Currency Updates:
AUD/USD The pair defied early USD strength and continued its bounce off Europe’s 0.7757 low as NY got going. The pair sat near 0.7790 in early NY and dipped briefly towards 0.7775 on the better than f/c jobless claims. The dip was bought though and the USD began to soften. This saw the pair lift to hourly resistance near 0.7815. The lift likely got a boost from AUD/NZD’s rebound from overnight and push above 1.0360 in NY. Some USD strength returned in NY’s afternoon and AUD/USD slipped back to the 0.7780 area late heading into the close. A doji formed on today’s candle and daily RSI diverged on the new s-t high. This suggests the recent short squeeze may have run its course. Yield spreads remain near recent tights and further tightening should keep the pair heavy. Daily lows near 0.7740 and 0.7720 are immediate support. Breaks of those lows should bolster bear sentiment and see the pair make a run for the 2015 low.
EUR/USD The pair sat just below 1.1400 in early NY after Europe smacked the pair down after another failed attempt at break 1.1450/60 resistance. Germany’s rejection of Greece’s extension proposal then saw the pair dive again. A low of 1.1355 was quickly hit. Broad USD strength aided the pair’s dive. Bears ran out of gas though as the USD began giving up ground. A return towards NY’s open ensued but the lift couldn’t be sustained. An afternoon lift for the USD on firm US bond yields pressed EUR/USD lower again. Also pressing on the pair was a German position paper noting that Greece’s request was a ‘trojan horse’ that would replace the bailout program with bridge financing. EUR/USD slipped below the 200-HMA again and sat just above the day’s low into the close. Traders now look to tomorrow’s Euro group meeting for their next cues. If the Greek situation deteriorates it’s likely EUR/USD gets hit and we may see a test of key support in the 1.1260/70 area.
USD/JPY reverted to its 21-DMA at 118.42 O/N and in the aftermath of Wed’s FOMC Minutes that sent Tsy yields sharply lower. Further consideration of those Minutes began to steady yields and the USD as most downplayed the dovish bias as having been before the stellar Jan Jobs report. Speaking of jobs, weekly Claims retreated to 283k fm 304k last week, and below 290k f/c. The results would have been lower still save for higher claims in fracking states like Texas, ND, etc. Of course problems in the energy sector can’t be ignored, particularly given the historic crude build reported this week, on top of already swelling inventories. Philly Fed was a bit of a disappointment, but Tsy yields managed to claw back some of Wed’s losses, putting a bid under USD/JPY at 118.80. The USD2.5b 119 expiry at 10ET also attracted prices. Japanese Trade & Tankan data were encouraging, as was last week’s Japanese buying of foreign bonds, though economic improvement will give the BOJ less reason to launch QQE3. Key yen crosses merely consolidated gains from earlier in the week. Japan and other PMIs are the econ release focus Friday.
Looking Ahead – Economic Data (GMT)
• 01:35 JP Manufacturing PMI Flash Feb 52.2-prev
• 21:00 NZ Govt Optg Balance Dec 7.3%-prev
• 21:00 NZ Govt. Monthly Debt Dec 0.265-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
