Currency Updates:
AUD/USD Europe applied bear pressure to the pair as the chances of RBA rate cuts were upped in the rates markets. Aiding to weigh on AUD/USD was EUR/AUD being well bid. The pair sat near 0.7800 as NY got going. Early action saw the pair consolidate losses but bears took control again when it became clear the pair couldn’t regain ground above 0.7800, EUR/AUD pressed on to the 1.4630 area and commodities got hit again. AUD/USD made a quick dive and took out bid into 0.775. A low of 0.7720 was hit. Bids into 0.7700 (barrier likely) and the abating of the USD’s rise saw a profit taking bounce ensue. Late in the day the pair sat just below 0.7760. No major Oz data is due so traders are likely to key on the EZ CPI and US GDP reports for the pair’s cues. Strong US GDP should see additional bear pressure applied to the pair and we might see 0.7700 (July 2009 low) break.
EUR/USD The pair held to a relatively tight range but it did see decent movement within NY’s 1.12791.1368 range. Early NY saw the pair just below 1.1300. Buying took hold in the morning as EUR disregarded broad USD strength. EUR was well bid vs. other major currencies, especially CHF, AUD, CAD and NZD. This saw EUR/USD break Europe’s 1.1327 high. The pair got an added boost after the Danish CB cut rates again to give EUR/DKK a boost. EUR/USD went on to hit the day’s high. IT began sliding as USD strength persisted and USD/JPY ran 118.25 stops. The slide then accelerated as ECB’s Coeure noted to DJN that QE will work and that the ECB acted on QE due to deteriorating inflation expectations. NY’s low was then hit but the pair bounced as the USD’s run abated. Late in the day EUR/USD sat near 1.1305. EZ Jan CPI and US Q4 GDP are the big risks for the market tomorrow. A Soft CPI and strong GDP should send EUR/USD towards the lows again.
USD/JPY A rebound in Tsy yields and US stocks after a huge decline in US Jobless Claims – which may have been skewed by SA – pushed USD/JPY marginally beyond the daily Cloud and the 21-DMA, but it’s a close call whether these hurdles at 118.45/38 will be closed above. The latter hasn’t been closed above since Jan 8. The main difference between today’s trading and the past several sessions was that US stocks rebounded and Greek fears also went into remission, with most of today’s derisking occurring in the commodity/EM ccys amid a broadly stronger USD. USD/JPY faces offers at 118.80-119, with stops above there (119 big expiry Fri). Japan is to release CPI, Jobs, Housing and Vehicle Sales data Friday. Though the BOJ got a jump on many CBs by easing on Oct, others are doing their best to catch up, which may eventually pressure the BOJ to do more. EUR/JPY continues to find support from pre ECB QE shorts booking profits. 61.8% & 23.6% Fibos are at 134.78-79, by the Jan 16 swing low at 134.70 & are key topside pivots. Jan 20 swing high & 38.2% of the Dec-Jan slide are at 137.65/6. AUD/JPY’s threatening to retrace all of 2014’s gains.
Looking Ahead – Economic Data (GMT)
• 21:45 NZ Building Consents Dec 0.10-prev
• 21:45 NZ Ext Migration & Visitors* Dec 0.08-prev
• 21:45 NZ Perm/LT Migration* Dec 5010.00-prev
• 23:30 JP All Hhold Spding YY* Dec f/c -2.5%, -0.03-prev
• 23:30 JP All Hhold Spending MM* Dec f/c 0.3%, 0.00-prev
• 23:30 JP CPI, Core Nationwide YY Dec f/c 2.6%, 0.03-prev
• 23:30 JP CPI, Overall Nationwide* Dec 0.02-prev
• 23:30 JP CPI Core Tokyo YY* Jan f/c 2.2%, 0.02-prev
• 23:30 JP CPI, Overall Tokyo* Jan 0.02-prev
• 23:30 JP Jobs/Applicants Ratio Dec f/c 112%, 1.12-prev
• 23:30 JP Unemployment Rate Dec f/c 3.5%, 0.04-prev
• 23:50 JP Industrial output prelim mm Dec f/c 1.3%, -0.01-prev
• 23:50 JP IP Forecast 1 Mth Ahead* Dec 3.20%-prev
• 23:50 JP IP Forecast 2 Mth Ahead* Dec 5.70%-prev
• 00:30 AU PPI QQ* Q4 0.20%-prev
• 00:30 AU PPI YY* Q4 1.20%-prev
• 00:30 AU Private Sector Credit* Dec 0.50%-prev
• 00:30 AU Housing Credit* Dec 0.60%-prev
Looking Ahead – Events, Other Releases (GMT)
• No Significant Events
