Europe Round Up: Dollar off 13-year high vs yen, Euro recovers on higher Bund yields, German data - June 8th, 2015

Market Roundup

• USD recovers on White House denial Obama said strong USD a problem.
  
  
• USD/JPY 125.60 to 124.90 Europe drop, recovers to 125.55 on denial.
  
  
• EUR/USD plays 1.1087 to 1.1178 in Europe, flat/tight in Asia.
  
  
• UK's Cameron, tells ministers, back me on EU referendum or quit.
  
  
• Turkish Central Bank cuts USD deposit rate to 3.5% from 4.0%.
  
  
• CBT cuts deposit rate to 1.5% from 2.0%.
  
  
• G7 leaders urge tough line on Russia at Alpine summit.
  
  
• G7 Obama and Merkel agree Greece must reform.
  
  
• Germany April Industrial Output, +0.9% m/m vs -0.5% previous, +0.5% expected.
  
  
• Germany April Trade Balance +E22.3bln vs 19.3bln previous, 19.4bln expected.
  
  
• Euro Zone June Sentix index 17.1 vs 19.6 previous, 18.7 expected.
  
  
• Japan PM spokesman - Economy returning to growth orbit.
  
  
• Japan Mimura - More JPY declines undesirable for small firms.
  
  
• China May trade surplus $59.49 bln, $44.95 bln eyed, expected -2.5% y/y imp -17.6%.
  
  
• IMF Furusawa - Risks from Fed rate hikes.
  
  
• IMF FX intervention/cap flow management could be used.
  
  
• MoF May flow data - Japanese buy net Y629.0bn foreign stocks, tln bonds.

Economic Data Ahead

• (0815 ET/1215 GMT) Canada May House Starts consensus 185k, Previous 181.8k.
  
  
• (0830 ET/1230 GMT) Canada April building permits consensus -6.0%, Previous +11.6%.
  
  
• (1000 ET/1400 GMT) Labour Market Conditions Index (May) (previous -1.9).
  
  
• (1000 ET/1400 GMT) Employment Trends Index (Jun) (previous 128.2).

Key Events Ahead

• (1100 ET/1500 GMT) Former Fed Chair Volcker, on State Budgeting.
  
  
• (1145 ET/1545 GMT) Fed Trade operation 30-year Ginnie Mae max $775mln.

FX Recap

EUR/USD is supported above 1.1100 levels and currently trading at 1.1125 levels. It has made intraday high at 1.1177 and low at 1.1083 levels. The euro rose partly on rising Bund yields and better-than-expected German industrial output data. The euro changed hands at $1.1156, up 0.4 percent on the day. The 10-yr yields on bund now stands at 0.856, recording 0.47% gain on the day. Initial support is seen at 1.1010 and resistance is seen around 1.1181 levels. Option expiries are at 1.1000 (904M), 1.1100 (1.5BLN), 1.1200 (2.4BLN).

USD/JPY is supported above 125.00 levels and posted a high of 125.66 levels. It has made intraday low at 124.98 and currently trading at 125.30 levels. The dollar edged down 0.4 pct at 125.15 yen, having hit a 13-year high of 125.86 yen on Friday after a robust U.S. jobs report. The pair trades in red in Asia largely on the back of better than expected Japan's revised growth forecasts for the first quarter which provided the much needed impetus to the Japanese yen. Japan's economy grew 1.0% in the January-March period, according to revised data from Japan's Cabinet Office, having initially reported growth of 0.6% Q1 2015.  Near term resistance is seen at 125.86 (June 5 high) and support is seen at 125.29 levels. Option expiries are at 124.00 (900M), 125.00 (1.1BLN), 125.25 (1.1BLN), 126.75 (640M).

GBP/USD is supported below $1.5300 levels. It made an intraday high at 1.5304 and low at 1.5220 levels. Pair is currently trading at 1.5230 levels. Pair is under strong selling pressure, following the release of an economic review from the Moody's rating agency, saying that the UK economic growth will likely remain strong in the upcoming years, although the strong debt burden will unlikely drop before 2017. The pair fell down to 1.5222 following the news, from where it's currently bouncing. Initial support is seen at 1.5189 and resistance is seen around 1.5368 levels. Option expiries are at 1.4900 (1.2BLN), 1.5150 (300M), 1.5200 (209M), 1.5415 (1BLN).

USD/CHF is supported just above 0.9400 levels and trading at 0.9404 levels and made intraday low at 0.9366 and high at 0.9428 levels. In the absence of any macro economic data from Switzerland, market will eye on US data due later in a day. Near term support is seen at 0.9296 levels and resistance is seen at 0.9500 levels. Option expiry is at 0.9475 (680M).

AUD/USD is supported above 0.7600 levels and trading at 0.7636 levels. It has made intraday high at 0.7652 levels and low at 0.7602 levels. Most Australian banks will be closed in observance of the Queen's Birthday. Today in Asian trading session, China released trade balance data with positive numbers but movement was very less on AUD parity. Initial support is seen at 0.7568 and resistance at 0.7739 levels. Option Expiries are at 0.7500 (400M), 0.7700-05 (280M).