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    US Market Open – February 12, 2016: Rhetoric and Rumor Feeding Yen Volatility

     euryen212.png

     

    Overnight Events

    • USD/JPY trades 111.60-113.02 and rumour mill in overdrive
    • BoJ Gov Kuroda – Mkt moves excessively risk-averse  
    • Kuroda out of line with  fundamentals, won’t hesitate to ease more
    • PM Abe advisor Honda – BoJ emergency meeting possible – Nikkei
    • Japan FinMin Aso – Recent FX moves sudden, “rough”
    • Aso will take appropriate  action if needed, no comment on intervention
    • EUR/USD offered but orderly-Plays 1.1265-1.1334
    • DAX up 1.5% and DB shares near 10% higher
    • Brent 3.8% firmer at 31.20, Crude 3.6% higher at 27.16
    • Barclays cuts USD/JPY end Q1 forecast to 100
    • DE Flash Q4 GDP 2.1% y/y vs 1.7% (rvsd 1.8%) prev, 2.3% exp
    • UK Flash Q4 GDP 1.5% y/y vs 1.6% prev, 1.5% exp
    • EZ Dec Ind Output -1.3% y/y vs 1.4% prev, 0.8% exp

    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:  1.1245-50 (715M) 1.1300 (629M), 1.1340-50 (879M)
    • USD/CHF: 0.9795-0.9805 (396M) USD/JPY: 113.50 (809M)
    • EUR/GBP: 0.7650 (840M), 0.7750 (1.4B), 0.7850 (838M)
    • AUD/USD:  0.7070 (478M), 0.7200 (738M)
    • USD/CAD: 1.3850 (1.1B), 1.3900 (590M), 1.4000 (422M)

    Chart – (Source:ThompsonReuters)

    EUR/JPY growing risk for 121.96 Fibo  
    EUR/JPY faces mounting risk for a deeper drop to 121.96, the 50% Fibo of the 2012-15 rise (94.12-149.79). But medium-term bears need a monthly close below 128.52 (38.2% Fibo of same range) to reinforce the underlying bearish structure. In March-April 2015 and this Jan, that level broke but bears failed to get such a monthly close. 14-mth momentum is becoming increasingly negative, highlighting the possibility of it finally happening this month. The drop below the previous 2015 low at 126.08 adds to the negative picture. Only a move back above the 128.52 level would make the picture brighten a bit more. Chart: https://tmsnrt.rs/20PD8VY

    Economic Data(Source:Bloomberg)

    feb12data.png


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