Currency Updates:
USD/JPY and the JPY crosses traded soggy in Asia. Japanese exporter sales into the Tokyo fix outweighed Gotobi buys from Japanese importers. This and Nikkei sogginess saw most pairs lower. USD/JPY fell back from 102.60, just shy of yesterday’s 102.65 high, to 102.31. Bids returned in the 102.30-40 window but were mostly absorbed. More trail down and especially from 102.10 and into the 101-handle. Stops are mixed in sub-102.25 and 102.00-10. Offers remain in place from around 102.70 and trail up. Large vanilla option expirations at 102.50 failed to anchor the market but could come into play into the New York cut. EUR/JPY fell back from 139.41 to 139.07. Some stops were tripped on the break below 139.25. More are eyed sub-139.00 (Ichi tenkan at 139.03) and 138.65 (200-DMA at 138.68). GBP/JPY fell back modestly from 172.32 to 171.92. AUD/JPY pushed back from 95.92 late in New York and 95.90 early in Asia to 95.64 but remains very much in its recent uptrend. NZD/JPY see-sawed between 86.91-87.17, perhaps not as bid as AUD/JPY but holding its own and moving higher from 85.85 on May 29.
EUR/USD opened in Asia at 1.3593 after selling off across the board overnight. Reserve managers sold EUR/USD straight while funds sold EUR against selective EM currencies and AUD. Despite these flows overnight, EUR/USD and the EUR complex remained moribund in Asia as has been the case recently. EUR/USD could only manage a 1.3588-94 range. Option gamma plays again helped to hem in any price action with large expirations again at 1.3600 and more above and below. Surprisingly resilient post-ECB ease last Thursday, the EUR complex is beginning to look a bit more vulnerable on diverging central bank expectations. Support is eyed at 1.3570 (61.8% Fibo retracement of 1.3503-1.3677) but stops are building below. A break back above 1.3625 is needed to ease current downward pressures.
AUD/USD opened in Asia at 0.9352 and remained better bid between 0.9342-64. After a lackluster o/n session, it drifted lower early before bouncing on some fresh buys at the lows. Another strong CNY fix helped. Another back of Aussie data was met by yawns but did not stop AUD/USD from moving higher. Offers at 0.9365-70 helped cap the topside but stops are eyed above. Of some concern is the on-going China port commodity financing scandal.
Looking Ahead – Events, Auctions (GMT)
N/A ECB Pres Draghi, Greece SYRIZA head Tsipras meeting in Frankfurt.
N/A Brussels Economic Forum ’14, various speakers.
N/A Greece E1.25 bln 26-wk, France 3/6/12-mo BTF bill, Norway bond auctions.
07:00 ECB/Finland CB Liikanen press conference on latest economic outlook.
08:00 Dutch CB Swank to present biannual macro forecasts.
08:00 Netherlands E3.0 bln 0.5% 2017 DSL auction.
09:15 BoE Gracie speech at London BBA conference.
09:15 EU Dijsselbloem, Slovak FinMin Kazimir press conference in Bratislava.
09:30 UK DMO GBP3.25 bln 2.75% 2024 Gilt auction.
09:30 Germany E4 bln 0.25% 2016 Schatz, E1 bln 0.1% index-linked Bund auctions.
11:00 Slovak CB Makuch press conference on latest macro forecasts.
11:15 ECB Coeure in Frankfurt panel discussion.
(See North American Open for a detailed listing of US/NorAm releases, events.)
