Currency Updates:
Currency Summaries
EUR/USD Tight ranges held in NY as action early in the session saw the day’s range basically matched. NY traded 1.3830-1.3847 with the it settling near 1.3840 to end the week. Second tier US data wasn’t able to stir the market. April’s Markit Composite Flash came in at 54.9 vs. the prior 55.7 with the employment component coming in at its lowest since June 2012. Ongoing Russia/Ukraine tensions and a looming Ukrainian ultimatum for Russia due tomorrow kept traders from pushing the pair too far. Market focus seems tied to April 30 when big econ & event risk is due. German jobs & EZ CPI for April as well as the FOMC are scheduled for Tuesday. The CPI is likely to get most attention and send EUR lower. Market sentiment will grow that the ECB will have to act soon if inflation is slipping. A soft CPI may mean an end to EUR/USD’s rally and see the pair break below the 21 week MA and T-L off July’s low which have been supporting dips. A clean break below that support and the April low may see the pair make a run for the 2014 low near 1.3480.
USD/JPY stayed under pressure throughout the NorAm session as equities were broadly lower on Russia and China fears. A Ukrainian ultimatum issued yesterday hung over the marketplace as investors had no way to handicap the outcome. The Japanese CPI data didn’t seem to provide the direction as many had hoped so all eyes now turn to next Wednesday’s BOJ meeting to see how they respond to the latest reading. Nikkei futures sold off 0.8% in Chicago and puts the index in a precarious spot with this week’s bearish cross of the 40 and 200 day moving averages. CNHJPY finished at a new low for the year and is a potential negative in that the last thing the Japanese need is a disinflationary wave coming from China.
AUD/USD opened on the highs and finished on the lows in a NorAm session dominated by worries about Russia and China. EM/high beta currencies remain at risk with tensions high over the Ukraine ultimatum and the continued slide of the CNH. The conversation regarding the weakness in the Remnimbi has shifted from being a PBOC screw-turning to keep speculators honest to one where the markets are wondering if the Chinese are embarking on a plan to bail out their export sector. Flattening of DM yield curves to new lows would suggest that the bond markets are pricing in that probability and would leave the Oz and other at risk of some instability. .9300 capped the rally attempt for the 2nd day running and now serves as a short term pivot point.
Looking Ahead – Economic Data (GMT)
• 23:50 JP Retail Sales YY Mar f/c 11.00%, 3.60%-prev
