Currency Updates:
AUD/USD Shorts decided it would be best to cover in NY’s morning as positioning was stretched and the Fed risk loomed. AUD/USD sat near 0.7610 into NY’s open and bull pressure was applied right out of the gate. Broad based USD weakness aided the pair’s lift from the open up to 0.7675 ahead of the fed. A slight dip to the 200-HMA (0.7653) just before the announcement was bought and the pair sat near 0.7670. The Fed’s dovish lean intensified the short covering as US yields collapsed and reversed spread narrowing seen earlier in the day. AUD/USD pierced the 21-DMA and hit a high of 0.7752. Very little pullback was seen and the pair sat near 0.7740 late in the day. Longer-term shorts have some concerns now. A bullish outside candle formed today, daily RSI is biased up and yield spreads are widening. With the market still very short a squeeze to the 0.7900/30 resistance zone cannot be ruled out.
EUR/USD Activity in early NY was limited. The market ignored an early widening of DE-US yield spread and broad based USD weakness as EUR/USD lingered near the 1.0600 area. Late in Europe’s morning a large swoon in the USD finally saw EUR/USD come to lift. Short covering brought the pair above the 200-HMA and it hit 1.0670 before pulling back a bit into the Fed. Upon the Fed announcement the pair saw algos whip the pair into a frenzy. A quick dip to 1.0615 reversed in an instant as the message had a dovish lean to it even after ‘patient’ was removed. EUR/USD then spiked near 1.0740 before dipping near 1.0660. Short covering saw that dip bought and the pair went on to test 1.0800 with subsequent dips from there bought as well as shorts scramble to cover. Bulls remained in control late in the day as the pair broke to new highs and had the 1.0825/55 resistance zone in their sights. The short squeeze may have legs still. Daily RSI has turned from deeply o/s territory and yield spreads have tightened. A break above 1.0855 opens the door to 1.0905/10. If that is cleared there is little resistance until the 1.1035/75 zone.
USD/JPY Importer and spec range-trading bids in the 121.00-10 range were chewed through before the London close, triggering an initial round of sell stops that were followed by more pronounced selling after the FOMC statement & SEPS were released. The daily Tenkan line at 120.97, the Mar 12 pullback low at 120.66 and the 38.2% of the 118.11-122.04 rise at 120.54 were broken below. Yellen’s presser helped to stabilize prices, but US interest rates have tumbled, particularly toward the front of the curve and this remains a weight on USD/JPY prices. Key support is at 120.07 from the daily Kijun & 50% of the 118.11-122.04 rise. O/B bearish divergence on weekly charts and a broadly o/b USD are clearly near-term headwinds, though a sustained setback would raise expectations of the BOJ doing QQE3 sooner than the current Oct f/c. EUR/JPY is also working off o/s daily and weekly conditions, today clearing Mar 11 high at 129.95 by the 61.8% of the 131.87-126.92 slide. The broader 50% retracement of the Feb-Mar slide at 131.80 and the daily Kijun there are in the realm, despite lingering concerns regarding Grexit and the pace and effectiveness of ECB QE.
Looking Ahead – Economic Data (GMT)
• 21:45 NZ GDP Production QQ* Q4 f/c 0.7%, 1%-prev
• 21:45 NZ GDP – Annl-Avg, Prod-Bas* Q4 f/c 3.2%, 2.9%-prev
• 21:45 NZ GDP – Annual* Q4 f/c 3.3%, 3.2%-prev
• 21:45 NZ GDP Expenditure QQ* Q4 f/c 0.8%, 1.3%-prev
• 23:30 JP Reuters Tankan DI Mar 11-prev
• 23:50 JP Foreign Bond Investment w/e 270.4b-prev
• 23:50 JP Foreign Invest JP Stock w/e 290.1b-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
