Forex Morning Report: Comments, Positions, News, & Charts

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Morning Report: Comments, Positions, News, & Charts

15 July 2014/7:43 a.m. ET

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Market Comments

Well, we have a rally in GBP/USD this morning, triggered by higher than expected inflation data out of the UK; traders now expect the Bank of England to move sooner on rates rather than later.  New high in order or a test of the old one—watching still! 

TOKYO, July 15 (Reuters) - The Bank of Japan's governor voiced confidence on Tuesday that inflation would hold above 1 percent even when a boost from energy costs fades, attempting to convince sceptics the economy was recovering and there was no threat of a return to deflation.

I am not sure why the BOJ is so confident given the global growth backdrop and the stagnation in Japanese exports.  Weren’t yen bears expecting more from the BOJ, i.e. more dovish talk on the currency? We shall see….There was very little action from the yen on this news.  $-yen continues to grind lower; it is a tough trade to stay with given the deep corrections to the lower lows.   Today USD/JPY is higher in minor wave (b), and has tested the 50% retracement (101.65) of what I have labeled minor wave (a).  I am still targeting down to the 99.42 target daily basis.  So if we see risk off again in Japanese stocks (USD/JPY and Nikkei index are still tightly correlated) it could be a good opportunity for another short trade.  In addition, the positioning in Japanese yen is still extremely bearish among your average punter.  Here are the latest long/short open interest numbers from the CME futures for JPY-USD:

Bulls: 13%   Bears: 87% …using this as a contrary indicator suggests still plenty of fire power available to push JPY-USD higher, i.e. USD/JPY lower…

USD/JPY 360-min:

Positions

 

Economic Calendar (Dukascopy) & Key Events & News:

 Fed’s Yellen speaks at 2:00 p.m. ET today.

Market Briefs (IFR Markets)

• BoJ kept monetary policy steady, leaves most CPI-econ projections as is
• BoJ FY 2014/15 growth slightly less at +1%, April forecast +1.1%
• Kuroda - no reason for yen rise if Fed raises rates while BoJ maintains QQE - Reuters
• China Trade Min - H2 export growth to improve remarkably over H1 - Reuters
• China Trade Min - to achieve 7.5% trade growth target - Reuters
• China Trade Min - outbound investment likely +10%, FDI to rise – Reuters
• China June Money supply M2 +14.7% y/y, end-June FX reserves $3.99 tln
• China banks suspend controversial yuan remittance scheme – WSJ
• New Zealand registers China’s CCB as a bank - Reuters
RBA Jul 1 minutes - sets steady course for rates amid economy doubts – Reuters
• RBA minutes - AUD high historically, NZD & CAD also high - Reuters
• FSB recommends charges for FX fixings in deep reform – Reuters
German Jul ZEW Economic sentiment 27.1 vs 29.8 prev, 28.0 exp
• German Jul ZEW Current conditions 61.8 vs 67.7 prev, 67.0 exp
• Juncker calls for 300bn euro investment programme -Reuters
• Banco Espirito Santo shares fell 20% to record low Tues am CET – Reuters
• Swiss June Producer import prices, -0.8% y/y vs -0.8%, -0.8% exp
• Carney says we do not know when rate rises will start, driven by data – Reuters
• UK PM Cameron appoints Philip Hammond as foreign minister –Reuters
• UK Conservatives 34% vs 33% for Labour – Guardian/ICM poll
UK June CPI 1.9% y/y vs 1.5% prev, 1.6%exp
• UK June RPI 2.6% y/y vs 2.4% prev, 2.5%exp
• UK June RPIX 2.7% y/y vs 2.5% prev, 2.5%exp
• UK June Core output 1.0% y/y vs 1.0% prev, 1.0% exp
• Sterling ‘will be hit if Scotland votes yes’ (to independence) – Daily Telegraph
 
Looking Ahead - Economic Data (GMT)
• 11:45 US ICSC/GS chain store sales Index wk Jul 12, prev +5.2% y/y
• 12:30 US Empire state manufacturing Jul, mkt +18.00, prev +19.28
• 12:30 US Import prices Jun, mkt +0.3% m/m, prev +0.1% m/m
• 12:30 US Retail sales Jun, mkt +0.6% m/m, prev +0.3% m/m
• 12:30 US -- Retail sales ex-Autos Jun, mkt +0.5% m/m, prev +0.1% m/m
• 12:30 US -- Retail sales Control Jun, mkt +0.4% m/m, prev 0.0% m/m
• 12:55 US Redbook same store sales Index wk Jul 12, prev +6.0% y/y
• 14:00 US Business inventories May, mkt +0.5% m/m, prev +0.6% m/m
 
Looking Ahead - Events, Other Releases (GMT)
• 14:00 Fed Chair Yellen delivers semi-annual MP testimony to Senate Banking Cmte

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