Currency Updates:
AUD/USD Europe negated an attempt to break the pair above the 200-HMA. Bears pushed the pair from the 0.7850 area towards 0.7805 as NY opened. Below f/c ADP data didn’t deter bears. They persisted and pushed the pair lower early on. The slide accelerated a bit on the ISM non-MFG beat and subsequent lift for US yields and the USD. AUD/USD hit a NY low of 0.7743 but did manage a slight bounce. IT sat near 0.7765 late in the day as the USD saw broad based weakness late in the day. Traders now look to Oz Dec retail sales as their sole cue for trading AUD later. The m/m reading is expected at 0.40% vs. the prior 0.10%. An above f/c result might see the pair’s recent rally get another boost. Weak results may see the pair make a trip to sub-0.7700 levels again.
EUR/USD General USD strength and uncertainty over the Greece situation saw bear pressure applied to EUR/USD in Europe & NY. The pair slipped from the 1.1480 area in Europe & stood near 1.1460 into NY’s open. The ADP miss gave no relief for longs as the pair slipped towards 1.1435. The above f/c ISM non-Mfg data saw a boost to US yields and the USD. EUR/USD’s slide deepened. A Die Welt story noting the ECB GC was set to back liquidity assistance for Greek banks allowed a small bounced. Comments from EU’s Schulz stating Greece’s Govt has no choice but to keep if obligations to European partners stymied the bounce. The pair hit a NY low of 1.1399 and saw very little bounce as it sat near 1.1415 late in the day. The pair may be in limbo for now and hold between the 10 and 21-DMas. Traders don’t want to get too aggressive ahead of the US jobs data on Friday especially after the vicious moves seen on Feb 3.
USD/JPY had already based at 117.24 ahead of the NY open, with the o/n high at 118 being rejection by the 21-DMA. US ADP came in below f/c but was close enough not to upset the USD. Tsy yields were already headed higher into next week’s refunding and remained supportive of USD/JPY until the ISM Services report featured a dive in the Employment index to 51.6 fm 55.7. Given that the vast majority of US workers are employed in service jobs, the broader 56.7 ISM reading was disregarded and Tsy yields slipped along with the USD. A drop in WTI, after another massive inventory build, gathered pace below 50 and below Tues’s low, which reinforced the drop in Tsy yields. 117.40-50 and 118 expires also tended to support USD/JPY in the NY morning. 117.60 was all she wrote for the NorAm rally, despite Fed’s Mester saying she’d be comfortable with a rate hike before H2. EUR weakness weighed on EUR/JPY and USD/JPY as Greek fears came back. EUR/JPY got below 134, retracing more of Tues’s surge through an close above key hurdles by 134.80. Abe – Kuroda friction on policy & JGB yield rise are also in the frame. Weekly Flows tonight.
Looking Ahead – Economic Data (GMT)
• 22:30 AU HIA New Home Sales m/m Dec 2.20%-prev
• 23:50 JP Foreign Bond Investment w/e 45.6b-prev
• 23:50 JP Foreign Invest JP Stock w/e 466.9b-prev
• 00:30 AU Retail Trade* Q4 f/c 1%, 1.00%-prev
• 00:30 AU Retail Sales MM Dec f/c 0.4%, 0.10%-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
