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5 months ago
IFR Markets ForexWatch Asia Regional Daily Briefing
March 5, 2017 / 11:16 PM / 5 months ago

IFR Markets ForexWatch Asia Regional Daily Briefing

    SYDNEY, March 6 (IFR) - 

Yellen's Mar hike nod anticlimactic for mkts
Market Briefs
    * US  Markit Comp final PMI 54.1 v 54.3; Svcs 53.8 v 53.9
pvs

    * US ISM N-Mfg PMI 57.6 v 56.5 Rtrs f/c, 56.5 pvs;
employment & new order higher, prices pd lower

    * Fed’s Yellen: March rate hike appropriate if data holds
up; shifts in global econ could impact outlook along w/US fiscal
plans

    * Fed’s Yellen: US econs potential to grows looks to be
about 2% unless labor force grows faster

    * Fed’s Fischer: Strongly supports recent message from
colleagues at Fed, cites recent ‘animal spirits’, good economic
data

    * Fed’s Bullard: Using March statement to set up May rate
hike a more traditional approach

    * Fed's Lacker: citing mistakes of '60s, plugs preemptive
rate hikes; warns on costs of losing control of inflation

    * Commerce Secy Ross: BAT is powerful tool to balance
deficit, sensible trade deal with Mexico will boost peso

    * SNB’s Jordan: C.bank has enough leeway w/current
instruments to deal w/political shocks

    * German Bund yield set for biggest weekly rise since US
election

    * MXN surges to strongest level since Trump election,
rallies after Mex-friendlier US Commerce Secy comments 

 
Looking Ahead - Economic Data (GMT)


    * 00:30  AU Retail Sales MM*                   Jan       f/c
0.4%, -0.10%-prev

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

 
Macro Themes in Play
    * DXY lower on day but up for fourth week, Yellen/Fischer
speeches anticlimactic, Fed chair reiterates pitch for near term
rate hike however sees economic potential at only about 2%,
comment keeps lid on yields, curve and USD

    * EURUSD squeeze continues, conditions won’t get any better
for bears than last three weeks but results disappointing; Euro
short rates turn higher, -0.80 bps Schatz yield looks ridiculous
with EZ inflation hitting 2% target, FR/ES/IT stock markets have
nice run as political risk ebbs

    * USDJPY can’t get legs, long USD trade now yield curve
dependent; Cable hurt by UK PMI miss; SNB’s Jordan talks down
CHF

    * AUD, CAD, commodity FX finds bid after Yellen but still
bearish; MXN up big, US Commerce Sec’y Ross reassures on NAFTA

Oil, gold, CRB bounce on USD selloff but still suspect

Currency Summaries
EUR/USD  
    * Sharp lift into NY open as USD longs lighten up, NY opens
near 1.0535

    * Bulls pressure persists as USD slips a bit further, 1.0575
neared

    * USD bid resurfaces pair slips below 200- HSMA ahead of
Yellen

    * Choppy after inital comments, dips near 1.0540 as hawkish
tip heard first

    * Yellen then goes on to say US GDP to be about 2% unless
labor force grows faster

    * USD broadly hit as UST yields slip, DE-US spreads tighten
and EUR/USD nears 1.0610

    * 55-Day SMA and daily cloud base pierced as well to send
warnings to bears

    * EZ Q4 GDP & ECB meeting as well a Feb US jobs data are key
risks next week

 
USD/JPY 
    * USD/JPY neared its 114.82 Cloud top amid Fischer &
Yellen's HLs

    * Despite March rate hike hints, hike probs barely moved &
USD fell back

    * Failure to trigger 115 barrier/buy stops sent spec longs
to the sidelines

    * Basically a sell-the-news response to a now mostly priced
in Fed hike

    * Market now focused on US Jobs data next Fri; JP Trade &
GDP Wed

    * EUR/JPY cleared its Kijun & 50% Fibo at 120.78 and is
holding gains

    * Macron's improved polling in French election reduces EUR
risk shorts

    * 61.8% of the Jan 27-Feb 24 drop at 121.38 by the 55-DMA
next rsst

 
USD/CHF
    * EUR/CHF got a leg up from latest French election polls &
SNB's Jordan

    * Tightening Bund-OATs & peripheral EZ spreads driving EUR
broadly higher

    * Jordan said SNB had the tools to deal w EZ political
shocks             

    * Early NY afternoon spike nearly got to Feb's 1.0710 high

    * Fischer & Yellen's March rate hike hints not enough to
revive USD/CHF

    * Week's rise stalled ahead of 61.8% of the Jan slide at
1.0154

    * USD/CHF not doing as well as higher STIR spreads would
suggest

    * Weekly Swiss Sight Depos Monday. '17 weekly avg very high
at CHF2.4bln

 
GBP/USD   
    * Cable hit a new 7-wk low in early European trading after
below f/c Markit Svcs PMI data

    * Pair moved to session low 1.2215 aided by diverging US-UK
rate paths

    * Yellen/Fischer tipped to hike in Mar, depending on data;
USD sold into NY close regardless

    * Pair ends NorAm 1.2275 just ahead of NY/daily high by
1.2285

    * EUR/GBP ends NY 0.8640 +0.83%, EUR up on higher EZ
inflation, German/French PMI

    * Brexit and Scottish Indyref2 uncertainty continue to weigh
on GBP, giving EUR advantage

 
USD/CAD
    * O/N range 1.3379/3420, Noram range 1.3384/3437, last
1.3399 (NY -27 pips)

    * A plethora of Fed speakers culminating with Fed Chair
Yellen             

    * Her remarks leaned hawkish but didn't shock due to week's
Fedspeak             

    * UST/GoC spreads narrowed (2-Yr opened +53.3, unch, last
+53.8)

    * S&P -0.05%, off lows (NY +0.1%) DXY -0.66% (NY -0.45%)
gold unch (NY +0.6%)

    * WTI/Brent +1.3/1.4% (NY +1.1%) US Non-Mfg ISM beat f/c.
Markit unch [page:2417]

    * Mon - US factory orders & durable goods revisions Tue Cda
Ivey PMI & trade

 
AUD/USD     
    * Choppy NY session, opens near 0.7560, dips near day's low
on early USD bid

    * USD longs take some profit ahead of Yellen, AUD/USD near
0.7590 then dips a bit

    * Whippy after Yellen, nears day's low initially but then
rises as USD slides

    * Pair near 0.7590 late in the day as furthe short cover
lifts

    * Daily techs warn bears, RSI diverges & long lower wick
forms on daily candle

    * Oz Jan retail sales and RBA meeting are key risks next
week

 
NZD/USD
    * NY opens near 0.7020, light bear pressure early but USD
slips & shorts cover a bit

    * 0.7050 neared but USD bid resurfaces ahead of Yellen, near
0.7020 into comments

    * Pair dips below 0.7005 initially but Yellen doesn't give
USD bulls enough fodder

    * USD slides, NZD/USD shorts cover further, pair again nears
0.7050, nearby late

    * Techs are bearish, new trend low set & RSIs biased down
with no divergence

    * Mil auction and Feb electroni card sales are NZD risks
next week

 
LATAM
    * USD/MXN moved to new post-election low at 19.5190, ends
NorAm nearby

    * LatAm's shrug off hawkish leaning Yellen/Fischer Dollar
lower into weekend

    * US commerce Sec Ross: fate of BAT unclear, sensible trade
deal will boost peso

    * Banxico FX hedge pgm begins Monday USD 1bn on offer
            

    * USD/BRL offered into NorAm close, -1.38% to 3.1130; BR
inflation/GDP Tuesday

    * Brazil house speaker defends government pension reform
            

    * USD/CLP ends NorAm 657 +0.5%, shrugs off higher copper

 
Yellen keeps lid on yield curve with view on economy
    * Yellen reiterates pitch for near term rate hike, March
meeting trades > 80%

    * But sees potential for economy at only 2%                

    * Statement keeps lid on long rates, yield curve and dollar

    * FX mkt going to need real yield break out (> 50 bp) for
next USD leg

 
CHART OF THE DAY (USD/JPY)
    * USD/JPY pops to 114.75, just shy of 114.82 Cloud top on
Yellen/Fischer HLs

    * Both strongly hint at a March rate hike, but Tsy curve
flattens fm both sides

    * Lower L-T yields & Cloud top failure triggers near retest
of 114.08 day's low

    * Mkt now 75% prob of Mar rate hike, not far from before Fed
speakers

    * 114.95 Feb high by 115 barriers & wkly Kijun/50% Jan-Feb
slide at 115.10

    * 2-yr yld spreads soaring to pre-GFC level, 10-yrs nearing
Jan-Dec highs

    * A 115 B/O targets Dec-Jan 118.66/60 peaks.


 (Reporting by IFR and NY buzz team)
  

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