Currency Updates:
AUD/USD Europe disappointed pots-RBA SOMP bears as they pressed the pair up to 0.7850/60 resistance with little pullback. Stops above 0.7860 seemed in jeopardy. The pair sat near 0.7850 into NY’s open as the USD was a bit soft. An early NY bull rush saw the stops run and a high of 0.7877 hit. A pullback near 0.7850 ensued into the jobs data. The big beat and upward revisions immediately spiked AUD/USD lower. Support near 0.7780 was threatened but it held. JPY weakness saw AUD/JPY lift near 93.10. This likely prevented AUD/USD from falling further. Instead the pair lifted back near 0.7835. The JPY weakness abated and USD strength persisted. AUD/USD then steadily slid & tested below 0.7780. Little bounce was seen as the pair held near the day’s low late in the session. Risks for the pair next week are RBA Gov. Steven’s speech on Feb 9, Oz Q4 home p[rice index and Jan employment data. Housing may get a good look by the market as the RBA noted concerns on prices in the SOMP and post-cut statement.
EUR/USD Europe held a tight range but the pair did have a bearish lean to it. The pair dipped to 1.1430 but bounced near 1.1450 as Ny got going. Early NY saw the lift push a bit further as the USD was soft. A NY high of 1.1466 was hit but the lift was erased in a heartbeat. The US jobs report beat forecasts and prior NFP released were revised up nicely. This had the market thinking the Fed may have its ‘patience’ tested. The USD soared and EUR/USD dived below the 200-HMA and tested near 1.1315 before any type of bounce took hold. JPY weakness pushed EUR/JPY above 135.15 and this allowed EUR/USD a bounce towards 1.1350. The lift faltered in the afternoon though and the pair near 1.1310 with little bounce. Late in the day the pair sat just under 1.1320. There is little major EZ econ data until Q4 GDP reports late in the week. The market will most likely focus on the Greek situation. The Eurogroup’s Chairman Dijsselbloem stated Greece must apply for a bailout extension on Feb 16 at the latest to keep financial backing. EUR trading into that event could prove to be volatile as the market will be jittery.
USD/JPY The US NFP report was such a big beat overall that it sent Tsy yields surging enough to push USD/JPY to its highest since Jan 12. The 119.23 high, vs the day’s 117.17 low, stopped right by the daily Cloud top and the down TL off the Dec & Jan highs at 119.27. The upper 21-day Bolli was pierced at 119.10; the first time it’s been touched since the Dec 8 trend high at 121.86. Despite the stellar US jobs report, the first full 25bp rate hike is still not priced in until July. Sideways-to-lower USD-JPY 2-yr yield spreads have been the main drag on USD/JPY prices since Christmas, counteracting a decent rise in the N225 over that span. N225 futures today climbed to 17,950, nearly retesting the Dec peak at 18,115. If upcoming Jan US data, namely the Feb 12 Retail Sales report, tend to reinforce today’s good news and the N225 can make new trend highs, the stage will be set for USD/JPY to at least retest the late Dec high at 120.82. EUR/JPY was dragged higher by the yen fall after the US news, but remains thwarted by offers above 135. GBP/JPY cleared key MA & Fibo hurdles. UK Political fears persist, but techs pt to 184.23 next. JPY Q4 GDP due Feb 15.
Looking Ahead – Economic Data (GMT)
• Sun CN Exports YY Jan f/c 6.3%, 9.70%-prev
• Sun CN Imports YY Jan f/c -3%, -2.40%-prev
• Sun CN Trade Balance Jan f/c 48.90b, 49.60b-prev
• 23:50 JP Bank Lending YY Jan 2.60%-prev
• 23:50 JP Current Acct NSA JPY* Dec f/c 358.0b, 433.0b-prev
• 05:00 JP Consumer Confid. Index* Jan 38.80-prev
• 06:00 JP Economy Watchers Poll* Jan 45.20-prev
• 00:30 AU ANZ Newspaper Job Ads Jan 3.00%-prev
• 00:30 AU ANZ Internet Job Ads Jan 1.80%-prev
