Asia Brief: New Zealand Westpac Consumer Sentiment 116.7 vs 121.2 previous. BoJ's Iwata said weak yen puts Japan at risk of recession, current Yen weakness is slightly excessive, USD/JPY at 90-100 reflects fundamentals, further BoJ easing needed if inflation falls below 1 %. G20 warns of potential market risks amid uneven growth. AFR reports Deutsche Bank fired a Sydney-based rogue FX trader.
CFTC: EUR shorts 137k vs 158k short prior week. GBP shorts 6k vs 27k long prior week. JPY shorts 83k vs 101k short prior week. AUD longs 22k vs 41k long prior week. CAD longs 7.5k vs 11.6k long prior week. CHF shorts 11k vs 14k short prior week.
Global Markets: Nikkei down 0.90 %, Shanghai Comp lost 1.60 %, Hang Seng and ASX declined 1.40 %. Gold at $1212 (-0.40 %), Silver at $17.53 (-1.80 %), Crude Oil at $91.40 (-0.30 %). US 10 year yield at 2.56.
FX Overview: The main theme overnight was the USD weakness and further decline in commodity prices. EUR/USD bounced after comments from ECB officials over the weekend suggested that QE can be ruled out in the near-term. We will likely see a short squeeze in the next two sessions, with 1.2930 the key short-term resistance level. Trailing stops are resting above and a break would suggest we'll see another test of the 1.2980 level. The market is still very short the Euro and with some strong support levels resting sub-1.28, specs might want to wait for another rally towards 1.30 to add to shorts. Asia reports offers resting at 1.2920, while bids noted 1.2820-30 and ahead of the 1.28 level.
Cable rallied to 1.6364 overnight. With Scotland now behind us, the focus is now again on the BoE and the Fed. It will be a very data-light week for the Pound, with no tier 1 data, but Governor Carney will be holding a speech in Wales on Thursday. Good resistance at 1.6400-10, while intraday support lies at 1.6280.
USD/JPY was under pressure as the Nikkei dropped on the open. The pair hit a low of 108.66 where it ran into demand from local importers & investors. Offers are lined up in front of the 109.20 level and stops are resting above. 109.50 is next resistance and then the big 110.10 level. The commodity currencies have recovered slightly, led by gains in the Kiwi after the general election results. However, momentum has waned already and AUD/USD is now approaching the 0.89 level, while NZD/USD is consolidating around 0.8160. USD/CAD remains a good buy on any dips towards 1.09. Bids reported at 1.0900-20, while offers noted 1.0980-85.
Looking ahead, we have a data-light session ahead of us, but the US session should be more exciting with ECB President Draghi and FOMC Member Dudley speaking.
Good luck!
CFTC: EUR shorts 137k vs 158k short prior week. GBP shorts 6k vs 27k long prior week. JPY shorts 83k vs 101k short prior week. AUD longs 22k vs 41k long prior week. CAD longs 7.5k vs 11.6k long prior week. CHF shorts 11k vs 14k short prior week.
Global Markets: Nikkei down 0.90 %, Shanghai Comp lost 1.60 %, Hang Seng and ASX declined 1.40 %. Gold at $1212 (-0.40 %), Silver at $17.53 (-1.80 %), Crude Oil at $91.40 (-0.30 %). US 10 year yield at 2.56.
FX Overview: The main theme overnight was the USD weakness and further decline in commodity prices. EUR/USD bounced after comments from ECB officials over the weekend suggested that QE can be ruled out in the near-term. We will likely see a short squeeze in the next two sessions, with 1.2930 the key short-term resistance level. Trailing stops are resting above and a break would suggest we'll see another test of the 1.2980 level. The market is still very short the Euro and with some strong support levels resting sub-1.28, specs might want to wait for another rally towards 1.30 to add to shorts. Asia reports offers resting at 1.2920, while bids noted 1.2820-30 and ahead of the 1.28 level.
Cable rallied to 1.6364 overnight. With Scotland now behind us, the focus is now again on the BoE and the Fed. It will be a very data-light week for the Pound, with no tier 1 data, but Governor Carney will be holding a speech in Wales on Thursday. Good resistance at 1.6400-10, while intraday support lies at 1.6280.
USD/JPY was under pressure as the Nikkei dropped on the open. The pair hit a low of 108.66 where it ran into demand from local importers & investors. Offers are lined up in front of the 109.20 level and stops are resting above. 109.50 is next resistance and then the big 110.10 level. The commodity currencies have recovered slightly, led by gains in the Kiwi after the general election results. However, momentum has waned already and AUD/USD is now approaching the 0.89 level, while NZD/USD is consolidating around 0.8160. USD/CAD remains a good buy on any dips towards 1.09. Bids reported at 1.0900-20, while offers noted 1.0980-85.
Looking ahead, we have a data-light session ahead of us, but the US session should be more exciting with ECB President Draghi and FOMC Member Dudley speaking.
Good luck!
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