Currency Updates:
AUD/USD USD weakness in early NY had AUD/USD pressing up against hourly resistance in the 0.7810 area. The USD’s slide abated though and AUD/USD begin to drift from the high. The pair’s slide accelerated and ran stops through 0.7780. Buys in EUR/AUD seems to be the driver as that pair broke 1.3960 resistance and eventually tested above 1.4100. AUD/USD was pressured to a 0.7747 low and remained near the low even in the face of softer US treasury yields. Late in the day the pair sat near 0.7760, Recent longs are on edge as price action above the 55-DMA and daily cloud base was disappointing. Daily RSI is biased down as is the monthly and yield spreads are narrowing again. A close below both the 10 & 21-DMAs should encourage bears and could indicate the recent rally is over. We’re then likely to see a retest of the 2015 low over the coming sessions.
EUR/USD The pair pierced the 10-DMA and pressed 1.0800 in Europe’s morning but bears ran out of steam. The USD began a broad based slide & EUR/USD rallied towards 1.0830 into NY’s open. Bull pressure remains for most of NY as EUR was noticeably firm on the crosses. EUR buys vs. AUD & GBP were noted and helped EUR/USD press 1.0900 resistance. The level eventually gave way and stops were run. Thin liquidity allowed for a spike high near 1.0950. Action settled though and the pair drifted back near 1.0900 heading into Yellen’s late afternoon speech. Her statements were somewhat mixed and didn’t vary much from her last press conference but algos whipped the pair about. The pair initially spiked above 1.0930 on dovish comments but then the gains eroded almost instantly on the hawkish tips. In the end the market took the tone as a bit hawkish and the pair stayed heavy. It just below 1.0890 late in the day. US PCE on Monday and EZ CPI on Tuesday are the risks early in the week. Action is likely to quiet down in the second half of the week due to upcoming religious holidays.
USD/JPY A somewhat disappointing final revision to US Q4 GDP dragged USD/JPY down to a 118.93 session low, where the hourly Cloud base and 100-DMA related bids supported. 1.4bln of 119 expiries attracted prices into the 10ET cut. A UoM uptick lent a slight hand, as did a pop in EUR/JPY on word Greece a furnished fiscal reforms letter to creditors. USD/JPY remained in a tight range after that due to the drop in USD-JPY yield spreads and lateral equity prices. Yellen stuck to script. USD/JPY’s threatening its first weekly close below the 21-WMA (118.92) since clearing it in Aug. EUR/JPY broke well below its daily Tenkan by 129.90 at the outset of Ldn trading, only to come roaring back when 129 couldn’t be removed. The rebound to 130.40 was mostly a EUR rebound, partly prompted by word Greece had finally furnished its creditors with a new reforms letter. Light liquidity exacerbated the midday rebound, which stopped shy of the falling 21-DMA at 130.57. A plunge in oil prices after Thur’s Yemen-inspired spike higher pushed the yen up against the AUD, CAD and other commodity ccys. GBP/JPY is closing the week below its 200-DMA, but up on the day.
Looking Ahead – Economic Data (GMT)
• 23:50 JP Industrial output prelim mm Feb -1.80%, 3.70%-prev
• 23:50 JP IP Forecast 1 Mth Ahead* Feb 0.20%-prev
• 23:50 JP IP Forecast 2 Mth Ahead* Feb -3.20%-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
