Currency Updates:
AUD/USD Europe held the pair to a tight range as it hugged the 0.8070 area. NY applied bear pressure though as the greenback was generally firm on the back of a new trend low for EUR/USD and USD/JPY climbing back above 119.50. This saw AUD/USD slide in early NY and make a new trend low of 0.8033. The USD’s climb subsided and AUD/USD bounced into Europe’s close and sat near 0.8060 into the Fed minutes. The message was a bit mixed and price action reflected that. AUD/USD dived to 0.8036 then up to 0.8075 in a matter of minutes before reverting back to pre-minutes levels. The outlook remains bearish for this pair after the new trend low was hit as RSIs still weigh and yield spreads sit near recent tights. Option interest into 0.8000 is a big hurdle for now but it looks poised to be broken. Once cleared the market will target the 50% Fib of 0.4475-1.1081 which sits at 0.7928.
EUR/USD Below f/c Dec Ez CPI weighed in Europe. Further weight came from USD strength. This saw EUR/USD slide from 1.1897 towards 1.1820 into NY’s open. An early bounce met sellers as US bond yield recouped some Jan 6 losses & the USD held its bid early on. EUR/USD slid lower and hit a new trend low of 1.182. Option related bids halted the slide and the abating of the USD’s rise saw some short covering take hold. The pair lifted towards 1.1835 pre-FOMC minutes. The minutes were a bit mixed with the initial reaction being USD bullish. EUR/USD dived down to 1.1808. The move quickly reversed though as the Fed noted that further deterioration in foreign economic situations could lead to issues for the domestic econ. The market took this as a bit dovish. EUR/USD rallied near 1.1855/60. Very little pullback from that spike high was seen as the pair sat just below 1.1855 late in the day. The new trend low keeps the l-t outlook bearish and the market still wants to sell rallies pre-ECB. Offers remain into 1.1900 and 1.1950 for now.
USD/JPY After the local buying in Asia gave USD/JPY a lift, so, too, did a rebound in risk across most asset classes. That rebound was reinforced by better-than-expected US ADP and Trade data, eventually lifting USD/JPY to a troika of intraday resistance near 119.70 (hrly Cloud top, 100-HMA & 61.8% of the 120.74-118.05 drop). Unfortunately, the risk rebound dissipated and USD/JPY fell back toward the London lows after the FOMC Minutes failed to impress. Prices are back by the Kijun at 118.71 heading toward the NY close. The main problem for USD/JPY is that Tsy yields are closing below where they were before the ADP and Trade data lifted them. US stocks are holding most of their gains, but N225 futures have shied away from the underside of the broken up TL from Oct that they fell below Tues. Rebounds in the yen crosses have also withered from NY opening highs, as some of the early gains were from P/T in oversold mkts ahead of Fri’s US Jobs report. EUR/JPY was wedged roughly between the 200-DMA and the Cloud base, failing to gain traction on Germany’s backing away from the Grexit scenario. 100-DMA supports GBP/JPY.
Looking Ahead – Economic Data (GMT)
• 00:30 AU Building Approvals Nov f/c -3.5%, 11.4%-prev
• 00:30 AU Pvt House Approvals Nov -0.2%-prev
• 23:50 JP Foreign Bond Investment w/e -1362.3b-prev
• 23:50 JP Foreign Invest JP Stock w/e -387.1b-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
