Global Markets:

  • New Zealand Trade Balance (m/m): $818M, Expected: $600M, Previous: $306M
  • New Zealand Trade Balance (y/y): $0.65B, Expected: $0.49B, Previous: $0.31B
  • New Zealand Exports: $4.65B, Expected: $4.44B, Previous: $4.08B
  • New Zealand Imports: 3.74B, Expected: 3.78B, Previous: 3.77B
  • RBNZ Deputy Governor: Lending limits dampened inflation by 25-50 bps of rate rises
  • RBNZ Dep Gov: Lending rules may have cut pressure on NZ Dollar
  • RBNZ Dep Gov: Raising cash rate will allow easing or removal of lending limits

 FX Flows/Orders:

  • Japanese were seen as sellers of USD/JPY initially, but bought the pair after stops at 101.75 were cleared
  • Demand from leveraged names increased then with the bounce in the Nikkei index supportive
  • Dealers note bids are lined up around 101.60 with stops through 101.40
  • EUR/JPY bounced off 140.25 support, but traders note that a break below 140.00 could trigger further position covering
  • EUR/USD bids reported between 1.3750 and 1.3765, with large stops sub-1.3750
  • Banks also see good demand for EUR/GBP beneath the 0.83 level
  • AUD/USD remains bid; good EUR/AUD selling noted overnight
  • Talk of a barrier option resting at 0.9250 and offers in front of it, but no heavy resistance seen until 0.93
  • Buying dips the preferred strategy; solid intraday support at 0.9215 and then 0.9170
  • Things are not looking good for USD/CAD; an US dealing bank says they see plenty of stops below 1.1070 which might accelerate downside momentum

 Market Sentiment:

The drop in US yields put the USD/JPY under pressure in yesterday’s late NY session and traders decided to go for the stops sub-102.00. Japanese were sellers ahead of the Tokyo open and sizeable stops were cleared beneath 101.80. The pair bounced since then, led by demand from leveraged names and supported by the bounce in the Nikkei. Traders expect further consolidation in the next few sessions amid two-way flows as we approach the end of the fiscal year in Japan.

 Looking ahead, the focus in Europe will be on UK Retail Sales data, with a majority of the banks forecasting consumer demand to remain in a good underlying shape. GBP/USD has rallied after bouncing off the 1.6460 support level; initial resistance now seen at 1.6605, but a break above the 1.66 handle would pave the way for a test of 1.6667.

 Upcoming Events:

  • 07:45 GMT – French Consumer Confidence (85.0)
  • 09:00 GMT – Euro Zone M3 Money Supply (1.3 %)
  • 09:30 GMT – UK Retail Sales (0.5 % MoM, 2.5 % YoY)
  • 09:30 GMT – Core Retail Sales (0.3 % MoM, 2.8 % YoY)
  • 12:30 GMT – US Initial Jobless Claims (325k)
  • 12:30 GMT – US GDP (2.7 % QoQ)
  • 13:45 GMT – US Bloomberg Consumer Confidence
  • 14:00 GMT – US Pending Home Sales (0.3 % MoM)