Currency Updates:
AUD/USD ran into resistance ahead of 0.9355 in early European trade after extending north from 0.9318 (Asia low). Light stops are tipped above 0.9355 (0.9356 = Fri NY session high), with offers mooted pre-0.9400. The RBA is expected to leave its cash rate at 2.5% at 0.30am ET Tues.
EUR/USD Sentiment towards the EUR remains extremely negative and the market continues to add to already large EUR short positions. The EUR is being used as a funding currency for carry trades, as EZ short-term yields continue to disappear, and was pressured by carry trade demand overnight and into Europe, as EUR/AUD; EUR/NZD and EUR/CAD selling flows were noted. The uncertainty surrounding the Ukraine/Russia crisis also adding to the bearish sentiment as further EU sanctions against Russia will negatively impact the already fragile EZ economy. As the European session got going a bout of short covering out of Asia provided scope for a modest rebound to 1.3146 and this from a new 12-month low of 1.3120.
USD/JPY has traded a narrow 104.08-104.28 range, marginally breaching the 104.27 pivot point. The current risk appetite within the market keeps USD/JPY elevated. The overall scope is for gains higher, but option-related selling expected to continue ahead of 104.50 options barrier. There are 250M worth of 104.20 option expiries which are likely to attract USD/JPY in the short-term. Note that a huge amount of 136.50 EUR/JPY strikes are set to expire at the NY cut on Thursday, these will likely attract the cross as we get closer to the cut. The failure high at 137.20 on Friday now offers supply while interim resistance comes in at 137.07 today. A break above the 137.20 level will likely trigger buy stops.
– AU Building Approval 01:30GMT
– AU Current Account 01:30GMT
– JP Average Cash Earnings 01:30GMT
– AU RBA -04:30GMT
