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    US Market Open – Wednesday, March 23, 2016: STERLING STAYS SOFT ON BREXIT FEARS

     

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    Overnight Events

    • Fed needs to ‘get on with’ rate hikes, Harker says - RTRS
    •  BoJ Funo: Market risk aversion could weigh on sentiment – RTRS
    •  BoJ Funo: CAPEX, suggests fiscal stimulus needed – RTRS
    •  BoJ Funo: True FX one channel in which monetary policy effects economy – RTRS
    •  BoJ Funo: Won’t hesitate to ease again if recovery threatened - RTRS
    •  Japan Econ Min Ishihara: Up to PM Abe to decide on sales tax hike – RTRS
    •  Japan Econ Min Ishihara: See no change to Japan’s solid economic fundamentals - RTRS
    •  Japan Mar Reuters Tankan 6 vs 7 prev
    •  Brussels bomb suspect arrested-Belgian newspaper DH – RTRS
    •  Swiss Mar ZEW investor sentiment 2.5 vs -5.9 prev
    •  Woodside scraps Australian Browse LNG project as glut bites - RTRS
    •  GBP 3mth option expiry date now falls beyond June 23 Brexit referendum – FX Buzz
    •  Latest ICM poll says 43% of Brits want to leave EU, 41% want to stay
    •  Brexiteer Boris Johnson addresses Brexit risk in TSC testimony (parliamentlive.tv)

    Currency Summaries
    EUR/USD  
    •  EUR/USD eases a little in slow moving European session
    • 1.1180-1.1207 range. Bearish on break 200-HMA 1.1196
    •  DAX up 1% weighing EUR via pressure EUR funded crosses
    •  Longer-dated rate divergence weighs EUR/USD: https://reut.rs/1RjgAFoÂ
    •  EUR 1.6bln 1.1195-1.1200 vanilla expiries may anchor spot
     
    USD/JPY
    •  USD/JPY has risen 112.14-112.76
    •  Japanese bids located at 112.10
    •  Good name had bids below 112.20
    •  Rates diverging across curve favouring higher USD/JPY
    •  EUR/JPY has seen a 125.52-126.18
    •  Cross has offers ahead of 126.27, Tuesday’s peak

    EUR/CHF
    •  EUR/CHF erases all losses which followed yesterday's risk aversion
    •  Now risks bullish break over 21-DMA 1.0924:
    • Swiss investor survey 10GMT. Down sharply Jan/Feb to -5.9 from 16.6 Dec
    •  Stock markets buoyant suits CHF lower as a funding currency
    •  Daily cloud base @ 1.0978 target above 21-DMA

    GBP/USD   
    •  GBP/USD has fallen to a 1wk low of 1.4157 amid Brexit fears
    •  Latest ICM poll says leave campaign has 2% lead
    •  EUR/GBP is consolidating Brexit fear-influenced gains sub-0.7910
    •  0.7910 = March high last week. 0.7905 was Tuesday’s high

    USD/CAD
    •  USD/CAD met headwind circa 1.3106 after heading north early Europe
    •  1.3016 was yesterday’s North American session, before drop to 1.3028
    •  1.3050, 1.3100 & 1.3120 option expiries today (closest-to-market)

    AUD/USD            
    •  AUD/USD has retreated to 0.7577 after profit-taking on longs since pre-0.7650 failure
    •  0.7649 was Asia high, amid talk of raft of offers 0.7650-80

    NZD/USD
    •  NZD/USD has fallen to a 1wk low of 0.6694 amid pipeline RBNZ cut speculation
    •  0.6727-0.6769 was Asia range
    •  Interest rate futures suggest 48% chance of another 25bp OCR cut next month
    •  RBNZ cut OCR by 25bp to 2.25% earlier this month

    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: 1.1195 (410M), 1.1200 (1.2BLN), 1.1245 (255M), 1.1250 (644M)
    •  USD/CHF: 0.9775 (100M)
    •  USD/JPY: 112.10 (160M), 111.95 (360M), 111.85 (150M)
    •  GBP/USD: 1.4050 (261M), 1.4250 (262M), 1.4330-35 (362M)
    •  EUR/GBP: 0.7900-10 (165M)
    •  AUD/USD: 0.7625 (249M), 0.7550 (162M)
    •  NZD/USD: 0.6690 (128M), 0.6745 (198M), 0.6790 (200M)
    •  AUD/NZD: 1.1195 (220M)
    •  USD/CAD: 1.3050 (110M), 1.3100 (210M), 1.3120 (340M)

    Chart - GBP/USD seeks a close below 1.4162/75 (Source:ThompsonReuters)
    GBP/USD solid resistance weighed above 1.4500, the cloud which spans 1.4395-1.4660. Recall spot  failed one pip ahead of February 16 1.4515 high. A doji formed on last  Friday's candlestick line, which is indicative of indecision. A daily close below 1.4162/1.4175 (76.4% retrace of the 1.4053-1.4514 rise/Kijun line) - will weaken the structure for a retest of 1.4053 – March 16 low. 1.4000 is also be unmasked. Chart:  https://tmsnrt.rs/1WHLs3N

    Economic Data(Source:Bloomberg)

    March23data.png


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