Currency Updates:
AUD/USD The pair couldn’t stray too far from the 200-HMA for NY trading. Early on the pair the pair sat just beneath the 200-HMA. A quick spike to 0.7800/10 resistance (in sympathy with EUR/USD’s lift) met sellers. A steady decline took hold with s-t macros being noted sellers and the pair slipped to a 0.7747 low. No further losses were possible as the USD’s lift abated and bids into the Feb 5 low combined to stem the drop. Another lift above the 200-HMA ensued but the pair slipped back near 0.7765 late in the day. Traders are reluctant to push the pair too far as key OZ data is due. The Oz Jan jobs report is due Feb 12. IT’s likely the pair will stick to the tight range until then. Should the number come in weak then we’re likely to see a retest of the 2015 low into the weekend.
EUR/USD NY walked in with bear pressure being applied to the pair. Europe dropped EUR/USD from the 1.1335 area towards 1.1275 into NY’s open mostly on the back of EUR/GBP’s decline to 0.7409. Real money bids in EUR/USD stemmed the slide and an MNI story on Greece then saw the pair spike towards 1.1340. The story quoted ‘sources’ stating the EU commission is to propose a 6 month extension for Greece, propose a reorganization of the Troika and table a compromise plan for Greece. The rally faltered quickly though as the market began to realize this proposal likely wasn’t the full story. Reuters then reported the EU commission said there is no formal proposal for Greece but that talks are intensive. EUR/USD slipped back near 1.1285. Buyers emerged though as the earlier rise in the USD abated. A slow ascent took hold and the pair sat near 1.1315 late in the day. Action is likely to remain quiet in Asia as the Europe group meeting is tomorrow. large headline risk likely exists. Should the Greek situation turn more sour it’s likely EUR/USD will sink and we may see the 2015 low retested.
USD/JPY Offers defending the daily Cloud top & the down TL off the Dec & Jan highs at 119.06/16 today were cleared and stops run above 119.25. The surge got to 119.625 in NorAm trading, very nearly completing the 76.4% of the Dec 23 to Jan 16 slide at 119.65. With little hard or clearly bullish news du jour in hand, a bout of light profit-taking ensued, but quickly found bidders by Monday and Friday’s 119.22-23 highs. Prices have steadied above there with help from Fed’s Williams & Lacker both sounding more convinced about the need for a rate hike by mid-year, regardless of any financial market volatility the higher rates might trigger. A close above the Cloud & the dn TL at 119.06/16 would strengthen the view that the correction from Dec’s high is over. Bolstering this case are today’s price push past the upper 21-day Bolli and the nascent spreading of those bands following 3-months of contraction. Moreover, this week’s range is wholly above the weekly Tenkan at 118.19; this after the Tenkan had been capping rallies most of last month. EUR/JPY may post its first close above the 21-DMA since Dec 12 today. 135.35 Feb 4 high is nearby into key EU-Greece meetings.
Looking Ahead – Economic Data (GMT)
• 21:45 NZ EleC Card Retail Sales mth Jan -0.1%-prev
• 21:45 NZ Elec Card Retail Sales YY* Jan 3.5%-prev
• 23:30 AU Consumer Sentiment Feb 2.4%-prev
• 00:30 AU Housing Finance Dec f/c 2%,-0.7%-prev
• 00:30 AU Invest Housing Finance* Dec -2.2%-prev
Looking Ahead – Events, Other Releases (GMT)
• 22:00 AU – RBA Asst Gov for Fin’l Markets Guy Debelle speaks in Sydney
