4 Dec 2014
Asia Recap: USD bulls in full control
FXStreet (Bali) - The USD was the king of the board yet again, with the rest of Asian currencies (AUD, NZD, JPY) giving further ground, with the general perception being that the underlying USD bull trend has resumed.
AUD/USD traded as high as 0.8427 on better-than-expected Australian retail sales/trade balance, however, the initial spike was sold strength, with the market fading the run-up, leading to new session lows at 0.8377. Chatter is increasing that the next big level specs may be targeting is the 0.80 handle, as market still prices over 30% chance of an RBA cut next February, with the rate outlook worsened since Wednesday's Aus GDP miss.
USD/JPY continued grinding slowly but surely north - highest at 119.95 -, with an option barrier at 120.00 in full. While stops are expected to be large above the level, which may lead to an initial spike, market sources report very solid selling interest from exporters at/above the psychological level, with importers/leveraged names on the bid. Note, a large $2.21bln in option expires at 120.00 during today's NY cut may keep the rate not so far from the round level, while a not so big $660mln option expiration at 119.75 could seen any setback limited.
The rest of G10 FX traded weaker vs the USD too. NZD/USD printed its cheapest level at 0.7730, with some solid bids noted. EUR/USD kept pressuring 1.23 ahead of the ECB meeting, while GBP/USD remains stuck in a range, currently at 1.5680, wit today's BoE policy outcome likely a non-event.
Key headlines
Japan: PM Abe set to win majority in Dec 14 election - Nikkei
BoC Poloz: Weaker oil a downside risk to growth and inflation
BoC Poloz: Interest rates to reduce financial stability last line of defense
Japan Foreign bond investment up to ¥3.4B in November 28 from previous ¥-45.1B
Japan Foreign investment in Japan stocks dipped from previous ¥734.9B to ¥-53B in November 28
Better-than-expected Aus retail sales, trade balance
Australian retail sales solid - ANZ
Fed's Fisher: Fed closer to raising rates than generally expected
AUD/USD traded as high as 0.8427 on better-than-expected Australian retail sales/trade balance, however, the initial spike was sold strength, with the market fading the run-up, leading to new session lows at 0.8377. Chatter is increasing that the next big level specs may be targeting is the 0.80 handle, as market still prices over 30% chance of an RBA cut next February, with the rate outlook worsened since Wednesday's Aus GDP miss.
USD/JPY continued grinding slowly but surely north - highest at 119.95 -, with an option barrier at 120.00 in full. While stops are expected to be large above the level, which may lead to an initial spike, market sources report very solid selling interest from exporters at/above the psychological level, with importers/leveraged names on the bid. Note, a large $2.21bln in option expires at 120.00 during today's NY cut may keep the rate not so far from the round level, while a not so big $660mln option expiration at 119.75 could seen any setback limited.
The rest of G10 FX traded weaker vs the USD too. NZD/USD printed its cheapest level at 0.7730, with some solid bids noted. EUR/USD kept pressuring 1.23 ahead of the ECB meeting, while GBP/USD remains stuck in a range, currently at 1.5680, wit today's BoE policy outcome likely a non-event.
Key headlines
Japan: PM Abe set to win majority in Dec 14 election - Nikkei
BoC Poloz: Weaker oil a downside risk to growth and inflation
BoC Poloz: Interest rates to reduce financial stability last line of defense
Japan Foreign bond investment up to ¥3.4B in November 28 from previous ¥-45.1B
Japan Foreign investment in Japan stocks dipped from previous ¥734.9B to ¥-53B in November 28
Better-than-expected Aus retail sales, trade balance
Australian retail sales solid - ANZ
Fed's Fisher: Fed closer to raising rates than generally expected