March 2, 2017 / 11:20 PM / 6 months ago

IFR Markets ForexWatch Asia Regional Daily Briefing

    SYDNEY, March 3 (IFR) - 
    
USD higher still, on Fed hike outlook
Market Briefs
    * US  jobless claims -19k (223k v 242k pvs)  near 44-yr low;
 Continuing claims +3k, 4-wk avg -6.25k

    * Fed’s Powell: Case for March rate hike has come together,
wants to get rates well abv zero before reducing balance sheet

    * CME Fedwatch has Fed March Rate hike at 80%,   bit.ly/1LtKN1u

    * Inflation rebound keeps euro zone bonds on defensive EZ
 inflation hits 2% in Feb as per Rtrs f/c

    * Reuters Poll: ECB sidelined this year; to tweak guidance
or taper QE in shift

    * Trump administration's dollar policy not clear -FX
strategists

    * Russian cuts to oil production stall in February, had
pledged to cut 300k BPD only cut 100k BPD in Feb

    * Brazil rate cut pace hinges on economy, inflation -central
bank

 
 
Looking Ahead - Economic Data (GMT)

    * 23:30  JP  All Household Spding YY*                 Jan   
f/c -0.4%, -0.30%-prev

    * 23:30  JP  All Household Spending MM*            Jan   
f/c 0.3%, -0.60%-prev

    * 23:30  JP  CPI, Core Nationwide YY                  
Jan    f/c 0%, -0.20%-prev

    * 23:30  JP  CPI, Overall Nationwide*                   
Jan    0.30%-prev

    * 23:30  JP  CPI Core Tokyo YY*                         
              Feb   f/c -0.2%, -0.30%-prev

    * 23:30  JP  CPI, Overall Tokyo*                          
Feb   0.10%-prev

    * 23:30  JP  CPI Index*                     
                   Jan    99.8-prev

    * 23:30  JP  Jobs/Applicants Ratio          
                        Jan    f/c 1.44, 1.43-prev

    * 23:30  JP  Unemployment Rate                          Jan
   f/c 3%, 3.10%-prev

    * 05:00  JP  Consumer Confid. Index*                   Feb  
43.2-prev

 
Looking Ahead - Events, Other Releases (GMT)
    * No Significant Events

 
Macro Themes in Play
    * Markets mostly lower as odds of near term Fed rate hikes
continue rising, Fed’s Brainard piles on, March meeting near
80%, dollar strength takes toll on commodity complex, CRB tests
bottom of 2017 range, EM notable underperformer as result,
spreads widen

    * USD still lags pace of rate rise, flattening yield curve
limits scope of dollar trajectory, differs from first leg of
USD/rate up-trade in late 2016 when curve steepened sharply;
soft wages, downgrading of Q1 GDP trackers capping long rates
for now

    * EURUSD heavy but still frustrating bear camp, US-Euro rate
diff at new wides, currency should be lower; CHF retail sales
and GDP miss badly; rate diff weighs on Cable; USDJPY up but
unable to break through Feb highs (115.00)

    * AUD all one-way down, signals end of party for carry FX;
CAD, oil, metals all break sharply as USD-CRB correlation
appears set to reconnect after five month divergence, EEM set to
give back after outperforming S&P YTD

Oil down for third day, settles mid-range, Russians pause
production cuts, US stockpiles build; heavy liquidation in
precious metals on rates/USD developments 

Currency Summaries
EUR/USD  
    * Minor bounce in Europe's morning stalls, pair slides into
NY, opens near 1.0525

    * Bear pressure immediately as USD gains & UST yields rally
to widen DE-US spreads

    * 1.0500 breaks but pair bounces as USD slips at bit, 1.0530
neared but sellers emerge

    * USD regains its footings and sets new session high,
EUR/USD nears 1.0495 late

    * Techs are bearish, RSIs biased down & 10-DSMA weighs

    * EZ Feb Markit services PMI & Jan retail sales are risk in
Europe's morning

    * A slew of Fed speakers during NY hours are a major risk,
hawk rhetoric likely

 
USD/JPY 
    * Mar Fed hike almost fully priced as USD/JPY nears key rsst
by Feb high

    * 55DMA, cloud top, Feb hi, 50% Jan-Feb drop, wkly Tenkan
@114.67-5.10 

    * US Jobless Claims at 44-yr low & Powell added to Mar Fed
hike view

    * Fischer & Yellen's stamp on that view awaited on Friday

    * Potential for Japanese stagflation              - Reuters

    * Expiries Fri 1.8b 114.00, 1.7b 114.50, 2b 115.00. 1.5b
116, 1.4b 117

    * Few expires above 115 Mon-Wed reut.rs/2mdFm27

    * 2-yr yield spreads at post-GFC highs, but 115.10 B/O is
key near-term

    * EUR/JPY eyeing the Kijun & 50% of the Jan-Feb slide at
120.78

    * May close above 38.2% & cloud base at 120.17-18 today

    * AUD/JPY against the JPY selling grain after poor AUD Trade
data

    * CRB also struggling now amid broader USD rise

    * Big JPY data day Fri: Jobs, CPI, Nikkei PMI, Consumer
Confidence 

 
USD/CHF
    * USD/CHF being dragged higher by 2-yr USD-CHF spreads by
Dec highs

    * Last week's 1.0141 high & 61.8% of Jan's drop at 1.1054
yet to be cleared

    * Another drop in US Jobless Claims & Powell added to Mar
hike view 

    * Swiss GDP up 0.1% in Q4 but below f/c             
            

    * Disappointing data after recent positive news (PMI, KOF,
trade surplus)

    * Swiss January retail sales down 1.4 pct yr/yr             

    * EUR/CHF still lingering above Feb & Brexit lows at
1.0632/23

    * Steadiness suggests SNB continues to provide support

 
GBP/USD   
    * Cable remains offered, holds below daily cloud, ends NY on
6-wk low by 1.2250

    * Rising odds for Mar Fed hike              and widening
US-UK yield diffs lift USD

    * Brexit fears remain in Background as A50 expected shortly

    * 1.2300 (Asia high), 1.2327 & 1.2350 are cable resistance
levels             

    * EUR/GBP ends NY -0.1% to 0.8570, Le Pen faltering & Brexit
uncertainty favors long EUR

 
USD/CAD
    * ·  O/N range 1.33 24/75, Noram range 1.3352/3402, last
1.3399 (NY +25 pips) 

    * ·  CAD lower O/N -Brainard speech               Fed rate
hike odds              

    * ·  UST/GoC spreads widened (2-Yr opened +53.4, +0.7bp,
last +55.0) 

    * ·  S&P lower, -0.33% (-0.24% in NY) DXY +0.43% (+0.2% in
NY) gold -1.34% 

    * ·  Brent & WTI -1.3/-1.2% (-0.45% in NY) Cda GDP beat f/c
             lifted CAD 

    * ·  US weekly claims strong, NY ISM a tad firmer Global
Economic Calendar Fri- US Svcs ISM due

 
AUD/USD     
    * Pair drops sharply in Europe's morning, NY opens near
0.7625, bear pressure persists

    * Broad USD buys, US yield lift,wider AU-US spreads &
commodity slump weigh

    * Key s-t support near 0.7605/10 breaks, stops run and USD
bid intensifies

    * AUD/USD slips below 0.7560 late in the day and stays heavy
toward the close

    * Techs grow bearish, RSIs biased down & 10-DSMA crossing
below 21-DSMA

    * No major data due in Asia, mkt awaits Fed speakers & US
ISM non-Mfg on Friday

 
NZD/USD
    * Pair slides steadily in Europe & NY sessions USD & UST
yields trade firmly

    * NY opens near 0.7105, pair slides right out of the gate as
USD bid intensifies

    * March 1 low & daily cloud base break, slide extends and
nears Jan 12 low

    * Little bounce seen as the USD maintains its gains, pair
near day's low late

    * Techs are bearish, RSIs biased down & slew of techs in
0.7089/0.7125 zone break

    * No major data in Asia due, Friday Fed speakers a risk,
likely to remain hawkish

 
LATAM
    * USD/MXN ends NorAm near 20.00, off session high by 20.0300

    * Pair bid on higher US rate and higher Mex inflation
outlook             

    * Further Banxico hikes exp'd, which may hinder Mexican econ
recovery

    * USD/BRL +1.66% ends NY near 3.14, diverging US-BR rate
outlook weighs on BRL

    * BCB could speed up rate cuts depending on economy,
inflation             

    * USD/CLP ends NY 655.40 +0.9%, weak copper/widening US-CL
rate diffs hit CLP

 
Macron 1st round win could make run-off a non-event
Recent opinion polls have painted an identical French
presidential election picture since independent candidate Macron
and ex-rival centrist Bayrou struck an alliance last week
            . The subsequent failure of leftist Hamon and
Melenchon to strike a possible game-changing tie-up has also
added to the sense of calm             . The polls
suggest Macron will finish behind Le Pen but ahead of Fillon in
the first round on April 23, before beating Le Pen in the May 7
run-off. Macron presented his election manifesto Thursday, with
a poll suggesting his economic policies have broad approval from
around 63% of voters             . If that high approval number
helps Macron get more votes than Le Pen in the first round, it
could make the run-off a euro-positive non-event. Le Pen may
need to top the first round poll if she is to have any hope of
generating enough momentum to win on May 7. Reuters
Breakingviews piece on Macron             .
 
CHART OF THE DAY (AUD/USD)
AUD/USD bears are awake today after the pair failed to seriously
hold above recent runs through 0.7700. Overnight comments from
Fed's Brainard and sub-par January Oz trade data helped the pair
drop below key 0.7605/10 support. Further losses are likely as
RSIs are biased down and the 10-DMA will cross below the 21-DMA.
Added fodder for bears is Friday's Fed-speak. A slew of Fed
speakers are likely to bang the hawkish drum again to help keep
U.S. yields firm. The RBA meets next week and is likely to harp
on weak trade data and AUD strength. Australian yields should be
capped while U.S. yields are likely to rise and this should
weigh on AUD/USD. A push below tech support (0.7450/0.7525)
looks likely and then December's low is targeted.

 (Reporting by IFR and NY buzz team)
  

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