WWM - Analytics


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    US Market Open – Monday, March 7, 2016: Calm before this week's CB Barrage


    Overnight Events

    • USD/JPY 113.40-114.07 (Asia high) to the lows into NY
    • EUR/USD sideways in Asia marked sharply lower in Europe-1.10-1.0945
    • GBP/USD matching EUR/USD fall and EUR/GBP steady as a result
    • Brent 1.05%, DXY 0.25%, DAX -1.04%, MICEX 1.0%
    • DE Jan Ind. Orders -0.1% m/m vs -0.2% rvsd prev, -0.3% exp
    • EZ Mar Sentix 5.5 vs 6.0 prev, 8.0 exp
    • BIS – Mkt turbulence shows faltering confidence in cbs healing  powers
    • Hedge funds’ bearish mining bets turn sour – Financial Times
    • SNB Maechler– Money policy limits not reached yet, CHF over-valued –Le Temps
    • BoJ Gov Kuroda - Concerns QQE cannot be expanded unfounded
    • Moody’s Japan faces downside risks to growth projection-Rtrs
    • Japan PM Abe – BoJ decided on NIRP on its own, will raise VAT as planned
    • PBOC ViceGov Yi Gang –Fundamentals sound, FX reserves ample
    • China unveils five-year plan, prepares for tough battle, ’16 GDP 6.5-7%
    • Moody’s puts most oil producing nations on review for possible downgrades

    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)

     • Vols hit hard last week across the board, but finding a floor now
    • ECB Thursday props related gamma – Thurs EUR/USD costs 180 pips
    • EUR/USD Implieds vols well above realized as event risk looms
    • USD/JPY 1mth fell 13.8-11.0 last week and now 11.7. BoJ eyed 15 Mar
    • NZD buyers short dated downside over RBNZ Thurs vs USD and AUD
    • GBP vol setbacks have stalled as has GBP spot recovery    

    Chart - GBP/USD headed lower with bears in charge (Source:ThompsonReuters)
    GBP/USD bears are likely to push the pair back below 1.4000, to test the 2016 1.3836 low once again. The 10- and 30-DMA lines highlight the overall bearish structure with 14-day momentum remaining negative. We noted on March 1 that bulls would likely be halted by the 1.4155/1.4254 region - 38.2%/50% retrace of the 1.4672-1.3836 February fall. The high on Friday turned out to be 1.4249. The failure ahead of the 1.4254 level has been a setback for bulls. They need to force a daily close back above the 30-DMA at 1.4278 to put the bias back on the upside. Chart: https://tmsnrt.rs/21V7zHl

    Economic Data(Source:Bloomberg)


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