Currency Updates:
AUD/USD The pair held to the lower end of the day’s limited rage for the NY session. Offers in the 0.9400/10 region loomed and with fairly significant risk events coming up bulls weren’t in a mod to push. the pair was pinned below 0.9385 for most of ht NY session as traders awaited speeches RBA Chief Stevens’ Anika Foundation and Asst governor Debelle’s due later. Traders don’t expect a great deal of mention of the AUD in the speeches but any mention of AUD is will likely be an effort to jawbone it lower. After the speeches traders then focus their attention to US CPI and AU Q2 CPI. US inflation is expected unch while AU is f/c to tick a bit higher. Bears will need the stars to align and see US above f/c and AU below estimates to gain control of AUD/USD. If they get their wish, it’s likely 0.9320/30 support will see a serious test. If broken the 200-DMA and May low will get tested. If the CPI results end up being bullish for AUD it’s likely 0.9450/60 resistance and the July high gets tested.
EUR/USD The attempt to breech 1.3550/75 resistance in Asia failed and Europe pressured EUR/USD lower during a session that saw relatively quite trade. the pair sat near 1.3520 as NY got going. Bear in NY managed to push a bit lower as a 1.3513 low was hit early. The downing of the Malaysia Airline jet from last week seems to be getting more market attention and traders begin to think EUR will not be a safe haven should the situation escalate further. This helped keep EUR/USD from mounting much of a rally off the lows & it sat just above 1.3520 late in the day. Traders will continue to monitor geopolitical risks but have data risk on the horizon. US CPI is due tomorrow. Forecasts call for little change from the previous result but traders are fearful to a topside surprise. An above f/c result should send the EUR/USD down as traders will then expect Fed rate hikes sooner than later. should the data come in well above expectations it’s likely the Feb low near 1.3475/80 will be broken. A sustained move below that support likely sees a quick run to sub-1.3300 levels as market chatter suggests traders don’t have large short positions on the books.
USD/JPY recovered it’s intraday dip with help from higher short-term Tsy yields and reduction in equity market losses; the latter after President Obama took a reasonably low-key tone in his latest speech on MH-17 et al. UK’s Cameron was much more strident, but the mkts are sensing that the West will remain measured in their response. Most currencies are little changed to start the week, though the tone was a bit more risk-off overall and thus friendly to those buying yen dips. Offers are grouped at 101.45-50, 101.70-80 and 102.00. Local bids into 101 persist, with stops said below 101.95 and the next defense in the 101.75-80 range. EUR/JPY is digesting last week’s slide, but is this week below the 55-WMA, having already broken below the weekly Cloud top, Tenkan and Kijun lines. The ’14 low at 136.25 is pivotal. The IMF upped their ’14 German GDP outlook, but the mkt clearly remains concerned by the EZ’s economic outlook and the ECB’s ltd room for maneuvering on QE. US CPI & Existing Home Sales and the EU meeting on their response to MH17 are Tues’s main event risks. Japanese Trade and CPI are out Thur & Fri. Vols remain subdued.
Looking Ahead – Economic Data (GMT)
• No Significant Data
Looking Ahead – Events, Other Releases (GMT)
• 03:00 AU RBA Governor Glenn Stevens speaks to the Anika Foundation Luncheon
• 23:25 AU RBA Asst Gov Debelle speaks at 2nd LatAm Australia Investors Forum
