Currency Updates:
AUD/USD A quiet European morning was disrupted upon NY’s opening. The pair near 0.7810 as NY got going. Broad based USD sales by those expecting a weak US jobs report boosted AUD/USD to a 0.7846 high. The gains evaporated in short order after the NFP beat and U rate dropped. AUD/USD slid, with very little in the way of bounces, and took out key support near 0.7740/50. The pair neared 0.7715 before any pullback was seen. Some give backs for USD gains allowed the pair to lift near 0.7745 but bears emerged and the pair went on to make a session low of 0.7706. Late in the day the pair sat near 0.7720. There isn’t much major Oz data next week but China sees a good amount coming out. AUD traders will likely take their cues from that data. Should the results show China’s econ growth slowing further AUD is likely to trade heavy. AUD/USD might then make a run for the 2015 low next week.
EUR/USD Europe didn’t wait for the US jobs data to smash EUR/USD. RM names clobbered the pair at Europe’s opening. The pair dived from the 1.1025 area towards 1.0930 into NY’s open. Some USD long covering by shorter-term RM names allowed the pair to lift near 1.0990 ahead of the jobs data. The USD and US yield soared on the better than f/c jobs report as the market now believes the Fed may change their language at the next meeting and July Fed funds futures showing near 25 bps of hikes. The only disappointment in the report was average hourly earnings but the market ignored it. EUR/USD spiked down to 1.0843 before any type of bounce took hold. A small lift near 1.0880 met sellers and the pair then went on to hit the day’s low at 1.0842. A give back of some USD gains late in the day allowed the pair to sit near 1.0865 late in the day. A slew of China econ data and the Eurogroup’s meeting on Tuesday are the next risks for EUR/USD traders. As it stands now bears control the pair still and a test of the September 2003 low looks likely.
USD/JPY A bigger-than-f/c rise in NFPs and drop in the Jobless Rate, including the U6, were enough to send Tsy yields surging and USD/JPY up through 2014 highs by 120.50/75, and eventually above 121 after the hefty 10ET expirations there. Today’s 121.29 high is the highest since the Dec 8 peak at 121.86; That high was the highest since July 2007, which was the month after prices peaked before the GFC began. Gains were pared back in the NY afternoon to 120.58 as surging interest rates took their toll on equities, including N225 futures. Exporters were happy to sell USD/JPY above 121, but we suspect the GPIF et al will also be happy to buy any dips amid the much higher Tsy yields on offer. Of course the L-T concern is that GPIF’s rerisking strategy could backfire amid a prolonged equity and bond prices slide or yen recovery, which is why the BOJ will persist with QQE2. Beyond the 121.86 peak, the focus shifts to the 2007 peak and technical targets in the lower 124.00s. EUR/JPY’s descent came first on EUR weakness in London, then on a rebound in the yen in late NY on risk-aversion buys amid stock declines. Jan 26 low at 130.16 is within reach. JPY GDP r Sun f/c lower.
Looking Ahead – Economic Data (GMT)
• CN Exports YY Feb f/c 14.2% ,-3.3%-prev
• CN Imports YY Feb f/c -10%, -19.9%-prev
• CN Trade Balance Feb f/c 10.80b, 60.03b-prev
• 21:45 NZ Manufacturing Sales* Q4 0.4%-prev
• 23:50 JP Bank Lending YY Feb 2.5%-prev
• 23:50 JP Current Acctt NSA JPY* Jan f/c 288.2b, 187.2b-prev
• 23:50 JP GDP Rev QQ Ann Q4 f/c 2.2%, 2.2%-prev
• 23:50 JP GDP Revised QQ* Q4 f/c 0.6%, 0.6%-prev
• 23:50 JP GDP Cap Ex Rev QQ* Q4 f/c 0.3%, 0.1%-prev
• 23:50 JP GDP QQ Pvt Consmp Re Q4 0.3%-prev
• 23:50 JP GDP QQ Ext Demand* Q4 0.2%-prev
Looking Ahead – Events, Other Releases (GMT)
No Significant Events
