Global Markets: 

  • Asian stock markets: Nikkei down 1.25 %, Shanghai Composite lost 0.60 %, Hang Seng declined 1.65 %, ASX dropped 1.80 %
  • Commodities: Gold at $1222 (-0.25 %), Silver at $17.30 (-0.75 %), Crude Oil at $83.62 (-2.50 %)
  • Rates: US 10 year yield at 2.312, German 10 year yield at 0.904, UK 10 year yield at 2.265 

News & Data: 

  • Australia Home Loans -0.9 %, Expected: 0.1 %, Previous: +0.3 %
  • Japan Tertiary Industry Activity Index -0.1 %, Expected: 0.2 %, Previous: -0.3 %
  • IMF Deputy Managing Director Naoyuki Shinohara: Yen still broadly consistent with fudamentals; strong dollar triggerring Yen weakness
  • ECB’s Weidmann: Euro-Area Growth in coming quarters is restrained; ultra-loose monetary policy comes with risks
  • Fed’s Williams says it is appropriate under current conditions to raise rates around mid-2015
  • BOJ Kuroda: Japan economic weakness is temporary. Stable currency moves are desirable.
  • Fed’s Fischer:  Exchange rates reflecting changes in U.S. and Europe.  Exchange rate movements have been fully appropriate.
  • Fed Bullard: Not worried by inflation effects of stronger dollar. 

FX Overview: 

It was a risk-off session with all major Asian equity indices declining and the Japanese Yen strengthening. The FOMC minutes on Wednesday were perceived as dovish, which led to USD selling, but that was reversed yesterday after more upbeat comments from certain Fed officials. US equity markets dropped sharply and the S&P 500 and Dow Jones Index both closed the day 2 % lower. Meanwhile, Crude Oil continues it’s decline and has lost almost 4 % yesterday alone.

EUR/USD declined from a high of 1.2790 in yesterday’s EU session to 1.2662. Weak econ data from Germany and comments from ECB President and German FinMin Schäuble helped to drive the currency lower and the risk-off theme in the mid-NY session did the rest. The pair recovered somewhat in the Asian session, reaching a high of 1.2715. Dealers note that the EUR has been supported by cross flows, especially EUR/AUD buying. Bids noted at 1.2650, with stops through 1.2640. To the topside, key intraday resistance at 1.2740/50, with larger offers resting in front of the 1.28 level.

USD/JPY held well considering everything and consolidated in a 30 pips range during the Asian session. Large bids were seen in front of the 107.50 level yesterday and dealers note that there is still decent buying interest around that area. Stops in good size through 107.40. To the topside, offers at 108.20 up to 108.30, while 108.80 is now the key short-term resistance level. Some EUR/JPY selling noted from leveraged names and the pair is back below the 137.00 level. 136.60 support has held so far, but a break lower seems imminent.

AUD/USD is consolidating around 0.8770 as we are heading into the European open. Key support at 0.8730, while offers seen at 0.8820 and into 0.8850. USD/CAD again approaching the 1.12 level, but likely to consolidate until the employment figures later in the day.

Upcoming Events: 

  • 06:45 GMT – French Industrial Production (-0.2 % MoM)
  • 08:00 GMT – Italian Industrial Production (0.5 % MoM, -0.2 % YoY)
  • 08:30 GMT – UK Trade Balance (-9.60bln)
  • 12:30 GMT – Canadian Employment Change (20k)
  • 12:30 GMT – Canadian Unemployment Rate (7.0 %)
  • 13:00 GMT – FOMC Member Plosser speaks