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    Thursday, february 11, 2016: Thin USD/JPY dips under 111.00

    yen211.png

    Overnight events

    • USD/JPY free-fall to 110.99 before lifting to high 111s
    • USD/CHF hits 4-mth low of 0.9661-Safety flows cited
    • European banks shares slump-DB was down 8% at worst
    • DAX off 2.5%, Brent off 1.0%, Gold up 2.7%, DXY off 0.25%
    • Riksbank cuts 15-bp to -0.5%-Upper end of mkt expectations
    • EUR/SEK jumps to 9.6145 then fall to 9.50
    • Riksbank’s Ingves-negative rates working well
    • SNB’s Jordan-tying CHF to basket makes no sense-Bilanz
    • CH Jan CPI y/y -1.3% vs -1.3% prev, -1.3% exp
    • UK Rics Jan Hse PxBal 49 vs Downwardly Rvsd Dec 49, 52 exp
    • UK Rics-Hse demand up due to buy-to-let Inv seek to avoid Apr tax rise
    • Moody's Comfortable With NZ AAA Rating - Moody's Senior Vice Pres.
    • UK CBI Cuts 2016 GDP F.cast to 2.3% (Nov: 2016 2.6%)

    Today’s events

    An expiring FX option heading into the New York Cut, if close enough to the strike price, can act as a magnet for selling/buying.  If the option is large, it can generate enough trading to move the market.  

    Option Expirations(Source:ThompsonReuters)

    • EUR/USD: 1.1300 (146M)
    • GBP/USD: 1.4600 (265M)
    • AUD/USD: 0.6975 (402M), 0.7000 (144M), 0.7025 (325M)
    • USD/CAD: 1.3900 (445M), 1.3800 (180M)

    Chart - (Source:ThompsonReuters)
    USD/JPY could drop to mid 106.00s
     
    USD/JPY bears now eyeing 110.35 – 61.8% retrace of 100.76 to 125.86 (2014-2015) rise – a break and close below which on a monthly basis would unmask 106.68 – 76.4% retrace of 100.76 to 125.86. The 106.55 level – 38.2% retrace of the 75.31 to 125.86 (2011-2015) massive recovery - has also become a bear target which is very close to the 106.68 level. Our recent view for a deep fall in spot has proved correct, with the breaks of 113.93 - 23.6% retrace of the 75.31 to 125.86, 113.31 – 50% of 100.76-125.86 range and Nov 2014 112.42 low. These broken levels have severely weakened the market structure. Fourteen-month momentum is currently very negative for February and is a great risk on registering this negative reading at the end of the month. Chart: https://tmsnrt.rs/1QafCxM

    Economic Data(Source:Bloomberg)feb11data.png


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