WWM - Analytics

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    US Market Open – Wednesday, March 8, 2016: Sun still shining on on the AUD

     

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    Overnight Events

    • China Feb Trade balance USD 32.592bn vs 63.29bn prev, 50.15bn exp
    • SSEC closed up 0.1% Tuesday having been down 2% early in session
    • Japan Q4 GDP revision not bad but not that good, bank loans in steady rise
    • Japan Q4 GDP revised annualised -1.1%q/q vs -1.4% prev, -1.5% exp
    • Japan Q4 GDP revised -0.3%q/q vs -0.4% prev, -0.4% exp
    • Japan Q4 Cap ex revised 1.5%q/q vs 1.4% prev, 1.2% exp
    • Japan mulls second tax-hike delay as spending falls – RTRS
    • Econ Min Ishihara: Impact of next sales tax hike not calculated – RTRS
    • Nikkei closes near 1-week low as strong yen drags down exporters
    • MoF Feb flow data – Japan buy net Y1.2326tn foreign stocks, Y3.5607tn bonds, Y117.9bn bills
    • Foreign investors sell net Y2.8126tn, Japan stocks, buy Y1.6600tn bonds, sell Y3.1375tn bills
    • Goldman Sachs – Structural bear market drivers for metals intact – RTRS
    • AUD at parity? (vs USD). Saxo Bank is betting on it – SMH
    • Euro zone Q4 GDP revised 0.3%q/q vs 0.3 prev, 0.3 exp
    • Euro zone Q4 GDP revised 1.6%q/q vs 1.5 prev, 1.5 exp
    • German Jan Industrial output 3.3%m/m vs -1.2% prev, 0.5% exp
    • Schnabel, German Council of Econ Experts: Germany will resist ECB rate plans – Irish Times
    • Swiss Feb CPI -0.8% vs 1.3 prev, 1.1 exp
    • BoE’s Carney: Leaving EU could weaken sterling, pushing up inflation – RTRS
    • Carney: Leaving EU could lead to economic activity due to reduced confidence – RTRS
    • BoE’s Cunliffe: We are in “uncharted water” if UK leaves EU – RTRS
    • German Fin Min Schaeuble: Brexit is a geopolitical risk - RTRS

    AUD/USD          
    • AUD/USD elicited support pre-0.7410 during the European am
    • Gain consolidation is big-picture story, after surge on commodity gains Monday
    • Offers are touted at 0.7485 (0.7486 was Monday’s 8mth high) & 0.75

    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)

     • USD/JPY and cross vols propped by weaker spot tone. 1.2bln 113 expiry looms
    • EUR gamma bid on ECB – Thurs EUR/USD 26.5 vol/180 pips vs Wed 12.5/60 pips
    • Cable and EUR/GBP vol setbacks from mid Feb long term highs, stall for now
    • AUD/USD vols up a touch, AUD put bias on risk reversals meet demand at lows
    • NZD gamma bid in to RBNZ – Thurs atm costs around 100 pips breakeven
    • USD/CNH vols off last week’s setback lows. CNH puts losses via riskies stalling

    Chart - EUR/CHF to find support at 1.0892 (Source:ThompsonReuters)
    EUR/CHF faltered ahead of the rising 200-DMA which is currently at 1.0791, the subsequent recovery reached 1.0974 on Monday. The 10-DMA comes in at 1.0892; this should continue to keep the overall bias on the upside. Note that 1.0892 is also 50% retracement of 1.0810-1.0974 (Feb 29-March 7) rise. Bulls will likely take the cross through the 30-DMA at 1.0994, which will then unmask 1.1005/1.1051 – 50%/61.8% retracement of the 1.1200-1.0810 February fall. Diverging 30-day Bolli bands highlight the scope for further relatively volatile moves. Note that a break and close below the 1.0810 base will be a setback for bulls and shift the overall risk back to the downside. Chart: https://tmsnrt.rs/1Swq4POÂ

    Economic Data(Source:Bloomberg)

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