Japanese Yen Climbs, Breaks USD 150; DXY Edges Up

Aussie, Kiwi, Euro, Slide; Bond Yields Drop, Stocks Rally 

Summary:

Japan’s Yen outperformed its peers, the US Dollar breaking below 150 to settle at 149.85 in late New York. Comments from a Bank of Japan official on a potential exit from its ultra-easy monetary policy boosted the Yen. 

The Dollar Index, (USD/DXY), which gauges the value of the Greenback against a basket of 6 major currencies, edged higher to 104.12 (103.85 previously).

New Zealand’s Kiwi (NZD/USD) dipped to 0.6087 from 0.6112 highs after the RBNZ held the Overnight Cash Rate at 5.5%, for the fifth straight time as expected. New Zealand’s central bank offered a less hawkish outlook on monetary policy than expected.

The Aussie Dollar (AUD/USD) tumbled to 0.6500 from 0.6540. While Australia’s Annual CPI held at 3.4% in January, it was below estimates at 3.6%. A weaker Kiwi also weighed on the Battler. 

The Euro (EUR/USD) slumped to 1.0807 against 1.0845 previously. Germany’s Annual Inflation fell in January to 2.5% from 2.9% in December, and lower than forecasts at 2.6%. 

Against the Swiss Franc, the US Dollar (USD/CHF) soared to 0.8840 from 0.8805. While Switzerland’s quarterly GDP beat estimates, February’s Leading Economic Indicators slumped. 

The US Dollar was mixed against the Asian and Emerging Market currencies. USD/CNH (Dollar-Offshore Chinese Yuan) dipped to 7.2075 from 7.2125 while USD/SGD (Dollar-Singapore Dollar) rallied to 1.3455 from 1.3440. 

Global bond yields dropped led by the US. The 10-year Treasury Yield fell 7 basis points to 4.25%. Germany’s 10-year Bund yield eased to 2.41% from 2.46%. The UK 10-year Gilt yield slid to 4.12% from 4.19% previously. 

Global Stocks edged higher. The US DOW was last at 38,880 (38,820) while the S&P 500 gained 0.4% to 5,080. Japan’s Nikkei edged higher to 39,197 (38,887). 

Economic data released yesterday saw US Core PCE Prices in January rose 0.4%, up from 0.1% previously, matching expectations. It was the sharpest rise in one year. 

Claims for Unemployment Benefits in the US climbed to 215K, up from 202K previously, and higher than estimates at 209K. US Personal Income in January rose 1% from -0.5% previously, beating expectations at 0.8%. 

• USD/JPY – the Dollar tumbled against the Japanese Yen to finish at 149.85 from 150.50 previously. In another volatile session, the USD/JPY pair soared to an overnight high at 150.66 before tumbling lower. The overnight low recorded was 149.21.
• NZD/USD – The Kiwi had its wings clipped by the RBNZ, falling to 0.6087 from 0.6112. While the RBNZ kept rates unchanged at 5.5%, it lowered forecasts for a peak in rates to 5.6% from 5.7%. Broad-based USD strength also weighed on the Flightless Bird.
• AUD/USD – the Aussie Battler tumbled against the overall stronger Greenback to 0.6500 from 0.6540. In another volatile session, the Australian Dollar tumbled to an overnight low at 0.6487 before steadying. The overnight high recorded was 0.6531.
• EUR/USD – the shared currency retreated to 1.0807 after climbing on Wednesday to 1.0845. The Euro traded to an overnight low at 1.0796. The overnight high recorded for the EUR/USD pair was 1.0856.

On the Lookout: 

We finish the week with a busy economic calendar. Australia kicks off with its February Judo Bank Manufacturing PMI (f/c 47.7 from 50.1 – ACY Finlogix). Japan follows with its January Unemployment Rate (f/c 2.4% from 2.4% - ACY Finlogix), and Jibun Bank February Manufacturing PMI (f/c 47.2 from 48 – ACY Finlogix). 

China follows with its NBS February Manufacturing PMI (f/c 49.1 from 49.2 – ACY Finlogix), Chinese NBS February Non-Manufacturing PMI (f/c 50.8 from 50.7 – ACY Finlogix). China also releases its February Caixin Manufacturing PMI (f/c 50.7 from 50.8 – ACY Finlogix). 

Markets will be focused on China’s Caixin data, which carries the most weight. Japan follows with its February Consumer Confidence (f/c 38.3 from 38 – ACY Finlogix).
 
Europe kick off with the UK Nationwide House Price Index (m/m f/c 0.3% from 0.7%; y/y f/c 0.7% from -0.2% - ACY Finlogix). Switzerland follows with its January Retail Sales (y/y f/c -0.2% from -0.8% - ACY Finlogix). France follows with its February Final Manufacturing PMI (f/c 46.8 from 43.1). 

Germany releases its February Final Manufacturing PMI (f/c 42.3 from 45.5 – ACY Finlogix). The Eurozone releases its February Manufacturing PMI (f/c 46.1 from 46.6 – ACY Finlogix). The UK follows with its UK S&P Global February Manufacturing PMI (f/c 47.1 from 47 – ACY Finlogix).

This is followed by the Eurozone February Inflation Rate (y/y f/c 2.5% from 2.8%; m/m f/c 0.5% from -0.4% - ACY Finlogix), Eurozone January Unemployment Rate (f/c 6.4% from 6.4% - ACY Finlogix).

North America kicks off with Canada’s S&P February Global Manufacturing PMI (f/c 48.7 from 48.3 – ACY Finlogix). The US rounds up today’s data releases with its US S&P February Final Manufacturing PMI (f/c 51.5 from 50.7 – ACY Finlogix). The US also releases US ISM February Manufacturing PMI (f/c 49.5 from 49.1) and finally the US University of Michigan Final February Consumer Sentiment (f/c 79.6 from 79 – ACY Finlogix). 

Trading Perspective: 

Thank God it’s Friday. We can expect Asian and European markets to consolidate the Dollar’s gains ahead of today’s data dump. 

The Dollar Index (DXY) settled at 104.12, up from 103.85. Look for immediate resistance at the 104.25 level to cap any gains today. Strong support for the Dollar Index (DXY) lies at 103.80 and 103.50. Today sees the release of Global and US PMIs, where most readings are expected to see improvements. Any disappointments, particularly on US data, will weigh on Dollar, lifting Rivals. 

• USD/JPY – expect another volatile day on the Dollar-Yen pair. Japanese officials are notorious for releasing comments on a Friday. Look for immediate support on the Greenback at 149.50 followed by 149.20 (overnight low). A break below 149.20 could see 148.80 and lower. On the topside, immediate resistance lies at 150.20, 150.50 and 150.80. Likely range today 149.00-151.00. Am neutral here today, trade the range.

• AUD/USD – the Aussie Battler fell against the overall stronger Greenback to 0.6500, down from 0.6540. On the day, look for immediate support at 0.6480 (overnight low traded was 0.6486). The next support level lies at 0.6450 and 0.6430. Immediate resistance can be found at 0.6530 (overnight high traded was 0.6531). The next resistance level lies at 0.6560. Look for the Aussie to consolidate in a likely range of 0.6470-0.6570. Prefer to buy Aussie on dips today.
• EUR/USD – the Euro retreated to finish at 1.0807 from 1.0845 previously. Look for immediate support today at 1.0790 (overnight low traded was 1.0796). The next support level lies at 1.0760. Immediate resistance can be found at 1.0830 followed by 1.0860. Look for the shared currency to trade in a likely range today of 1.0785-1.0885.
• NZD/USD – we focus on the Kiwi today following the RBNZ’s less than hawkish outlook on monetary policy. The Kiwi has immediate support today at 0.6075 (overnight low traded was 0.6077). The next support for the Kiwi can be found at 0.6045. On the day immediate resistance can be found at 0.6110 (overnight high traded was at 0.6112). The next resistance level lies at 0.6140. Look for the Kiwi to trade a likely range today of 0.6050-0.6150. Prefer to sell the Bird on strength.

Happy Friday and trading all. Have a top weekend ahead.

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