FOREX: USD - BBDXY Testing 1175-1180 Into Employment Data
The BBDXY has had a range today of 1179.42 - 1183.25 in the Asia-Pac session; it is currently trading around 1179, -0.25%. The USD has fallen below most short-term supports and is looking to the lows seen in January now. It does not take a lot for the sellers to come back to market as nobody wants to miss out on this trade. The break lower in US yields is just adding to the USD headwinds and the market will be bracing for more bad news from the employment data tonight. On the day, the first resistance is toward the 1185-1187 area and then 1195 where I suspect we could see sellers return. A sustained break below 1175-1180 could potentially signal the start of another leg lower targeting 1150 first and then potentially 1115.
- EUR/USD - Asian range 1.1886-1.1915, Asia is currently trading 1.1915. The pair is consolidating around 1.1900 as the USD comes back under pressure and we await US employment data tonight. Price action has been pretty constructive after the initial sell-off and the support just below 1.1800 proved to be solid, can it now build some momentum from that base ? On the day, the first support is back toward the 1.1860-1.1890 area and then 1.1770-1.1800.
- GBP/USD - Asian range 1.3632-1.3670, Asia is currently dealing around 1.3665. The pair like everything is trying to bounce as the USD struggles. GBP looks like 1.3580-1.3730 to me for now as we wait to see if the big USD could potentially break lower. Should this play out then a move back above 1.4000 is back on the cards.
- Cross asset : SPX +0.30%, Gold $5057, US 10-Year 4.14%, BBDXY 1179, Crude Oil $64.48
- Data/Events : Italy Industrial Production
Fig 1: GBP/USD Spot Weekly Chart
Source: MNI - Market News/Bloomberg Finance L.P
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NZD: NZD/USD-Rises Toward 0.5750, Look For Sellers To Fade Back Toward 0.5800
The NZD/USD had a range today of 0.5723-0.5750 in the Asia-Pac session, it is currently trading around {NZD Curncy}. The NZD has bounced in Asia on the FED headlines. The NZD has put in what looks like a top around 0.5850 and while this continues to cap I suspect the short-term could see bounces faded. On the day, I suspect a bounce back toward the 0.5755-0.5780 area should now find sellers initially as the market reacts to the failure to gain momentum above 0.5800 and is now looking for the down trend to be reengaged. The caveat being that the market does not over react to the potential FED indictments.
- MNI BRIEF: Powell Says Fed Received Justice Dept. Subpoenas. Federal Reserve Chair Jerome Powell said Sunday the central bank has received grand jury subpoenas from the U.S. Justice Department that threatened a criminal indictment, but argued the move is a pretext aimed at clipping the institution's independence. {NSN T8Q8X46QRTHC <GO>}
- CFTC Data of last week shows Asset Managers slightly increasing their short positions in the NZD, -40649(Last -37981). The Leveraged community reduced their own shorts that they had just begun to build quite aggressively, -10605(Last -14480).
- Options : Closest significant option expiries for NY cut, based on DTCC data: none. Upcoming Close Strikes : 0.5800(NZD400m Jan 13), 0.5830(NZD373m Jan 13) - BBG
- The NZD/USD Average True Range for the last 10 Trading days: 33 Points
Fig 1: NZD CFTC Data
Source: MNI - Market News/Bloomberg Finance L.P
JPY: USD/JPY - Tries Lower But Demand Returns Around 157.50
The USD/JPY range today has been 157.52 - 158.20 in the Asia-Pac session, it is currently trading around {USDJPY Curncy}. USD/JPY tried lower in our session but again found solid demand on the dips back toward 157.50. The BOJ is in a tough spot, and they are going to need to do something significant to turn around the market's perception of a weak Yen. A test of the BOJ/MOF resolve looks inevitable at the moment as the market moves its focus back toward the important 160.00 area. USD/JPY remains in an uptrend and while the support back toward the 154.00-155.00 area is intact it remains a buy on dips. On the day, I suspect dips back toward the 157.00 area could now continue to be supported initially as the market looks to build on this momentum. I suspect we get more official jaw-boning as we approach 160 and any move above there would dramatically increase the chances of them getting involved.
- "TRUMP DENIES INVOLVEMENT IN DOJ'S FED SUBPOENAS, TRUMP SAYS DOJ SUBPOENAS NOTHING TO DO WITH INTEREST RATES: NBC”
- "JAPAN TAKAICHI CABINET APPROVAL RATING UP 2.3PT TO 78.1%: JNN" : BBG
- CFTC Data of last week shows Asset Managers continue to pare back their JPY longs, +47852(Last +54818). The Leveraged community reduced their own shorts that had started to become quite large, -68117(Last -79265).
- Options : Close significant option expiries for NY cut, based on DTCC data: 156.70($609m), 157.00($872m), 158.00($1.45b). Upcoming Close Strikes : 159.00($949m Jan 15) - BBG.
- The USD/JPY Average True Range(ATR) for the last 10 Trading days: 72 Points
Fig 1 : JPY CFTC Data
Source: MNI - Market News/Bloomberg Finance L.P
CHINA: Bond Futures Up, 10-Yr Nears Key EMA
- China's bond futures are modestly higher Monday following a small injection of liquidity during this morning's OMO. The maturity schedule for 7-day OMO is modest this week, following last week's CNY1.6tn liquidity withdrawal.
- Risk sentiment is off to a good start this week with all major bourses higher, dragging bond futures up too.
- The 10-yr is up +.05 to 107.825, near to the topside resistance from the 20-day EMA of 107.90.
- The 2-Yr is up +.01 to 102.356, retaining its position below all major moving averages. Topside resistance from the 20-day EMA is at 102.41.
- Cash is stable to slightly lower in yield with the 10-Yr at 1.866% (-0.5bps today).
- China is selling CNY135bn of 2027 and CNY32bn of 2056 bonds this week.
