WWM - Analytics

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    U.S. MARKET OPEN - Tuesday, March 29, 2016:  USD/JPY MAINTAINING ITS BULL RUN

     

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    Overnight Events

    • USD/JPY plays 113.23-113.80 and mid-range into NY
    • GBP/USD maintaining bull run with 1.4272 high from 1.4196 low
    • DAX off 0.3%, Brent down 2.0%, Gold off 0.2%, DXY up 0.03%
    • EZ Feb M3 5.%0 vs 5.0% prev, 5.0% exp
    • EZ Feb Loans to Households 1.6% vs 1.4% prev
    • IT Mar Consumer Confidence 115.00 vs 114.5 prev, 114.00 exp
    • IT Mar Business Confidence 102.2 vs 102.00 prev, 102.3 exp
    • Fed’s Williams (non-voting) urges Fed to stay on track with rate rises Rtrs
    • Japan Abe-Orders Aso to speed up budget spending next FY2016-Rtrs
    • Abe-Economic recovery trend remains intact-Rtrs
    • Japan Asakawa-exch rate doesn’t matter, but volatility does-Rtrs
    • Japan FinMin Aso – FX, stock markets showing signs of stabilizing – Rtrs
    • E.Min Ishihara – PM decision on any tax delay based on econ conditions – Rtrs
    • Japan Feb retail sales 0.5% y/y, 1.7% eyed, tourism down with JPY up?
    • Neg rates beginning to bite BoJ, CP ylds dipping deep into neg   territory – Nikkei
    • EgyptAir domestic flight hijacked and landed in Cyprus-Rtrs
    • China’s milk stockpile leaves New Zealand dairy farmers struggling - Rtrs

    USD/JPY

    • 8th day of consecutive gains: Real money stand out buyers, corps main sellers
    • 113.23-113.80 range: Offers reside 114.00.  114.45 is 30DMA, 114.56 is 2 Mar hi’
    • Daily cloud base 114.65. Pair back to 113.40’s pre NY open, higher UST’s weigh
    • EUR/JPY matches 11 March peak 127.25. Break eyes 16 Feb peak 128.16
    • EUR/JPY well within 126.70-128.44 cloud. Last time above was Oct 2015
    • AUD/JPY peaked 85.96, Offers 86.00: Lower 85’s since.  100dma support 84.98

    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)

     • Fed speakers today and NFP Friday helps support gamma
    • 1mth date will roll over April FOMC and BoJ from tomorrow
    • EUR/USD vols ease as ranges hold. JPY vols firm on topside cover
    • Post Brexit GBP premiums remain high – vols and GBP puts multi year high
    • AUD/USD vols capped as ranges hold. NZD vols closer to AUD since RBNZ
    • CNH vols back under pressure after mild recovery last week

    Chart - USD/JPY contra-trend play favored (Source:ThompsonReuters)
    Medium-term bias remain to the downside, with the short-term bull run off of the March 17 110.67 low now looking overbought. Look to place an offer near the 30-day upper Bolli at 114.45, looking for a pull-back to 112.20 objective and a stop at 115.10 - both of which mirror the March 23 low at 112.14 and the Feb 16 high at 114.87 high). Both the 14-day momentum and daily slow stochastic are poised to turn bearish. Resistance is thick in the 114s: the Bolli line at 114.45, the March 2 high at 114.56, the daily Ichi cloud base at 114.65 and the mid-Feb 114.87 peak. Weekly charts point to a 110.67-114.56 range taking shape with strong rejections seen at the highs. Chart: 1) https://reut.rs/22WOQM5 2) https://reut.rs/1oiNco9 

    Economic Data(Source:Bloomberg)

    Mar29data.png


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