Currency Updates:
AUD/USD Europe pressed res near 0.7835/40 just ahead of NY’s open. Once it couldn’t be broken some profit taking took hold. That slide gather pace after US Q4 GDP was a bit above forecast. The USD put in a broad based rally and AUD/USD suffered a bit. Support in the 0.7790/95 area was approached but couldn’t be seriously tested. US yield and the USD dived after the Chicago PMI missed big. AUD/USD retested the day’s high but failed to clear the resistance once again. Late in the day the pair was hugging the 200-HMA. Next week is a big week for AUD. China’s Feb NBS Mfg PMI kicks things off on Saturday. Forecasts call for 489.7 (prv 49.8). Aussie data sees Feb AiG PMI & Jan HIA new home sales early in the week with the big Q4 GDP and Jan retail sales data later in the week. Data might play second fiddle though as the mkt focuses on the RBA. There is a 50% chance of a cut and more traders are leaning that way after the weak CAPEX. With US rates basically stagnant and not helping AUD/USD lower, the RBA may feel it’s their duty to take action in getting AUD down. A rate cut will see AUD/USD bears charge and the 2015 low retested.
EUR/USD Light short covering in Europe saw EUR/USD lift to 1.1245. Touted offers in the 1.1250/60 zone weighed and the pair slipped a bit into NY’s open. NY made a run at the offers as well but failed as well. The better than f/c GDP result put the USD on firm footings. EUR/USD dived below the Feb 26 low and hit a new s-t trend low of 1.1176. Some of those losses were taken back after Chicago PMI had a big miss. More losses were taken back as month-end USD sales took hold. The pair threatened hourly resistance near 1.1230 but couldn’t clear it. The pair then slipped and sat just below 1.1200 late in the day. China’s Feb NBS Mfg PMI and EZ Feb CPI are the big data risks to kickoff next week. Impact might be limited though as the market awaits the ECB on Thursday and details of the upcoming QE program. For now it looks like bears retain control as long upper wicks are in place on the daily & monthly candle, RSIs provide bearish momentum and yield spreads go further in USD’s favor. A retest of the 2015 low looks likely next week.
USD/JPY Even without the aid of rising Tsy yields, USD/JPY prices managed to extend Thur’s rally to 119.80, where exporter and range-trading spec offers capped it ahead of Tues’s 119.84 intraweek peak. The technical outlook strengthened with today’s range wholly above the Tenkan at 119.04 and with the Tenkan above the Kijun and the Cloud. The yen was a weak link among ccys today, perhaps reflecting the spate spotty Japanese data overnight and GPIF allocation data. BOJ QQE2 & GPIF et al buying of foreign stocks and bonds remains key JPY depressants. Jan’s core-core CPI minus the VAT hike impact was just 0.4% y/y. BOJ’s Nakaso comments in the NY afternoon about “green shoots” had little impact on the yen. Fed speakers du jour also did little to clarify when tightening would begin, though June remains moderately favored. EUR/JPY brushed against the Kijun line & 50% of the Jan-Feb recovery at 133.43 before bouncing weakly. Greek intrigue and commencement of the ECB QE next week remain drags. Monthly US Jobs data will be the primary focus next week. ISM is of interest after today’s huge Chicago PMI miss.
Looking Ahead – Economic Data (GMT)
• 21:45 NZ Terms of Trade QQ* Q4 f/c -3%, -4.4%-prev
• 21:45 NZ Terms of Trade – Exp Vol* Q4 f/c 1.5%, -0.1%-prev
• 21:45 NZ Terms of Trade – Imports* Q4 f/c -0.4%, -0.1%-prev
• 21:45 NZ Terms of Trade – Exports* Q4 f/c -3.1%, -4.5%-prev
• 22:30 AU AIG Manufacturing Index Feb 49-prev
• 23:30 AU TD-MI Inflation Gauge Feb 0.1%-prev
• 00:00 AU HIA New Home Sales m/m Jan -0.019-prev
• 00:30 AU Business Inventories* Q4 f/c 0.1%, 0.7%-pre0v
• 00:30 AU Gross Company Profits* Q4 f/c 0.3%, 0.5%-prev
• 00:30 AU Company Profits Pre-Tax* Q4 10.2%-prev
• 23:50 JP Business Capex (MOF) YY* Q4 5.5%-prev
• 01:35 JP Manufacturing PMI Feb 51.5-prev
• 01:00 CN NBS Non-Mfg PMI* Feb 53.7-prev
• 01:00 CN NBS Manufacturing PMI* Feb f/c 49.70, 49.8-prev
• 01:45 CN HSBC Mfg PMI Final Feb 50.1-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
