Currency Updates:
AUD/USD Tight ranges prevailed for Europe and most of NY. The pair held a 0.9390-0.9418 range for the most part as the mkt awaited the FOMC minutes. The Fed’s tip to ending QE in October if econ conditions warrant it spiked the USD up. AUD/USD broke the range low & hit 0.9383 in no time. No follow through was seen though as the minutes made no note of when rates will rise. US yields and USD gave back their gains. AUD/USD then rallied to a new session high of 0.9425. Little pullback was seen and the pair sat just below the high late in the day. Traders now turn their attention to the June Oz jobs data and China trade figures. Should the results come in soft, the recent AUD/USD rise may come under pressure. A retest of the 0.9320/30 support zone might then be in the cards.
EUR/USD Offers into the 200-HMA and 1.3640/50 zone saw Europe smash EUR/USD lower from the 1.3631 level & have it sitting just above 1.3600 into NY’s open. Early action was limited but the pair looked set to make further losses as US yields and the USD were generally firm. Lower levels were not to be though. EUR caught a bid in the crosses, especially vs. JPY, AUD & GBP) and began rallying. The 200-HMA was cleared and 1.3640 breached but the gains fades as US yields held firm and the Fed minutes were due. A drift lower had the pair near 1.3625 into the minutes. A quick spike lower off the tip to ending QE in Oct. if econ conditions could support the cut saw EUR/USD test near 1.3610. The slide reversed though as there seemed to be no mention of rate hikes in the minutes. Broad based USD sales by CTAs aided EUR/USD’s lift. The earlier high was cleared and a new high of 1.3648 was set. Draghi spoke and gave lip service to a lower EUR but it had no effect. Little pullback was seen & EUR/USD sat near the high late in the day. Traders look to China’s trade data & BoJ later for their next cues.
USD/JPY An upward drift in Tsy yields after late NY/early Asia lows underpinned USD/JPY into the FOMC Minutes release, the expectation being that they would reveal a bit more of the hawkish view than the overall Fed statement. Such was not the case. There might have been some superimposing of last week’s strong NFP result on an event that predated it, leaving specs a bit longer of USDs than they ought to have been into the release. USD/JPY’s fleeting spike up to 101.85 was followed by a slide to 101.54 as Tsy yields fell off. Stocks, on the other hand, have led up, which has reduced the covering of yen shorts and left USD/JPY in its well-worn and ever-compressing trading range above the 233-DMA at 101.40. Abe advisor Honda joined most on the Street in suggesting the BOJ doesn’t need to do QQE2 because the hit from the sales tax hike was not destabilizing. Reuters reported sources say the BOJ might lower its economic assessment due out with next week’s policy meeting. Vols remain by historical lows as traders await enough divergence in CB policies to force a breakout. Crosses firmed after the FOMC Minutes. Weekly flows, Corp Prices & Machine Ords Thur.
Looking Ahead – Economic Data (GMT)
• 22:00 NZ REINZ HPI MM* Jun -1.2%-prev
• 22:00 NZ REINZ HPI Year Ago* Jun 6.5%-prev
• 22:45 NZ PMI* Jun 52.7-prev
• 23:50 JP Foreign Bond Investment w/e -1051.1b-prev
• 23:50 JP Foreign Invest JP Stock w/e -32.5b-prev
• 23:50 JP Corp Goods Price MM Jun f/c 0.1%, 0.3%-prev
• 23:50 JP Corp Goods Price YY Jun f/c 4.5%, 4.4%-prev
• 23:50 JP Machinery Orders MM May f/c 0.7%, -9.1%-prev
• 23:50 JP Machinery Orders YY May f/c 9.5%, 17.6%-prev
• 05:00 JP Consumer Confid. Index Jun 39.3-prev
• 00:01 CN FX Reserves* Q2 f/c3.980t, 3.950t-prev
• 00:01 CN M2 Money Supply YY* Jun f/c13.5%, 13.4%-prev
• 00:01 CN New Yuan Loans* Jun f/c915.0b, 870.8b-prev
• 00:01 CN Outstanding Loan Growth* Jun f/c13.8%, 13.9%-prev
• 02:00 CN Exports YY* Jun f/c10.6%, 7%-prev
• 02:00 CN Imports YY* Jun f/c5.8%, -1.6%-prev
• 02:00 CN Trade Balance* Jun f/c34.99b, 35.92b-prev
• 01:30 AU Employment* Jun f/c 12000, -4800-prev
• 01:30 AU Full Time Employment* Jun 22200-prev
• 01:30 AU Participation Rate* Jun f/c 64.6%, 64.6%-prev
• 01:30 AU Unemployment Rate* Jun f/c5.9%, 5.8%-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
