Currency Updates:
The Australian Dollar (AUD): Europe made two attempts to trade the pair below 0.9345 but failed and bounced to 0.9355 as NY walked in. NY pressed the pair higher to test hourly resistance near 0.9365/70 but was unable to push further. S&P warned that Australia’s AAA rating could be at risk unless substantial budget cuts are made in coming years, made the AUD dived down to a low of 0.9326. Concerns in iron ore’s break low from 103.70/105 support and t-l support off the 2009 low added pressure to the AUD. RBA minute is due later & little surprises are expected.
AUD/USD: Should NY’s slide continue overnight, stop touted under 0.9320 and 0.9290 may get run. If the latter are run key 0.9200/05 support is targeted.
EUR/USD: No fresh lows were seen and NY lifted the pair towards 1.3730 but comments from ECB’s Mersch gave a quick smack down. Mersch stated the likelihood ECB’s GC will act in June has grown substantially while also noting the GC’s unanimous willingness to use conventional & unconventional tools to counter low inflation risks. EUR dived to 1.3700 are and was bought on the dip. A new session high of 1.3734 was hit but offers sitting ahead of the 100 DMA capped. Short covering may limit the downside while the daily cloud top & 50% fib of 1.3995-1.3648 may cap gains.
USD/JPY The slow but steady erosion continues in USD/JPY despite hefty pre-tax-hike demand showing up in things like today’s Machine Tool Ords (+19.1% m/m). To some extent, the fact that so much demand was accelerated ahead of the April tax hike means that the drop-off in demand after the tax will be even greater. It may also mean there are doubts about next year’s tax hike happening or that reflation will be robust enough over the medium-term to make this year’s hike seem less important. Reuters’s story on changes coming to the GPIF management was not unexpected, and thus did little for either the Nikkei or yen bears. USD/JPY is close to the 200-DMA it broke at 101.23 today. Well-touted bids at 101.09-10 sufficed in this dreary session, but this is the second straight session wholly below the up TL from last June. Stops and barriers noted below 101 and 100.75 (100.76 the ’14 low). N225 quite close to its 13.885 ’14 lows, with it & USD/JPY trading below weekly Tenkan and Kijun lines now. Fed and ECB speakers did little to change policy perceptions. EUR/JPY eyes its 200-DMA & a 76.4% Fibo at 138 next. AUD/JPY’s back in the Cloud.
RBA Minutes: 01:30GMT
