Currency Updates:
AUD/USD NY walked in with AUD/USD near the lower end of Europe’s range. Early action saw the pair rise from the 0.7870 area and test towards 0.7890. AUD/NZD then rallied up to the 1.0475/80 zone to give AUD/USD an added boost. THe pair hit a 0.7903 high and saw little pullback as it sat just above 0.7895 late in the day.Oz Q4 CAPEX is the big risk in Asia. The Reuters poll sees a decline of 1.9% vs. the prior +0.20% result. With the market still positioned short AUD an above f/c result is likely to see AUD/USD rally further. We might then see 0.8000/30 tested where the 55-DMA and Jan 28 high sit.
EUR/USD opened NY trade 1.1343 “unch” vs last night’s close, having traded 1.1347/89 overseas. The O/N pop was on a stop hunt, the stall a result of comments from Greek Fin Min Varoufakis who noted debt restructuring discussions will begin immediately. Early attention was on delta hedging EUR 1.1bln 1.1350 and EUR 2.3bln 1.1300 expiries into the NY cut. NYC traded a sedate 1.1336/69 as Janet Yellen completed her semi-annual address to Congress with almost a carbon copy of yesterday’s Senate appearance. 2-Yr yields closed +1bp and 10-Yr yield closed -1bp, reflecting a clarification that a June hike is still possible (at least 2 meetings) Draghi spoke before the EU Parliament, all big picture stuff [ID:nIFR28pwZB] EUR/USD heads to the Sydney hand-off 1.1356. In the final analysis it’s the Fed’s view that it’ll take a long while for inflation to reach target levels that appears to have shifted US long yields/ DXY psychology. Actual shifts in Fed policy have been nuances, markets may have overreacted. German Gfk, unemployment & EZ M3 & var. econ surveys due.
USD/JPY Selling in USD/JPY ran out of steam in Asia as longs taken ahead of Tuesday’s Yellen appearance had been flushed out and importer/spec bids ahead of the converged 21-DMA and Kijun at 118.57 reversed the tide. The NorAm recovery got a few stops above the tenkan by 119, but without a good reason from US data or round II from Yellen, 119.07 all that could be mustered. Reports of a Japanese pension fund following the GPIF portfolio reallocation lead may also have helped weaken the yen a bit. Word on GPIF allocations at end Dec may be released before the week ends, providing more clarity on how far it has come in its reallocation process (basically out of JGB, into stocks and foreign assets). EUR/JPY was slightly former, though better gains were in the higher beta yen crosses, particularly AUD/JPY. It finally broke well beyond Kijun & Fibo hurdles by 93.35 and is pressing the down TL off the Nov & Jan highs at 94.02 last. GBP/JPY is also looking bullish, with a close above the 61.8% of the Dec-Feb slide at 184.23 a good prospect today. Weekly JPY investment flows are out tonight. There is a slew of key JPY econ data out Friday & a Kuroda speech.
Looking Ahead – Economic Data (GMT)
• 21:45 NZ Ext Migration & Visitors* Jan 5.40%-prev
• 21:45 NZ Perm/Long-Term Migration* Jan 4100.00-prev
• 21:45 NZ Trade – Imports* Jan f/c 3.93b, 4.58b-prev
• 21:45 NZ Trade Balance* Jan f/c -183.0m, -159.0m-prev
• 21:45 NZ Trade Balance YY* Jan f/c -1.65b, -1.15b-prev
• 21:45 NZ Trade – Exports* Jan f/c 3.71b, 4.42b-prev
• 23:50 JP Foreign Bond Investment w/e 435.2b-prev
• 23:50 JP Foreign Invest JP Stock w/e 113.9b-prev
• 00:30 AU Capital Expenditure Q4 f/c -1.9%, 0.20%-prev
• 00:30 AU Building Capex* Q4 f/c -2.5%, -1.90%-prev
• 00:30 AU Plant/Machinery Capex* Q4 f/c -2%, 4.40%-prev
Looking Ahead – Events, Other Releases (GMT)
• 01:30 JP Bank of Japan board member Koji Ishida speaks
