Currency Updates:
AUD/USD The pair held to a tight range in NY’s session as it consolidated beneath the 200-HMA in basically a 0.7780/0.7825 range. Early NY saw the pair dip to the lows on better than f/c weekly jobless claims. The slide faded into NY’s afternoon and the pair rallied back near the 200-HMA as risk sentiment was upbeat. JPY weakness due to the risk rally pushed AUD/JPU above 91.90 and this dragged AUD/USD towards 0.7815. It sat near that level late in the session. Asia’s session is likely to be subdued as the market awaits the US January jobs report. If the jobs report is soft AUD/USD likely spikes higher as shorts will cover. This will see the Feb and Jan 29 highs cleared. The door is then open to key resistance in the 0.8025/55 zone.
EUR/USD The pair saw short covering in Europe test the 1.1450/60 resistance zone but be unable to break it. The ensuing dip had it near 1.1425 into NY’s open. Early action saw the slide deepen towards 1.1390 after weekly jobless claims came in much better than f/c. The dip was bought though and a steady ascent towards Europe’s high took hold. The zone held several tests but the dips became more and more shallow. Headlines from Greek’s CB Gov Stournaras noted the ECB collateral decision can be taken back if a deal is reached with EU partners buoyed risk sentiment. JPY weakened drastically and EUR/JPY rallied near 135.15. EUR/USD went along for the ride and ran stops above 1.1460. A quick spike took hold and 1.1499 was hit. Offers at hourly resistance and into the 21-DMA (1.1510) capped the gains. The pair slid a bit late in the day and sat just above 1.1475 towards the close. Traders now wait for the US January jobs report. A weak result likely sees EUR/USD ending its consolidation phase and break higher. We’re then likely to see a quick run to 1.1650/80 where the Jan 22 & 21 highs sit.
USD/JPY EUR/JPY was the main driver again today, first weighing on USD/JPY and most yen pairs in Asia after the ECB Greek collateral announcement late Wed, and then rebounding after EUR/JPY failed to break Wed’s low and buyers swept prices back toward Wed’s high as Grexit risk receded and EZ econ data again showed the EUR’s weakness starting to lend a hand. The Greek issue is far from resolved, but the ELA extension/expansion at least creates some space for more talks. US data were mixed, with the net result a strong rally in stocks funded by a sell-off in Tsys. E-minis have been outperforming N225 futures this week, making USD/JPY gains harder to hold. Today’s 117.60 high is just shy of the Tenkan at 117.65. More supply is noted into the falling 21-DMA that capped Wed’s high at 118. And USD-JPY 2-yr yield spreads, despite higher Tsy yields, have been grinding marginally lower since Jan 22 as JGB yields have climbed faster than Tsy yields. GBP/JPY’s M-T bullish reversal made good progress today. It now faces the 100-DMA at 180.36 and 38.2% of the Dec-Feb slide at 180.87.
Looking Ahead – Economic Data (GMT)
• 22:30 AIG Construction Index Jan 44-prev
• 23:50 Foreign Reserves Jan 1260.50b-prev
• 05:00 Coincident Indicator MM* Dec -100%-prev
• 05:00 Leading Indicator* Dec -70%-prev
Looking Ahead – Events, Other Releases (GMT)
• 00:30 AU RBA Statement on Monetary Policy
