Currency Updates:
AUD/USD The NY session saw the pair hold a relatively tight range above the 200-HMA. The pair was basically directionless between 0.8130 and 0.8170 as it was buffeted by a falling AUD/JPY and USD/JPY. The upcoming Oz jobs report on Jan 15 (Oz time) is another likely factor keeping AUD traders from being overly aggressive. The pair is likely to remain in tight ranges until that data point comes out unless there is major external factor to drive it in either direction. As it stands now the pair is being supported by the 10 & 21-DMAs and RSIs are biased up while yield spreads widen a bit. The risk for a squeeze exists. If the Oz jobs data is very upbeat we may get that squeeze and see the pair test key resistance near 0.8370/0.8400.
EUR/USD The EUR was broadly offered against the majors today. This saw EUR/USD trade heavy and threaten the 1.1750 level but it was unable to do so. IT held to a 1.1753/1.1800 range for NY and it sat nearer to the low end late in the day. The pair was unable to break the tight range as it was buffeted by EUR/JPY’s dive from 140.50 to 138.44 and USD/JPY’s dip below 117.60. However, with EUR so well offered across the board it’s likely EUR/USD will clear the 1.1750 soon as rallies have been meager and those looking to fade them have had no real chances to do so. Should the level break it’s likely a new bear leg begins and the pair then makes its run at the June 2010 low near 1.1640.
USD/JPY Falling USD-JPY yield spreads since late Dec have left USD/JPY struggling at times when rising N225 futures would normally have given prices a nice push into positive, as was the case in early NorAm trading today. N225 futures made new session highs, but USD/JPY couldn’t reach the late Asia peak at 118.85. Offers capped the pair at 118.77 as the hourly Cloud weighed on prices for a third straight day. Stocks, commodities, Tsy yields and USD/JPY all fell back after the Ldn close and USD/JPY posted a new session low at 117.52, with offers now trailing down to around 118. Prices falling into the daily cloud is somewhat bearish, despite the Tenkan remaining above the Kijun thus far, but the Kijun has now begun to fall into the Cloud, which doesn’t bode well at all. The Dec low at 115.65 by the 38.2% of the Oct-Dec rise at 115.50 is back in play. Reuters reported sources close to the BOJ as looking to follow the Abe govt’s lead yesterday by lowering their FY 15 CPI target to reflect tumbling energy prices. EUR/JPY’s breakdown Mon below 200-DMA & 61.8% supports left it on the slide today toward a 137.15 Fibo-projected base. JPY Machine Tool Ords tonight.
Looking Ahead – Economic Data (GMT)
• 21:45 NZ Electronic Card Retail Sales mth Dec -0.001-prev
• 21:45 NZ Elec Card Retail Sales YY* Dec 3.3%-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
