Currency Updates:
AUD/USD NY took advantage of the discount London offered them vs the o/n high of 0.7793 (post RBA Steven’s Q&A). A slightly less dovish Stevens session, higher commodity prices and general USD softening in the wake of Thur’s poor Retail Sales and Claims data underpinned AUD/USD, particularly after the 0.7725 London low couldn’t break the Asia low at 0.7721. A very disappointing U of Mich Consumer Sentiment result gave the pair one last leg up to 0.7778 NorAm highs. More broadly, prices are now wedged between the Feb lows, that couldn’t be breached on Thur, and the 0.7877 Feb high by 38.2% of the Jan-Feb slide. Light AUD data week next week and a US holiday on Monday.
EUR/USD opened NYC 1.1417, 13 pips up on last night’s close. Initial action saw a probe of the 200-HMA that fell short, 1,1380 offered was the low (200-HMA 1.1372 at the time) A strong Canadian Mfg sales print knocked USD/CAD lower Canadian Dollar Briefing pressured the DXY lower and created a general dour dollar sentiment. EUR/USD ground higher, was paid at 1.1432 ahead of the London fix. Oil prices had surged 4.3% at that point, also putting pressure on the DXY. However discretion being the better part of valor on a Friday afternoon, ahead of a long holiday weekend in the US, oil traders booked profits, Brent closed +3.7%, WTI +2.9%. Algos unwound EUR/USD longs, spot slipped back to 1.1385 given, closed 1.1392.
USD/JPY Thur’s swift USD/JPY drop found support Fri by the 200-HMA and Tues’s 118.40 low; a low that is also the daily on-close pivot pt. Prices are well above that pivot heading into the close, despite another bearish US data surprise today; this time from the U of M Consumer Sentiment indices. Trading in the States was subdued by the long holiday w/e that many extend into Friday. A poor 5-yr JGB auction kept the discussion going about how much the BOJ’s QQE program is distorting that market, but the general sense is that the Kuroda-led BOJ will keep its easing options open later this year. There’s no risk of a policy shift at next week’s meeting, and the Fed is still being priced to begin raising rates very gently in H2, mostly because of the removal of slack from the labor mkt. USD/JPY didn’t get much help for Tsy-JGB spreads this week, but the N225, which USD/JPY has a 60-day log corr of 0.8 to, remains near Abenomics highs. EUR/JPY slipped a bit Friday, but the likelihood of more EU-ECB-Greece can-kicking next week has kept prices above the 21-DMA for three consecutive sessions & targets by 137.65 still beckon. Japan GDP, IP & Trade next week.
Looking Ahead – Economic Data (GMT)
• : CN FDI (YTD) Jan 1.7%-prev
• 21:45 NZ Retail Sales Volumes QQ* Q4 f/c 1.3%, 1.5%-prev
• 21:45 NZ Retail Qrtly Vs Yr Ago* Q4 f/c 4.2%, 4.1%-prev
• 23:50 JP GDP QQ Q4 f/c 0.9%, -0.5%-prev
• 23:50 JP GDP QQ Annualised Q4 f/c 3.7%, -1.9%-prev
• 23:50 JP GDP QQ Pvt Cons Prelim Q4 f/c 0.7%, 0.4%-prev
• 23:50 JP GDP QQ Capital Expend. Q4 f/c 1%, -0.4%-prev
• 23:50 JP GDP QQ External Demand Q4 f/c 0.3%, 0.1%-prev
• 00:30 AU New Motor Veh Sales m/m Jan 3%-prev23:50
• 04:30 JP Industrial Output Rev* Dec 1%-prev
• 04:30 JP Capacity Util Idx Chg MM* Dec -0.8%-prev
Looking Ahead – Events, Other Releases (GMT)
• BRUSSELS – Eurogroup meeting
