Currency Updates:
AUD/USD Bear pressure remained on AUD/USD for the early part of NY trading as the pair hugged the 0.7600 area. The pressure was applied as the market had geared up for month-end AUD sales. Bears were disappointed though as the fixing saw the pair spike from just below 0.78600 towards 0.7645. Most of those spike gains were erased though as the USD recovered a bit. Late in the day the pair sat just above 0.7620. Traders now looks to Oz AiG March PMI and Oz Feb building permits for cues. Impact might be limited though as China’s March NBS MFG PMI is due a bit later. A number below the forecast 49.7 might see AUD/USD come under pressure. A test of the 2015 low might then take hold leading into the US jobs data on Friday.
EUR/USD The pair hit a new s-t trend low (1.0713) in Europe before bouncing a bit to the 1.0740 area into NY’s open. Early NY saw a quick spike higher on the combination of a drop in US treasury yields and corporate sales of USD. 1.0776 was hit but the gains were quickly eroded and the pair drifted back to the 1.0725 area. The intra-day market was anticipating EUR sales for the fixing and was positioned accordingly. They were disappointed though as broad based USD sales took center stage. EUR/USD again traded above 1.0770. Further gains were likely limited by EUR/GBP’s stumble from the 0.7260 area towards 0.7220. After the fix interest EUR/USD settled into a tight range and sat just below 1.0745 late in the day. Numerous EZ March PMIs and US ISM Mfg PMI are risks for the market tomorrow. The numbers likely need to be well off the mark to see a major impact as the market isn’t interested in pushing too aggressively ahead of the US jobs data and upcoming holidays. For now it looks like the broad 1.6-1.10 range will define EUR/USD’s extremes.
USD/JPY After reverting to the 21-DMA at 120.37 for the session high in Asia, USD/JPY retreated with Japanese stocks and to catch up with the fall in USD-JPY 2-yr yield spreads that had been underway since late NY Monday. Rising JGB yields and falling Tsy yields have weakened spreads. Today’s US data were mixed, but the Chi PMI miss kept Tsy yields under wraps and along with some ETF glitches and Ldn fix selling, took USD/JPY to a fleeting new intraday low of 119.77, right by the 200-HMA & the daily Tenkan. The 21-DMA was a logical place for the rebound from last week’s Cloud base & 61.8% retrace base to pause. A rise and close above that MA and the down TL off the March highs, Wed at 120.41, would reinforce the view that 118.33 was the bottom of an ABC correction. Creating some doubts about upside potential is that the 122.04 Mar high barely bested the 121.86 prior peak and didn’t mark a new closing high. The advent of a new Japanese FY should see fresh buying of foreign assets by lifers, joining the flows from GPIF et al and Trusts. Tankan & Mar PMI are tonight’s features. BOJ JGB buying to tamp down rising rates is also being awaited.
Looking Ahead – Economic Data (GMT)
• 23:50 JP Tankan Big Mf Idx Q1 f/c 14, 12-prev
• 23:50 JP Tankan Big Mf Outlook DI Q1 f/c 16, 9-prev
• 23:50 JP Tankan Big Non-Mf Idx Q1 f/c 17, 16-prev
• 23:50 JP Tankan big non-mf outlook Q1 f/c 17, 15-prev
• 23:50 JP Tankan All Big Capex Est Q1 f/c 0.5%, 8.90%-prev
• 23:50 JP Tankan Small Mf Idx Q1 f/c 3, 1-prev
• 23:50 JP Tankan Sm Mf Outlook DI Q1 f/c 4, -5-prev
• 23:50 JP Tankan Small Non-Mf Idx Q1 f/c 0, -1-prev
• 23:50 JP Tankan sm non-mf outlook Q1 f/c 0, -4-prev
• 23:50 JP Tankan All Sm Capex Est Q1 f/c -16.5%, -6.70%-prev
• 22:30 AU AIG Manufacturing Index Mar 45.4-prev
• 00:30 AU Building Approvals* Feb f/c -4%, 7.90%-prev
• 00:30 AU Private House Approvals* Feb 0.40%-prev
• 01:00 CN NBS Non-Mfg PMI* Mar 53.9-prev
• 01:00 CN NBS Manufacturing PMI* Mar f/c 49.7, 49.9-prev
• 01:45 CN HSBC Mfg PMI Final Mar 49.2-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
