Currency Updates:
AUD/USD The pair slipped in Europe after the 10-DMA capped any gains overnight. NY walked in with the pair near 0.7665. Bear pressure remained in NY as the USD was firm early on. Short-term support near 0.7640/45 was eventually cleared and the pair’s slide accelerated on that break. Overall risk-off sentiment had JPY strength push AUD/JPY down near 92.30. AUD/USD followed lower with soft commodities putting the wind at its back. The pair hit a session low of 0.7610 and saw very little bounce as it sat near 0.7620 late in the day. There is no major Oz data next week. RBA’s Debelle speak March 16 and is likely to try and talk AUD down if the currency comes up. Traders will be looking to the Fed for the big risk though. If the Fed keeps market expectations for a hike intact even after some soft US data, AUD/USD should remain under pressure. We might then see the March low broken and the pair make a run towards 0.7180/0.7240 support.
EUR/USD Short covering in Europe had the pair test near 1.0650 before pulling back below 1.0600 into NY’s open. NY bid the pair up early as shorts bought the dip. The lift got an added boost after US retail sales missed big and prior sales data results saw downward revisions. US bond yields fell and the USD saw a broad based spike down. EUR/USD quickly hit a 1.0684 high but the gains didn’t last long. Solid offering interest in the 1.0685/00 zone and talk of sovereign selling saw the pair quickly slip below pre-retail sales levels. The slide deepened in NY’s afternoon as bond yields clawed back some losses after a disappointing US 30 year bond auction. EUR/USD slipped just below 1.0600 and lingered nearby heading into the close. There is little major data from either the EZ or US tomorrow so action might remain choppy or be driven by positioning. With the market still well short EUR we might see bears get squeezed further into the weekend and ahead of the Fed next Wednesday.
USD/JPY A broadening divergence between falling USD-JPY 2-yr ylds spreads and rising N225 prices (15-yr hi today) left USD/JPY in a tight daily range inside Thur’s, with little net change as we head toward the close. Another round of weak US data, PPI & U of M, kept Tsy yields under wraps, but there was also some risk-off buying of Tsys amid exits from stocks, commodities and higher-beta ccys. The latter boosted the haven yen v the tumbling EUR, as well as commodity/EM currencies. USD/JPY is a tad technically top-heavy on daily charts, but the big action is in the crosses. EUR/JPY is closing the week below several L-T supports in the 127-128 range, with little support until the Jun ’13 swing low at 124.94. 38.2% of the ’12-’14 uptrend at 128.52 is done and dusted. The 50% retrace of same is at 121.95. GBP/JPY’s got little support until this year’s 175.45 low. AUD/JPY is being yanked back down toward the Feb-Mar uptrend’s 50% Fibo at 91.76 by Wed’s 91.75 low. All eyes are now on the FOMC next week to see if “patience’ can be removed as US data & inflation cool amid rising financial mkt angst. BOJ meets, but are seen on hold.
Looking Ahead – Economic Data (GMT)
• No Significant Data
Looking Ahead – Events, Other Releases (GMT)
• AU RBA Asst Governor Guy Debelle speaks at the Kanga News DCM Summit.
• JP Bank of Japan begins monetary policy meeting, Rate decision Tuesday
