Currency Updates:
AUD/USD Early NY saw gains in Europe added to. The ADP miss put the USD off balance at first as yields softened. AUD/USD ran stops above 0.7850 but could only manage a new high of 0.7860. USD strength, lead by EUR/USD sales, quickly emerged. AUD/USD slid from the high. The drop got a boost from a report in ‘The Australian’ noting that Rio Tinto will be might cut 1,000 jobs. http://bit.ly/1GTxEM3 AUD/USD dived towards the post-Oz GDP low but could only touch 0.7803. Very little bounce was seen though as AUD/NZD traded to a new trend low of 1.0296. AUD/USD sat just below 0.7815 late in the day. Oz retail sales and trade data for January are the key risks in Asia. Soft reading might see the recent short squeeze run out of steam. We might then see key support near 0.7720/40 tested.
EUR/USD The pair was consolidating the post-EZ services PMI slide into NY’s open. The pair held just below 1.1130 as NY got going. ADP’s miss gave EUR/USD a boost but it could only reach 1.1145. When it became clear no further gains were due, those looking for a larger rally to fade came to market and hit bids. Real money names that were normally patient were noted sellers. EUR/USD dived lower and the slide got a boost on the above f/c US Feb Services PMI. A new trend low of 1.1062 was hit. Option related bids ahead of a likely 1.1050 barrier prevented further losses. The afternoon saw the pair consolidate losses and sit just above 1.1070 late in the day. Traders now look to the ECB for their next cue. The details of the QE plan are expected. US jobless claims are also on tap and an upbeat number will encourage bears further. As it stands now techs show bears in full control on downward biased RSIs and a new trend low. Long-term bears now have the September 2003 low (1.0760) in their sights
USD/JPY Tues’s USD/JPY losses were consolidated on Wed above the Tenkan at 119.28 amid mixed US data and Fed Beige Book inputs. ADP for Feb was below f/c, but Jan was revised up to 250k and by to the 257k NFP result. ISM’s Services index inched up to 56.9 led by the Employment index at 56.4 from 51.6. The US yield curve steepened marginally, with front-end yields dipping amid contrasting Fed speakers’s comments. Softer stocks kept USD/JPY tamped by the hourly Cloud top by 119.80. N225 futures have managed to hold above their up TL from Jan 16’s low, Thurs at 18,550. A Reuters poll today pointed to expectations for a rise beyond 120 and last year’s 121.86 peak over the next few months. GPIF et al buying of foreign assets as well as Japanese outbound M/A are expected to underpin along with the BOJ’s QQE2 and perhaps more QQE later in the year if need be. Risk-off jags the main threat. EUR/JPY was dragged down by EUR/USD selling that took the main pair to new multi-yr lows and the cross below the 50% Fibo at 133.43 that had been stopping the rot the past few days. The 61.8% was also broken. GBP/JPY stumbled to the Cloud top
Looking Ahead – Economic Data (GMT)
• 23:50 JP Foreign Bond Investment w/e 166.3b-prev
• 23:50 JP Foreign Invest JP Stock w/e 289.0b-prev
• 00:30 AU Retail Sales MM Jan f/c 0.4%, 0.20%-prev
• 00:30 AU Trade Balance G&S (AUD) Jan f/c -950m, -436m-prev
• 00:30 AU Goods/Services Imports* Jan -1.00%-prev
• 00:30 AU Goods/Services Exports* Jan 1.00%-prev
Looking Ahead – Events, Other Releases (GMT)
• 01:30 AU RBA Deputy Governor Lowe Speech
• 01:30 JP BOJ Kiuchi speaks in Maebashi
