March 9, 2016 / 11:49 PM / 2 years ago

IFR Markets ForexWatch Asia Regional Daily Briefing

SYDNEY, March 10 (IFR) - Market Briefs  
 
    * RBNZ cuts OCR 25bps to 2.25 pct, signals further cut if inflation shifts
below 2%
    * U.S. Jan wholesale inventories rise 0.3%, seen hurting growth in 2016;
sales declined 1.3%
    * Bank of Canada holds rates, sees stronger world growth in '16/17
    * Wall Street gets boost from crude oil recovery, Brent crude up above $40
per barrel
    * Atlanta Fed holds U.S. Q1 GDP view at 2.2 percent after wholesale
inventory data
    * U.S. bond yields rise further after weak 10-yr auction
    * EIA data sees crude inventories rise, gasoline stocks fall 4,5MN bbls vs
f/c of -1.4MN bbls
    * Brazil's Barbosa: Brazil political crisis will not hamper economic reforms

    
Macro Themes in Play
Stocks sideways, commodity rally has minimal impact on major markets; positions
small ahead of ECB, painful memories of December debacle
EUR firm, traders worry of NIRP backfire like with BOJ and JPY; DXY ends right
on 200 dma, whichever way it breaks seen as a go-with trade; USDJPY recovers
with JGB yields, Cable nothing, coin toss
CAD flies on BOC hold, oil, fiscal spending brightens outlook; BRL through 200
dma for first time since Sep 2014, Bovespa biggest winner on the board YTD
despite steady diet of bad news; AUD within a fig of H&S bottom objective
(.7625)
New highs in oil despite US gulf crude stockpiles at record highs, talk of
another OPEC production meeting; commodities broadly bid on prospect of weaker
USD
    
Looking Ahead - Economic Data (GMT)
    * 23:50  JP  Japan Buying Foreign Bonds             Mar 4    JPY 933.8b-prev
    * 23:50  JP  Japan Buying Foreign Stocks            Mar 4    JPY 382.3b-prev
    * 00:00  AU  Consumer Inflation Expectation         Mar       3.6%-prev

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

Currency Summaries
 
EUR/USD 
    * Bears weigh in Europe's morning, firm JPY sinks EUR/JPY, EUR/USD down near
1.0955
    * Bounce sees NY open near 1.0975, lift fades as JPY bid persists & EUR/JPY
hits 123.08
    * EUR/USD tests 1.0940/50 zone again, slide halts as risk sentiment turns up
& JPY softens
    * EUR/JPY rallies sharply, pierces 124.85, EUR/USD rallies to 1.1035
    * Broad USD rally in NY afternoon sees pair near 1.1010 late in the day
    * Market now looks to China Feb CPI & ECB for next cues

 
USD/JPY
    * Recent long JPY trade reversed; Blackrock tipped its move 
    * USD/JPY bid after failing to take out the Mar 1 pullback low o/n
    * Oil led another version of the risk-on trade & JPY bore the brunt of it
    * Prices back up probing the Tenkan & 200-HMA by 113.40
    * Heavy FY-end JPY buying & massive JGB yld drop Tues receded today
    * Deeply negative JGB yields & JGB vol a L-T driver of outbound J investment
    * USD/JPY gains still at risk if another round of global derisking develops
    * EUR/JPY reversed after a 2-tic breach of the Mar 2 low; 125 Tues hi nearby
    * JPY crosses bid: AUD/JPY cleared its Cloud top & Mar 7 hi at 84.97/5.01
    * Weekly J investment flows tonight, but China data & ECB main foci

 
GBP/USD
    * Cable met fresh headwind at 1.4241 after strong UK mfg output data
    * 1.4241 was Tuesday's NY session high, after relatively hawkish Weale
    * Resistance at upper 21-h Bolli (1.4239), then 30-DMA at 1.4276
    * EUR/GBP extended south to 0.7701 after UK mfg output +0.7% vs +0.2% f/c
    * Pair rallied in NY aft as EUR shorts covered ahead of Thurs ECB
announcement
    * 0.7710 = pre-data low vs 0.7756 Wednesdays NY aft high
    * Key Support 0.7692 (last week's low). 0.7692 = 1.30 = GBP/EUR

 
USD/CHF
    * USD/CHF's O/N surge to 1.0044 barely clipped the Feb 29 high at 1.0039
    * The lack of follow-through and broad USD selling in NY erased all the
gains
    * The new trend high stopped shy of the thin Cloud's 1.0058 base
    * 2-yr yields spreads have slipped from Monday's peak (high since Dec)
    * EUR/CHF climbed to 1.1000 by 50% of Feb.'s drop & the Kijun at 1.1005
    * A close above there opens the way to the 61.8% at 1.1051 & nearby highs
    * ECB meeting Thur is the key event risk; SNB's a week later

 
USD/CAD  
    * O/N range 1.3379/3447, Noram range 1.3230/3428, Cl 1.3254, NY -143 pts
    * Brent crude +3.0%, WTI +4.7%, Alum +0.7%, copper +0.5%, gold -0.66%
    * AUD/CAD -0.41%, 0.9933, CAD/JPY +1.82%, 85.53, EUR/CAD -1.15%, 1.4592
    * DXY -0.04% (-0.16% in NY) US stocks +0.15/0.55% (S&P +0.11% in NY)
    * BoC - exports improved; rosy view global growth, USD plunged 
    * UST/CA 2-Yr spread -1.3 (+37.1) Wed Cda Cap Util, New HPI Fri Jobs
[page:2417]

 
AUD/USD  
    * Bull pressure in early Europe as AUD/JPY lifts from 83.55, AUD/USD up from
0.7425
    * NY opens near 0.7490, dips to 0.7467 on sour risk, dip bought as risk
turns
    * JPY weakens further, AUD/JPY up near 85.15, AUD/USD to new high of 0.7528
    * Broad USD strength in NY afternoon sees pair near 0.7500 late in the day
    * Oz Mar consumer inflation expectations & China Feb CPI are data risks in
Asia

 
NZD/USD  
Bull pressure in Europe's morning, weak JPY lifts NZD/JPY from 75.65 toward
77.00
NZD/USD lifts from 0.6725 are to NY open near 0.6780, early dip near 0.6760
bought
Risk sentiment turns up on stock & commodity lifts & JPY softens further, 0.6810
neared
Slides sub- 0.6770 as USD broadly bid late, pair holds near 0.6780 into RBNZ
RBNZ shocks with a cut to 2.25%, notes further easing to be required
Notes dairy sector risk of more extended period & lower NZD appropriate
NZD broadly hit, NZD/USD down to 0.6650, clear dovish message, NZD to stay heavy
 
LATAM
    * USD/MXN moves to lower end of recent range near 17.72 as NorAm closes
    * Oil key driver rallies 4%, risk bid as equities, US yields rise, XAU/USD
lower
    * Thurs ECB in focus as to degree of accommodation, -10bp cut min exp'd
    * USD/BRL off 1.35% biggest LatAm gainer, IPCA inflation falls 
    * Much anticipated base effects begin to take hold, may spur int rate cuts
    * USD/CLP -0.8% on higher commodities, copper +0.59%, 10-DMA weighs

 
Loonie rally big threat to Canada's export progress
The USD slump post- BoC was attributed to bullish comments they made regarding
the rise in Canadian non-mfg exports and BoC's forecast for higher global growth
in 2016. USD/CAD was also hit by weak US wholesale sales/inventories - illogical
as Canada is relying on strong US demand to boost non-energy exports, weaker US
growth will dampen US demand, additional USD weakness not warranted. CAD's 9-10%
rise since January lows will impact Canadian exporters. The BoC's global outlook
much rosier than private economists'. Even the better than f/c Q4 GDP resulted
from imports falling faster than exports. Canada needs to maintain non-mfg
export growth to replace lost energy sector jobs. Oil is important as noted
earlier but rebalancing the economy more so.  Alberta's jobless
rate is at a 20 year high, CAD much below 1.30 a disaster given NAFTA partner
MXN's larger depreciation since 2014.

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