Currency Updates:
AUD/USD wasn’t able to make much bullish headway in NY’s session even as the USD tumbled against most other major currencies. The pair got only a small boost off the below forecast durable goods orders as it traded to a 0.7975 high. A upbeat US consumer confidence number helped turn the USD’s fortunes and AUD/USD began steadily declining. Fears over a below forecast Aussie CPI due later likely tempered any bullish thoughts for the pair as well. The pair’s slide tested near Europe’s low and it sat just above 0.7925 late in the day. Should Oz CPI come in below f/c, calls for an RBA rate cut will be upped. Bear pressure will then be applied to AUD/USD and we might see the pair go on to break the 2015 low and test support near 0.7700.
EUR/USD The pair’s relief rally went a bit further in the NY session. Traders fears of disappointment from the Fed in the form of dovish rhetoric increased and soft US durable goods orders softened the USD. EUR/USD lifted from the 1.1260 area and hit a high of 1.1423. A turn in the USD’s fortunes took hold after US consumer confidence data. The USD’s rally, lead by USD/JPY, saw EUR/USD slip a bit form the highs. The pair dipped to old resistance near 1.1350/55 before bouncing late in the day. It sat near 1.1370 towards the close. Traders will now turn their focus to the Fed tomorrow. Some fear that the Fed will have heard the cries from corporate America over the strong USD hurting earnings. Should the Fed give in and strike a dovish tone the USD and yields should sink. EUR/USD’s squeeze should then get another boost. The pair might then break key s-t resistance near 1.1460 and make a run towards larger resistance near 1.1650/00.
USD/JPY extended the pullback that began after yet another failed breakout above the daily Cloud in Asia, first falling in sympathy with weakness in stocks & Tsy yields as Greek concerns mixed with US earnings worries, in part due to the USD’s strength the past several months. A huge downside miss from US Durable Goods yanked USD/JPY down to the up TL off the last five sessions’ lows, then at 117.31 (low was 34). Much better US data later in the morning teamed with the TL support to push the pair to offers at 118 by the hourly Cloud & 200-HMA. US stocks recovered some of their heavy intraday losses, but are underperforming the N225 futures. US earnings misses due to USD strength contrast with a smaller-than-f/c Japan Trade Deficit last month due to post QQE2 USD/JPY gains & oil’s dive, the former consolidating since Dec 8. Tumbling oil prices are better for Japan than the US. EUR/JPY has rebounded to the 134 vicinity as oversold EUR trades see post ECB QE & Greek election profit taking, not that there aren’t still major risks for the EUR. FOMC statement Wed is the next key event. Any change is language is likely to be marginal though.
Looking Ahead – Economic Data (GMT)
• 00:30 AU CPI QQ* Q4 f/c 0.3%, 0.5%-prev
• 00:30 AU CPI YY* Q4 f/c 1.8%, 2.3%-prev
• 00:30 AU RBA Weightd Medn CPI QQ* Q4 f/c 0.5%, 0.6%-prev
• 00:30 AU RBA Weightd Medn CPI YY* Q4 f/c 2.2%, 2.6%-prev
• 00:30 AU RBA Trimmed Mean CPI QQ* Q4 f/c 0.5%, 0.4%-prev
• 00:30 AU RBA Trimmed Mean CPI YY* Q4 f/c 2.2%, 2.5%-prev
• 00:30 AU CPI Index Number* Q4 106.4-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
