US Open Briefing


Europe Brief: UK CPI 0.4 % and 1.5 % as expected. German ZEW Economic Sentiment 6.9 vs 4.8 f/c. German ZEW Current Conditions 25.4 vs 40.0 f/c. Euro Zone ZEW Economic Sentiment 14.2 vs 21.3 f/c. BoJ's Kuroda said USD rise/JPY decline not negative for Japan's economy as they are natural moves reflecting fundamentals. ECB's Liikanen says ECB committed to using additional unconventional instruments to tackle risks of low inflation if necessary.

Global Markets: DAX, FTSE and Eurostoxx all down 0.40 %, CAC lost 0.55 %. Gold at $1238 (+0.20 %), Silver at $18.73 (+0.60 %), Crude Oil at $91.55 (-0.50 %). US 10 year yield at 2.56.

FX Overview: EUR/USD started the EU session around 1.2935. The pair fell to a low of 1.2921 as a round of USD buying hit the market at the London open, but it eventually retraced those losses. The ZEW data was rather disappointing, but as usually, the Euro doesn't move much on data releases unless they are extremely good/bad. EUR/USD nevertheless reached a high of 1.2967. Dealers saw good selling interest from leveraged names there, but the pair remains still well-bid. Bids noted at 1.2920 and in better size at 1.29. Offers in good size seen between 1.2975 and 1.2980, but also larger stops above that resistance area.

Cable was under pressure in the early London session as the market was expecting a softer CPI print. Inflation data arrived in line with expecations though and after a push to 1.6160, the pair recovered and is now trading at 1.62 into the NY session. Offers noted at 1.6240-50, while 1.6160 is now the pivotal intraday support level.

All quiet in USD/JPY again. The pair ran into some exporter supply at 107.30 and there are larger offers in front of 107.50. Asia noted good bids at 106.80-90 though, so the current range should stay intact pre-FOMC.

AUD/USD hit a low of 0.8986 at the London open, but bounced from there, reaching a high of 0.9032 earlier. There is still talk of solid selling interest at 0.9050 from macro funds and other leveraged names. I think we may test the resistance level again today, but it will be difficult for the pair to sustain momentum above there amid the clearly AUD-negative sentiment. To the downside, key support at 0.8980/85 and then 0.8950.

USD/CAD testing 1.1030 support again. Bids reported at 1.1020 and down to 1.10. To the topside, intraday stops building through 1.1075, good offers pre-1.11 (including option-related supply). NZD/USD at 0.8164. There is a Fonterra auction later today, so keep an eye on that.

Good luck!

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