Currency Updates:
AUD/USD The pair was driven down to the 200-HMA in Europe’s morning before bouncing towards 0.7710 into NY’s open. Bears took control in early NY as the USD continued to claw back post-FOMC losses and talk that the RBA may now act on their own was upped. AUD/USD slid from the open, pierced the 200-HMA and threatened support in the 0.7610 area. The pair remained heavy as pressure was applied from AUD/NZD’s slide towards 1.0310/15. Late in the day AUD/USD sat just above 0.7615. Action in Asia may remain limited as the market continues to digest the latest moves. There might be some action though as RBA’s Stevens speak in Melbourne. If the AUD comes up in the topic it’s likely Stevens will try to jawbone it lower. He may also note the potential for a rate cut after the latest RBA minutes suggested the bank is open to further cuts. AUD/USD is likely to trade soft on that type of rhetoric.
EUR/USD The correction off the post-FOMC high continued through Europe & NY trading. Bears pressed EUR/USD below the 200-HMA before a bounce towards 1.0740 took hold into NY’s open. The rally was sold though as the USD’s recovery proceeded and US bond yields put in substantial gains. Solid bids in the 1.0640/50 zone were filled and the 200-HMA was cleared. EUR/USD shrugged off the rise in EUR/GBP from near 0.7155 towards 0.7235 and HSBC’s upping of its end-2016 EUR/USD f/c to 1.10 from 1.05 and continued to slide a bit further. The pre-Fed lows were tested and little bounce was seen. Late in the day the pair sat just above 1.0620. After such a harsh session on March 18, traders now contemplate their next move and look for cues for direction. There is little major data on Friday to dictate any more in either EUR or the USD so it’s possible the market holds to a tight range until next week.
USD/JPY The recovery from the post FOMC USD bloodbath got USD/JPY back to 61.8% of the 122.04-119.29 slide by 121 in NorAm trading. There are also USD3.6bln of expiries there Friday. It took most of the NY session, but offers at 121 were finally breached as the majority of Wed’s Tsy yield dive was recovered. The next hurdle is the 200-HMA by 121.25 last. It was broken below Wed for the first time since Feb 26, adding to a host of other technical breakdowns that day. Japanese demand for foreign stocks and bonds, mostly US, remains strong, the weekly MOF flow data show, and all else being equal, should limit USD/JPY downside. Wed’s 119.29 low was a fleeting breach of the weekly on-close pivot pt & weekly Tenkan at 119.38/34; making them key weekly on-close props. Minutes from the BOJ’s Feb meeting are out tonight, but are unlikely to inform beyond what this week’s meeting provided. Little US data until next week to charge the Fed debate. More offers at 120.45-65 and into 122.00/04, w stops above the latter peak. EUR/JPY’s Wed spike toward the Kijun & 50% of the Feb-Mar slide was erased today. GBP/JPY again flirting w a sub 200-DMA close.
Looking Ahead – Economic Data (GMT)
• No Significant Data
Looking Ahead – Events, Other Releases (GMT)
• 23:50 JP Bank of Japan will publish the minutes of February policy-setting meeting
• 01:00 AU RBA Gov Glenn Stevens speaks at a luncheon at the American Chamber of Commerce in Sydney
