FOREX: USDJPY Recovers from Cycle Lows, DXY Consolidating ~99.50
Apr-17 09:15
- The majority of the focus for G10 currency markets on Thursday has been for the Japanese yen following the initial US-Japan trade talks taking place. The weaker greenback trend had prompted USDJPY to fall to a fresh cycle low overnight at 141.62, however positives emanating from these discussions then appeared to provide a boost to USDJPY.
- The pair now stands roughly 100 pips off the lows, having bounced as high as 143.08 in European trade. Furthermore, US equity futures are holding onto their session gains and combined with the higher US yields, appear to have provided a yen headwind on Thursday. Initial resistance for USDJPY is not seen until 144.64 the Apr 11 high.
- Amid the slightly firmer US dollar, the likes of AUD and NZD are struggling to extend their most recent recoveries. AUDUSD has failed on the approach to 0.6400 once more as a lower-than-expected employment change was countered by the unemployment rate coming in a tenth below expectations. Higher than forecast inflation data in New Zealand prompted a moderate bounce for NZDUSD, however so far, prior highs at 0.5944 have capped the upside.
- In similar vein, EURUSD made another attempt above 1.14 but has since subsided to the 1.1375 area. EURUSD vols are generally contained headed into today's ECB decision, where a 25bps rate cut is broadly expected. Key focus remains on 1.1495, the Feb 10 2022 high.
- Despite the moderate uptick on Thursday, the USD index has fallen sharply in recent weeks as a rotation out of US assets seems to be gathering momentum and normal correlations with yields have broken down. Positioning dynamics will be closely monitored as we approach the long holiday weekend.
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ECB: Rehn Sticks To March Guidance Script In MNI Event Opening Remarks
Mar-18 09:05
Initial highlights from Rehn. Not much to deviate from the ECB’s March guidance at first glance. More insight will likely be provided in the Q&A: “We are not pre-committed to any interest rate path. Policy rates are set at each meeting based on the latest information and our comprehensive assessment, next time on 17 April. The Governing Council retains full freedom of action in times of pervasive uncertainty”.
- “Tariffs and the related uncertainty will hit investment and slow down growth everywhere. The latest indicators on the US economy point to weaker than expected growth, which would also affect growth prospects in Europe”.
- “The growth outlook for the euro area remains subdued” …“In addition to cyclical factors, the euro area economy is also experiencing structural problems. In the ECB’s new forecast, productivity growth is slower than before. The weakness appears to be more structural than previously. But it would be wrong to say that it is entirely structural”.
- “Although there is little to be positive about in the security situation in Europe, the expected increases in defence spending and investment are at least likely to support GDP growth over the medium-term”.
- “Inflation in the euro area is stabilising at the ECB's 2% target”…“ Risks to the inflation outlook are two-sided”
EQUITIES: Roll Pace Update
Mar-18 09:02
Equity Roll Pace: March is still front Month but not by much, all the volumes in Futures are all spread related, June could become front as early as Tomorrow.
- ESA: 61%.
- NQA; 51%.
- DOW: 66%.
- VGA: 37% (as of Yesterday for the EU).
- DAX: 28%.
- FTSE: 44%.
EQUITIES: BNP single Stock Option
Mar-18 08:59
BNP (19th Dec) 74/60ps, sold at 4.55 in 2k.
