Intraday Market Thoughts

A Dose of Fright Boosts Yen

by Admin
Jan 5, 2015 22:49

Monday was a classic case of risk aversion as the yen climbed, stocks dropped and bonds rallied. The latest CFTC data shows a growing appetite to sell yen. China's services PMI and Aussie trade data are due up next.  The first Premium CADJPY short entry at 103.30s hit the final 102.00  target last night, while the 2nd short hit its final target today for a total of 320 pips. A new edition of the Premium trades has been deferred to Tuesday.

There was no clear catalyst for the moves Monday as new-year flows dominate. In Asian trading, the dollar rally dominated but FX took a back seat to stock market and bond volatility. The S&P 500 plunged 1.8% and European stock markets fell upwards of 3%. US 30-year Treasury yields fell 9 basis points to 2.59% -- the lowest since 2012.

An interesting divergence took place in USD/JPY as the day worse on. The stock market and yields continued to carve out new lows but after touching 119.34 in early trading, USD/JPY rebounded 30 pips and never retested the lows. That's a positive sign and CFTC positioning data (see below) showed yen shorts aren't overly crowded.

Looking to Asia-Pacific trading, the Australian dollar will be in focus for two reasons. The first comes at 0030 GMT when Aussie trade balance is due. The consensus is for a A$1.6 deficit in November, rose than A$1.3B a month earlier. At 0145 GMT, it's the HSBC China services PMI. There is no consensus but the prior reading was 53.0. Neither release is major report but AUD/USD remains close to 5-year lows and any headline could tip it lower.

Commitments of Traders

Speculative net futures trader positions as of the close on Dec 23. Net short denoted by - long by +.

  • EUR -152K vs -147K prior
  • JPY -96K vs -94K prior
  • GBP -19K vs -15K prior
  • AUD -41K vs -39K prior
  • CAD -14K vs -12K prior
  • CHF -17K vs -17K prior

Act Exp Prev GMT
Markit PMI Composite (DEC)
56.1 Jan 06 14:45
Markit Services PMI (DEC)
56.2 Jan 06 14:45
ISM Non-Manufacturing PMI (DEC)
58.2 59.3 Jan 06 15:00
53 Jan 06 1:45
Eurozone Markit PMI Composite (DEC)
51.1 Jan 06 9:00
Eurozone Markit Services PMI (DEC)
51.9 51.1 Jan 06 9:00
Trade Balance (NOV)
-1,323M Jan 06 0:30

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