Australian Daily Outlook

AUD/USD The slide in Asia didn’t progress much in Europe. The pair held above 0.7600 for most of Europe’s morning as EUR’s collapse drove EUR/AUD below 1.3900 and prevent AUD/USD from sliding. NY walked in with AUD/USD near 0.7610 and the pair lifted above 0.7630 as the USD wabs soft early on. The gains were erased though as the USD recovered a bit and EUR’s slide stalled slightly. This saw AUD/USD bears that were looking to sell a rally come to market and drive the pair to a new trend low of 0.7561. Some profit taking in the afternoon saw the pair near 0.7580 late in the day. Traders now look to Oz March consumer inflation expectations and the Feb jobs report. Should both data points give soft results the market will up the chances of the RBA cutting soon. AUD/USD will come under pressure and bring the pair closer to key support in the 0.7180/0.7240 zone.

EUR/USD Those looking to sell a rally lost patience in Europe’s morning. RM and corp names came to market , hit bid and drove EUR/USD towards 1.0555 just ahead of NY’s open. Early NY saw a profit taking lift take hold. The lift accelerated a bit as broad based USD weakness took hold. Spec offers at 1.0630 were left untouched though as the pair could only reach 1.0628. A slow drift ensued. The pair then tested near the lows on ECB’s Nowotny commenting on not not fully understanding the impact of negative rates. The uncertainty didn’t sit well with the market and Europe’s low was retested. That low broke later as according to DJN Germany’s Schaeuble noted the Euro’s slide vs. the USD ‘wasn’t completely unwanted’. The pair went on to a new low of 1.0511. Option related bids ahead of 1.0500 and some profit taking saw the pair lift towards 1.535 and it sat nearby late in the day. Feb CPI data from numerous EZ nations, a speech from Buba’s Weidmann and US retail sales are the big risks for tomorrow. A solid US sales result should keep EUR/USD under pressure.

USD/JPY Once again, the yen held up better against the USD onslaught than any of the other major ccys, in large part due to falling yield spreads and growing concerns that the surging USD will begin to create negative feedback loops in some markets, including the key US equity market and in regions with hefty USD debts to repay. Regardless, Fed-BOJ policy divergence – former on hold & hoping to raise rates some day, while latter balloons it balance sheet via QQE2 – and Japanese outbound investment flows led by the GPIF are keeping USD/JPY on the rise. There’s the usual talk about fiscal yr-end flows impeding prices, but so far it looks like natural exporter sales on top toward 122. EUR/JPY’s plight worsened as 2-yr DEM-JPY yields spreads fell to -26bp and prices broke the 38.2% of the ’12-’14 uptrend at 128.52, as well as the Jul-Aug ’13 lows by 128. The lower 21-mo Bolli is next at 127.40 and falling. GBP/JPY broke the 50% retrace of the Feb rally at 181.30 that had kept prices aloft Monday & Friday. BSI Q1 survey results and weekly investment flow data are on tap tonight from Japan. US Retail Sales Thur and FOMC next week are key events.

Looking Ahead – Economic Data (GMT)
• 21:45 NZ Food Price Index* Feb 1.30%-prev
• 23:50 JP Foreign Bond Investment w/e 70.9b-prev
• 23:50 JP Foreign Invest JP Stock w/e 350.5b-prev
• 23:50 JP Business Survey Index* Q1 8.10-prev
• 05:00 JP Consumer Confid. Index* Feb 39.10-prev
• 00:30 AU Employment* Feb f/c 15.0k, -12.2k-prev
• 00:30 AU Full Time Employment* Feb -28.1k-prev
• 00:30 AU Participation Rate* Feb f/c 64.8%, 64.80%-prev
• 00:30 AU Unemployment Rate* Feb f/c 6.3%, 6.40%-prev

Looking Ahead – Events, Other Releases (GMT)
• 20:00 NZ RBNZ Interest Rate* N/A f/c 3.5%, 3.50%-prev