Currency Updates:
AUD/USD A heavy USD and sales in EUR/AUD down to the 1.4390 area had AUD/USD just below 0.7850 into NY’s open. Bulls couldn’t make a serious run at offers in the 0.7850/60 zone and the pair began slipping. The slide accelerated as risk sold-off, option related selling took hold and EUR/AUD rallied back above 1.4520. AUD/USD’s dip hit 0.7811 before buyers emerged. The positive risk sentiment brought on by the Greek headlines then saw the pair approach the day’s high again. AUD/JPY’s rally back above 93.30 helped the lift. late in the day the pair sat just below the session high. With the pair seemingly correlated to general risk sentiment it’s likely traders will cue off the Greek headlines over the weekend for direction. A positive outcome should see the pair make further gains. Outside of the Greek drama the Oz Q4 CAPEX report will be the next big risk for traders.
EUR/USD was whipped about in NY trade as Greek headlines were the main drivers in thin markets. Early NY saw the pair add to Europe’s losses driven by a German Govt spokesman noting Greece’s proposal didn’t go far enough and EUR/JPY’s dive (drop from 135.10 towards 133.55). NY slipped EUR/USD to a 1.1278 low but bids near the key 1.1260/70 support zone couldn’t be seriously tested. Some short covering ensued. The lift accelerated after some positive Greek headlines hit the wires. EU’s Juncker stated “a Greek exit from the Euro won’t happen” and Eurogroup’s Dijsselbloem noted ‘ there is reason for optimism after talks with main players in Greek bailout talks”. The market leaned towards a deal and the pair rallied to 1.1430. The gains were then consolidated around the 1.1400 area but the pair dipped towards 1.1370 late in the day after Dijsselbloem noted the EZ ministers’ meeting on Greece was a first step to rebuild trust. This left the market with a less clear picture which aided the late-day sales. Traders are now on edge heading into the weekend as the Greek issue still seems in doubt. Sunday’s Sydney opening could be interesting if the Greek situation deteriorates.
USD/JPY The yen largely followed the risk parade today, which went from off to on as the NorAm session got underway and indications from Greek bailout extension talks were that a deal was in the making. As we near the end of the week, the reports of the deal being done have become more definitive and EUR/JPY is at its session highs close to Thur’s 135.92 high vs a NY morning nadir at 133.56. The focus now is on the Feb high at 136.70 by the upper 21-day Bolli. USD/JPY had run small sell stops below 118.40 in the NY morning, when risk was off, Tsy yields were near their lows and the N225 futures had slipped from o/n highs. But reports of progress toward the Greek deal chased USD/JPY back above 119 and N225 futures to fresh trend highs. In the end, USD/JPY has trod over roughly the same ground for five consecutive sessions. Key supports are between 118.05 and 118.17 from the Kijun, 61.8% of the Feb range, the Feb 16 swing low and the daily Cloud top. While above there the trend remains nominally higher. AUD/JPY used the risk-on vibe to make new highs for the week above 50% Fibo & Kijun hurdles. Heavy JPY data slate next week.
Looking Ahead – Economic Data (GMT)
• No Significant Data
Looking Ahead – Events, Other Releases (GMT)
• 23:50 JP Bank of Japan will release the minutes of January policy meeting
