US FX MARKETS OPENFX MARKETS OPEN Description: online.thomsonreuters/assets/emails/ifr-fx/line-solid-top.png TUESDAY, JULY 23, 2013 EUR/USD SHORT SQUEEZE RUNS ITS COURSE Market Briefs • General risk tone remains strong in Europe after night of gains in Asia • Spain sells E3.52 bln Bills, 3.5bln target for 3s and 9s, Ylds drop • Spain’s Rajoy, parliamentary slush funds hearing on Aug 1-EFE • BoS est Q2 GDP -0.1%, smallest drop since start of recession in 2011 • French Jul Bus climate 95 vs 93 prev, 94 exp • UK Jun net Mtg lending –GBP12 mln vs –455 mln May BBA • UK Jun Mtg approvals up 32% y/y BBA • Abe’s advisor, should have 2 more Qtrs of 4% GDP before tax hike • Kydo poll, Abe/LDP rating fall to 56.2% from 68% in June • Japan govt upgrades econ assessment for third straight month • Nikkei boosted by upgrade to Japan eco outlook • Nielsen rpt Global consumers more confident, less worried abt jobs • China Prem Li China should grow above reasonable 7.5% floor Looking Ahead - Economic Data (GMT) • 11:00 Turkey CB rate decision, lending rate hike exp • 11:45 ICSC/GS Chain St Sales Idx wk Jul 20 prev +1.7% • 12:00 Hungary CB rate decision, 25bps cut exp • 12:30 CAN R.Sales May, mkt 0.4% m/m, 0.1% prev • 12:55 Redbook Same St Sales Idx wk Jul 20 prev +3.0% • 13:00 FHFA House Price Idx May prev +7.4% • 14:00 Richmond Fed Mfg Jul prev +8 • 14:00 Richmond Fed Svcs Revenue Jul prev +15 Looking Ahead - Events, Other Releases (GMT) • 15:00 Fed o/r Tsy cpn buys 04/30/19-06/30/20 $3.00-3.75 bln • N/A Apple earnings report after the WS close Currency Summaries EUR/USD ran into stiff resistance around 1.32, ACBs said the sellers after macro funds bought. Specs came off second best, perhaps because buy stops are now much harder to come by, following a multi day short-squeeze. If the squeeze has reached its limit, fundamentals may reassert. In that respect a bid for dollars does seem to have been timed alongside a renewed rise for U.S. bond yields (10 year 2.51%). Buyers are now seen clustered around the hourly Ichimoku cloud top and 100-HMA circa 1.3140-45, while the 200-HMA @ 1.3109 is eyed pivotal with good bids in advance but stops noted below, mainly under 1.3100. USD/JPY Traded 99.67-99.14 in Asia. Bids 99.10-99.00 held. More bids 98.80, ahead of 98.74 cloud top. 99.50 option expiry pivotal through early London, before stops tripped above the Asia high. UST yields caught a bid and lifted the USD generally, with stops above 100.00 tripped, but 100.10-20 offers capping for now. More offers 100.50, 101.00 and large 101.50. EUR/JPY traded 131.48-130.69 in Asia, but presses 131.70’s as USD/JPY posts its highs. upside looks limited for now, with offers layered through 132.00. USD/CHF Trades 0.9350/0.9400, bids 0.9345-9350, 0.9320, 0.9300 with stops below. Asian seller touted 0.9400-05. Offers 0.9400, 94.20 hold gains for now as broad USD gains support. EUR/CHF: Traded tight 1.2342-1.2353 in Asia, higher with USD/CHF to 1.2370’s. Offers thick in to 1.2400-10. GBP/USD opened bid but ran into persistent supply in relation to the base of its daily Ichimoku cloud at 1.5381. Buyers eventually tired and the loss of momentum then led to some long liquidation. GBP supply has mainly been GBP/EUR sales around 1.1650 from retail names and corporate sales of cable in the upper 1.53s. Light trader stops were eventually tripped under 1.5350 and higher U.S yields then spurred U.S. funds to sell on a stop loss basis. Larger stops below 1.5220 remain untouched. Retail demand for GBP/CHF was seen from after the cable low. Mortgage data was mixed. Headlines of a rising approvals blunted by the continuing contraction of lending. AUD/USD Gains stalled 0.9286 for now, but decent resistance in to 0.9300 halted gains. Offers 0.9310, but buy stops 0.9330. Profit taking and the broader USD bid took pair in to 0.9230’s since. Stops placed below initial tech support by 0.9210 and more touted 0.9180. Bids seen 0.9200 and 0.9170. Daily momentum is positive and dip buyers already showing up. Close above 0.9301 (38.2% of 0.9792/0.8998) needed however, to strengthen further. Light demand for 1mth expiry 0.9400 option strikes noted. OPTIONS Vols at medium term lows across the board, with spot in ranges and summer lull starting to bite. EUR/USD vol potential to 5yr lows at 6.65 from late 2012 (currently 7.6). USD/CHF vols close the gap over EUR/USD to levels from early May (1.0 in 1mth vs 1.7 last week). 1mth EUR/CHF below 5.0 vs 6.75 in early July. EUR/JPY front dates lowest since late December, while the USD/JPY curve is starting to see recent slide stall. 1mth at 12.0 vs 12.3 yesterday and 13.3 Friday, lows since mid- May. CHARTING AUD/USD: Spot at a crossroads Important level on the upside is 0.9301, 38.2% of the 0.9792-0.8998 down-leg, with spot hovering below here for approximately one week now. Continued failures ahead of 0.9301 will gradually shift the bias back to the down-side. The 10-day and 30-day moving averages are negatively aligned, meaning the underlying bias remains on the down-side. A sustained break and close above the 0.9301 level needed to unmask 0.9395, 50% retrace.
Posted on: Tue, 23 Jul 2013 12:22:46 +0000