Currency Updates:
AUD/USD NY erased Europe’s post-RBA profit taking slide. Upon the open NY lifted the pair off the 0.7800 region as falling US yields brought on broad based USD weakness. The lift managed to match the post-RBA spike high. No further gains were possible though. Offers in the 0.7850/60 zone loomed and an afternoon rebound prevented further gain. The upcoming Oz Q4 GDP risk also likely helped keep the rally in check. Late in the day the pair sat near 0.7830 which left it with impressive gains and the best performing currency vs. the USD. The AiG PSI is another data risk ahead of GDP. Should both result come in above f/c we might see shorts squeezed further. We might then see the Feb 26 high and bear flag top near 0.7614/18 get tested.
EUR/USD Europe pushed the pair to the day’s low into NY’s open. No further losses were possible in NY though as broad based USD weakness ensued. The USD weakness was derived from soft US bond yields. EUR/USD lifted off the 1.1155 low and went on to hit the day’s high at 1.1218. A USD rebound in NY’s afternoon had the pair near 1.1180 and down tiny late in the session. It’s likely the recent consolidation of losses persists as the market waits for event risk later in the week. Traders are likely to keep their powder dry until the ECB on Thursday and the US jobs report on Friday.
USD/JPY was already under pressure after Abe advisor Honda repeated comments about the yen already being cheap on a PPP basis by 120 and after the 120.27 Asia high ran into exporter and spec offers just before the well-defined dn TL off the Dec 23-onward highs. Japanese wage and OT data were also mildly bullish for the yen, but the major labor agreements for this year are not expected until March 18. 109.50 proved pivotal intraday, with stops run below it after the NY option cut at 10ET and after the Japanese Cabinet Office corp survey released o/n f/c USD/JPY for this year at 109.50 vs 105.7 last year. The breakeven for exporters is now put at 99 vs 92.2 last year. Japanese and other stock mkts were soggy, adding to the yen bid as carry trades got trimmed, but most of the price action is seen as book-squaring ahead of US NFP on Friday. Prices remain above the Tenkan at 119.28, and well above the Cloud top and Kijun at 118.71/57. EUR/JPY remains slightly above key Fibo support at 133.43. CAD/JPY is stuck below several hurdles at 96.26-41. Other crosses consolidated as wellt.
Looking Ahead – Economic Data (GMT)
• 22:30 AU AIG Services Index Feb 49.90-prev
• 00:30 AU GDP QQ Q4 f/c 0.5%, 0.30%-prev
• 00:30 AU GDP YY* Q4 f/c 2.5%, 2.70%-prev
• 00:30 AU GDP Final Consumption* Q4 0.60%-prev
• 00:30 AU GDP Capital Expenditure* Q4 -2.70%-prev
• 00:30 AU GDP Chain Price Index* Q4 -0.30%-prev
• 01:45 CN HSBC Services PMI Feb 51.8-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
