Currency Updates:
AUD/USD Bull pressure applied in Europe persisted in early NY. A soft USD and short covering by model accounts were attributed to the rise. NY walked in with the pair near 0.7900 and sitting there into CPI. Upon the data release the pair initially slipped towards 0.7880. The dip was bough aggressively though and stops above the February high were run. Bullish follow through saw a high of 0.7939 made but the gains were fleeting. A rebound for the USD ensued and AUD/USD sales by US leveraged and fund names had the pair diving. Sour risk sentiment then kept the pair weighed for NY’s afternoon. Support near 0.7860/65 (daily cloud base, 55-DMA) was pressed and the pair sat just above it late in the day. There is no major Oz data due but the RBA releases its FSR. Little impact on AUD is expected though. The rally off the March low is intact but bulls might have some concerns. Today’s high wasn’t confirmed by the daily RSI and a long upper wick forms on today’s candle. A dip back to the 0.7750/0.7800 zone cannot be ruled out.
EUR/USD Short covering in Europe had the pair pressing 1.1000/10 resistance for most of their morning. NY walked in with the pair just below 1.10 and feeling firm. The US CPI was slightly above f/c This pressured the pair below 1.0940 initially. Dip buyers emerged though as the USD’s spike up faded. The ensuing EUR/USD rally saw Europe’s high broken and stops above 1.101 run. Bullish momentum carried the pair to a 1.129 high. A USD bounce and EUR/USD sales by RM names saw the pair’s gains begin to erode. The slide persisted into Europe’s close and support near 1.0885/90 was tested. Pressure remain on the pair in the afternoon and sour risk had JPY bid and EUR/JPY pressing down on 130.50. This aided to keep EUR/USD heavy and it sat just below 1.0920 late in the day. No major EZ data is due tomorrow so traders will look to Feb US durable goods order for direction. A weak result could see EUR/USD’s recent rally see further gains.
USD/JPY Early NorAm trading took USD/JPY down to a session low of 119.22, which is exactly the level of this year’s up TL off the Jan-Feb lows. The low came despite slightly above f/c US CPI results. The low breached last Wed’s post-FOMC nadir of 119.29, but strong US Markit PMI & New Home Sales helped prices briefly best the o/n high, only to be sent down again without trading 120. US Tsy yields fell, particularly out the curve, despite the day’s upbeat data, dragging USD/JPY back toward the middle of the range. Prices are now below the Kijun at 120.14 and need to retake that to give today’s TL carom increased credibility as a turning point. GBP/JPY is threatening its first daily close below the 200-DMA (178.16) since Oct. 177 looks pivotal there. EUR/JPY got closer to the daily Kijun at 131.57, as well as the last two weeks’ highs, 50% of the Feb-Mar slide and the weekly Tenkan in the 131.80 vicinity, with today’s 131.52 NY morning high. Next heavy Japanese data day is Friday. Broader focus is on next week’s US Jobs report for March. Early March indications are solid, putting a little extra weight on the jobs data to be robust, too.
Looking Ahead – Economic Data (GMT)
• 21:45 NZ Trade – Imports* Feb f/c 3.75b, 3.64b-prev
• 21:45 NZ Trade Balance* Feb f/c 392.0m, 56.0m-prev
• 21:45 NZ Trade Balance YY* Feb f/c -1.82b, -1.41b-prev
• 21:45 NZ Trade – Exports* Feb f/c 4.09b, 3.70b-prev
Looking Ahead – Events, Other Releases (GMT)
• 00:30 AU Reserve Bank of Australia to publish Financial Stability Review report
