REUTERS & IFR MARKETS US FX MARKETS OPENFX MARKETS OPEN THURSDAY, OCTOBER 9, 2014 DE-RISKING PAUSE EXCEPT IN STOCKS, USD/JPY RALLIES Market Briefs • Dollar index sets fresh two-week low after Fed mins- Rtrs • EUR/USD 1.2719 to 1.2791 and mkt reluctant to fade rallies • Sterling tops 1.6200 after dollar retreat – Rtrs • SNB’s Danthine, cap on franc remains central toll Rts • GB Sep RICS Housing survey 30 vs prev 39 R. 38 exp. 15mth low • DE Aug Exports -5.8% m/m vs prev 4.8% R. -4.00% exp • DE Aug Imports -1.3% m/m vs prev -1.4% R. 1.0% exp • DE Aug Trade Balance, EUR, SA 17.5bln vs prev 22.2bln. 18.5bln exp • Japan Aug core machinery orders +4.7% m/m, -3.3% y/y, +0.9% and -5.1% eyed • RBA Ellis – Australia regulators to keep close eye on home lending – Rtrs • Australia Sept employment -29.7k, unemployment 6.1%, • NZ Sept electronic card retail sales -0.1% m/m, +5.4% y/y, Aug +0.6%, +4.1% • IMF Shinohara – JPY falls not too big, reflect US fundamentals – Rtrs Looking Ahead - Economic Data (GMT) • 12:30 Initial Claims (Oct 4 wk) (mkt 295k, prev 287k) • 12:30 -- Continuing Claims (Sep 27 wk) (mkt 2.410 mln, prev 2.398 mln) • 12:30 CA New Housing Price Index (Aug) mkt 0.10%, prev 0.00% • 14:00 Wholesale Inventories (Aug) (mkt +0.3% m/m, prev +0.1% m/m) • 14:00 Wholesale Sales (Aug) (mkt +0.5% m/m, prev +0.7% m/m) • n/a ICSC Monthly (prev +5.2% y/y) Looking Ahead - Events, Other Releases (GMT) • 13:45 FRB St. Louiss Bullard opens FRBSTL fall conference • 15:45 FedTrade operation 30-yr Ginnie Mae (max $700 mln) • 17:15 FRB Richmonds Lacker on growth prospects; Asheville, NC • 19:40 FRB San Franciscos Williams (2015 voter, dovish) on the economy Currency Summaries EUR/USD A fourth day of EUR gains and the latest push to 1.2790 follows Wed’s release of dovish FOMC minutes. EUR/USD opened in Asia at 1.2734 and did not really look back until the European highs just shy of 1.2800. Weak French and German trade data had little influence over a market that is more interested in a potential wind change in dollar sentiment. Late European morning and the talk of fresh shorts while below 1.2800 circulated but again the market reluctant to fade EUR gains. A minor Fibo level comes at 1.2806, 61.8% 1.2995-1.2501, and this provides an initial resistance point. Large option expiries at 1.27 and 1.2715-25 might exert gravitation pull, EUR2.6 yards in total. USD/JPY fell from 108.32 to hit 107.61 as the FOMC minutes continued to work against the dollar, ahead of the latest recovery attempts. The failure, on an hourly basis, to close below 107.64 pivot point has helped intra-day bulls. There are 3 yards of 107.50 strikes set to expire at the NY cut today which are likely to draw the market in early NY trading, a further 3 yards are rolling off on Friday. Good sized offers seem to have formed around 108.00, this should stem near-term corrective moves. EUR/JPY has seen 137.29-137.85 so far today, the risk is high for further gains to 138.52 kijun line. GBP/USD extended north to a 1wk high of 1.6217 during the European am as the USD continued to suffer on the back of yesterday’s unexpectedly dovish FOMC minutes. 1.6151-1.6198 was today’s Asian session range. BoE rate decision 7am ET, no change expected. EUR/GBP ran into resistance ahead of 0.79 (yesterday’s 20-day high) following its early Europe break through 0.7887 (Asia high), then dropped to threaten 0.7871 (Asia low). USD/CHF was sold off from 0.9520 highs in early Europe as the USD retreated further. Stops under 0.9500 and 0.9490 were hit on route to 0.9470 lows. 0.9470-65 demand supports the market into NY but there is scope for a deeper retracement to the kijun line at 0.9433. USD/CHF weakness weighed on EUR/CHF but ranges held tight in the cross. 1.2110/1.2123 contained in Europe. USD/CAD plumbed a 1wk low of 1.1082 during the European am, as the USD continued to suffer on the back of yesterday’s unexpectedly dovish FOMC minutes. 1.1071 (Oct 2 low, after prior liquidation of USD longs) is a key support point, with 1.1115 (Asia high), 1.1132 (Tues Ldn am low) and 1.1154 (Wed Ldn am low) among resistance levels. There is a fair size 1.1100 option expiry for today’s NY cut (closest-to-market). AUD/USD Short-covering helped inflate spot by more than a cent from 0.8791 (post-Australian jobs data low), with 0.8899 marking the European am high. The subsequent retreat based six pips shy of 0.8852 (yesterday’s high). NZD/USD ran into resistance at 0.7975 during the European after vaulting 0.7952 (Asia high). 0.7975 is a 23.6% fibo of 0.8839 (July 10 high) to 0.7708 (Sept 29 low). More offers are expected near 0.80 (former key support level). Spot slid through 0.80 a fortnight ago, after RBNZ Governor Wheeler said NZD levels unjustified and unsustainable. FX OPTIONS Vols sold off since FOMC minutes amid another USD squeeze and looming long US holiday weekend. EUR/USD 1mth vol trades EUR 1bln at 6.7 in early London vs 7.1 pre minutes and 7.55 highs on Tuesday. 1yr 7.2 from 7.5. 2.5bln 1.2700-25 expiries underpin. Huge 107.50 USD/JPY expiries dominate/underpin and help alleviate fears of deeper spot setback near term. Vols also lower amid topside strike unwinding – 1mth is 7.6 from 7.8 and 1yr 7.95 from 8.2 pre minutes. AUD/USD 1mth off 1.0 since yesterdays 10.4 peak. TECHNICALS USD/CAD: Bears flexing their muscles Downside targets include the kijun line at 1.1046 and 1.1022 -- 38.2% of 1.0620 to 1.1271 - both within striking distance. USD/CAD managed to close below 1.1117 – 23.6% retrace of the 1.0620 to 1.1271 July to Oct rise – as Friday and Monday candlesticks bearish engulfing pattern devastates bulls. The long tail on Oct 2 suggests some residual bull strength remains, so bears should continue to exercise an element of caution. Bulls retaking the tenkan line at 1.1171 will even up the battle for overall direction.
Posted on: Thu, 09 Oct 2014 11:05:35 +0000