WWM - Analytics

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    US Market Open – Wednesday, February 24, 2016:Sterling unable to shake off Brexit fears

    brexit.png

     

    Overnight Events

    • GBP/USD hits 1.3881 from 1.4029 on Brexit plays
    • USD/JPY 111.63 low from 112.26 high
    • EUR/USD 1.10-1.1026 in Asia, Europe extends low to 1.0976
    • DAX off 2.0%, Brent off 2.2%, DXY up 0.3%
    • CH Jan UBS Consumption Indicator 1.66 vs 1.61 rvsd prev
    • FR Feb Consumer confidence 95 vs 97 prev, 97 exp
    • UK Jan BBA Mtg approvals 47.509k vs 43.660k rvsd prev
    • UK Feb CBI Distributive Trades vs 16 prev, 12 exp
    • Norway Q1 oil inv weaker than exp: 2016 NOK189bln vs 192.8bln
    • HSBC joins 15-20% Stg fall on Brexit club (GS & Citi)
    • BoJ Gov Kuroda – Won’t cut rates without eye on economic impact – Asahi
    • Kuroda – Ready to ease if market rout hurts economy- Rtrs
    • Kuroda negative rates not a signal a limit to QE
    • Kuroda BoJ doesn’t explicitly target FX  or stocks (in Diet testimony) - Rtrs
    • FOMC Fischer – Mkt turmoil may pass with little (lasting)  econ impact- Rtrs

    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)

    • NZD/USD has fallen to 0.6591 amid RBNZ OCR cut speculation
    • nbr.co.nz-NZ FinMin English drops heavy hint to RBNZ
    • NZ interest rate futures suggest 44% chance of 25bp OCR cut Mar 10
    • 0.6605 was Asia low. Large 0.6600 expiry Thursday, half-yard strike

    Chart - GBP/USD likely to fall to 1.3500 (Source:ThompsonReuters)
    GBP/USD's fall and close below 1.4371 at the end of January - 76.4% retrace of the 1.3500-1.7192 (2009-2014 rise) puts 1.3500 in focus. 14-month momentum persists, reinforcing the underlying bearish structure. Note that the failure ahead of 1.7331 in 2014 - 50% of the 2.1162-1.3500 (2007-2009) collapse - has led to the subsequent sustained bearis cycle. Medium-term bulls need to force a close back above 1.4371, on a monthly basis, needed to put themselves on an even footing. Chart: https://tmsnrt.rs/1TywE7R 

    Economic Data(Source:Bloomberg)

    Feb24data.png


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