finally breached late in the NorAm session, but stops below 117.75, and the 50% Fibo & weekly on-close pivot pt at 117.86, have yet to be triggered. The daily Kijun is at 117.64 and today’s close will be well below the Tenkan at 119.80 for the 1st close below that feature since clearing it on Oct 20. N225 futures are -2.7% at last glance, Tsy yields are off about 4bp front-to-back and the oil-led carnage in EMs and other carry type trades are getting crushed, feeding back into covering of yen shorts. Even US shares are coming off fairly hard, adding more pressure to book profits on previously profitable trades as liquidity wanes into year-end. 38.2% of USD/JPY’s Oct-Dec rise by 115.50 that’s close to the lower 21-day Bolli, will be a prime target on a sub 21-DMA close. EUR/JPY also made a new intraweek low on yen strength that overrode profit-taking on short EUR/USD positions that look ripe for an oversold bounce off the up TL from ’10 & 1’2 lows this week. MXN/JPY led the EM/oil cross carnage today.
Looking Ahead – Economic Data (GMT)
• 21:45 NZ Food Price Index* Nov 0%-prev
• 23:50 JP Foreign Bond Investment w/e 3.4b-prev
• 23:50 JP Foreign Invest JP Stock w/e -53.0b-prev
• 23:50 JP Machinery Orders MM* Oct f/c -2.4%, 2.9%-prev
• 23:50 JP Machinery Orders YY* Oct f/c -0.3%, 7.3%-prev
• 00:01 CN M2 Money Supply YY* Nov f/c 12.5%, 12.6%-prev
• 00:01 CN New Yuan Loans* Nov f/c 650.0b, 548.3b-prev
• 00:01 CN Outstanding Loan Growth* Nov f/c 13%, 13.2%-prev
• 00:30 AU Employment* Nov f/c 15.0k, 24.1k-prev
• 00:30 AU Full Time Employment* Nov 33.4k-prev
• 00:30 AU Participation Rate* Nov f/c 64.6%, 64.6%-prev
• 00:30 AU Unemployment Rate* Nov f/c 6.3%, 6.2%-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
