WWM - Analytics


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    US Market Open – Friday, February 19, 2016




    Overnight Events



    • Nervous GBP mkts-EUR/GBP 7720-7777 and now at 7754 open
    • UK/EU talks resume/drag after all night negotiations
    • EUR/USD Looking at 6 straight bear closes-Plays 1.1077-1.1139
    • USD/JPY heavy in a 113.38-112.72 range
    • Nikkei off 1.42%, SSE flat, DAX off 0.3%, FTSE up 0.05%
    • UK Jan R.Sales 5.2% y/y vs 2.3% prev (revsd), 3.6% exp
    • UK Jan PSNCR m/m –GBP24.919bln vs 8.478bln prev
    • UK Jan PSNB m/m –GBP11.813bln vs 7.490bln
    • Sweden Jan Jobless 7.5% vs 6.7% prev, 7.6% exp
    • Bank of Japan faces a new opponent on negative rates: Main Street – WSJ
    • FinMin Aso – G20 to discuss China excess capacity, oil price,  Fed policy – Rtrs
    • Fin Min Aso: Rapid FX moves undesirable - Rtrs
    • Aso-Recent market moves extremely rough Rtrs
    • PBOC Dep. Gov-Excessive loosening will create asset bubble
    • RBA board Edwards revives fears over AUD strength – DowJones
    • Suspected So.Korea intervention steadies KRW



    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)

    • Risk aversion in Asia, lends support to vols, JPY crosses especially
    • USD/JPY short downside to prop vols/risk reversals as spot suffers  
    • Overall activity remains fairly muted however as weekend looms
    • EU summit focus and the deal with UK – keeps GBP gamma bid
    • Monday Cable  129 pips breakeven and Monday EUR/GBP 70 pips
    • EUR/USD languishes in range, caps vols, potentially until ECB 10 Mar  

    Chart - (Source:ThompsonReuters)

    Nikkei H&S adds to dire outlook
    Looking at weekly charts, our bearish view on Nikkei has played out. A large head and shoulders pattern suggests a drop as far down as 12,750. Recovery attempts are likely to limited towards this week’s high at 16,341 high and the head and shoulders neckline at 17,061 offers solid resistance. Only a close back above the neckline will bring stability to make the outlook less bearish. Bigger picture, we are still looking for N225 to test 13,973, the 50% retracement of the Oct 2008/June 2015 (6,994-20,952) bull run. In 2016 we have had a weekly range of 14865-17099 and and another of 17,509-18,951, so a drop from current level to just under 14,000 is very reasonable. Before then, the 200-WMA at 14,845 and 2014 low at 14,529 should offer some support. Breaks and closes of those levels will clear the path towards the levels mentioned above. Chart: https://tmsnrt.rs/212ByzX

    Economic Data(Source:Bloomberg)


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