23 Mar 2015
What's next: Kiwi through the roof, ECB Draghi speech eyed
FXStreet (Bali) - The New Zealand Dollar was the clear top performer in Asia, followed by the Aussie, with the Euro, Pound and USD the main laggards.
Key headlines in Asia
IMM: USD longs cut sharply - Nomura
New Zealand Westpac consumer confidence on the rise in Q1 2015
Dominating themes from Friday Asia - centered on JPY, AUD, NZD
The USD started Asia on a weak tone, although most of the early losses were quickly evaporated, filling out the initial gaps. The main story grabbing the headiness, rather than being any indicator - the calendar was thin with only upbeat NZ consumer confidence published - was the major spike higher in the Kiwi complex, with big stops above 0.7620 (highest at 0.7661) in NZD/USD partially to blame for the overdone move, which sent pairs like the AUD/NZD a whisker away from 1.02. The surge in the Kiwi also allowed the AUD to break through 0.78 against the USD, posting its highest at 0.7834, a few pips short from last week's FOMC-led highs. USD/JPY remained under pressure, testing bids at 119.75
Heading into Monday Europe - centered on EUR, GBP
This week is full of events that will help determine the next directional move from the smart money community, having had enough time to digest last week's dovish FOMC outcome. In European hours, there aren't market-moving economic indicators to take note of, however, we have Merkel-Tsipras bilateral meetings.
According to Jacqui Douglas, Senior Global Strategist at TD Securities, "the early talks on the sidelines of the EU Leaders’ Summit last week seemed to go reasonably well, as Merkel has typically been a little more willing to compromise than some of her other German colleagues, so we could get some reasonably risk positive headlines, especially if Tsipras comes to the table with some more concrete proposals for structural reforms."
However, as RBS FX Strategists note, regarding the Greek situation: It remains quite fluid and discussions are expected to continue through this week. Citing an unnamed source Bloomberg reported the Eurogroup may meet on Greece this Friday after the EU Leader’s Summit concluded."
Later in the US session, other than top-tier US housing data and Fed speeches, the key event to monitor will be ECB President Draghi, who will testify in Brussels before the European Parliament's Economic and Monetary Affairs committee.
Douglas adds that "we may see more discussion here of the impact of QE, and perhaps on the big move lower in the EUR." Will Dragi sound slightly more upbeat? As RBS notes, "activity data in the EU have outperformed modest expectations of late, leading Draghi to say in his March press conference that risks to growth “remain on the downside but have diminished.”
Looking at the technical picture for the EUR and GBP vs USD, Valeria Bednarik, Chief Analyst at FXStreet, shared her views. With respect to EUR/USD, Valeria said that "there's not yet a confirmation that the pair has reached a bottom, with the need of some follow through above the 1.0865 area, should lead to a steady advance, up to 1.0900 first, and beyond this last towards 1.0945." As per GBP/USD, and in line with the potential for further broad-based USD weakness this week, Valeria notes that "there are limited chances of a downward acceleration, with an upward acceleration through the 1.5000 required to confirm additional advances."
Key headlines in Asia
IMM: USD longs cut sharply - Nomura
New Zealand Westpac consumer confidence on the rise in Q1 2015
Dominating themes from Friday Asia - centered on JPY, AUD, NZD
The USD started Asia on a weak tone, although most of the early losses were quickly evaporated, filling out the initial gaps. The main story grabbing the headiness, rather than being any indicator - the calendar was thin with only upbeat NZ consumer confidence published - was the major spike higher in the Kiwi complex, with big stops above 0.7620 (highest at 0.7661) in NZD/USD partially to blame for the overdone move, which sent pairs like the AUD/NZD a whisker away from 1.02. The surge in the Kiwi also allowed the AUD to break through 0.78 against the USD, posting its highest at 0.7834, a few pips short from last week's FOMC-led highs. USD/JPY remained under pressure, testing bids at 119.75
Heading into Monday Europe - centered on EUR, GBP
This week is full of events that will help determine the next directional move from the smart money community, having had enough time to digest last week's dovish FOMC outcome. In European hours, there aren't market-moving economic indicators to take note of, however, we have Merkel-Tsipras bilateral meetings.
According to Jacqui Douglas, Senior Global Strategist at TD Securities, "the early talks on the sidelines of the EU Leaders’ Summit last week seemed to go reasonably well, as Merkel has typically been a little more willing to compromise than some of her other German colleagues, so we could get some reasonably risk positive headlines, especially if Tsipras comes to the table with some more concrete proposals for structural reforms."
However, as RBS FX Strategists note, regarding the Greek situation: It remains quite fluid and discussions are expected to continue through this week. Citing an unnamed source Bloomberg reported the Eurogroup may meet on Greece this Friday after the EU Leader’s Summit concluded."
Later in the US session, other than top-tier US housing data and Fed speeches, the key event to monitor will be ECB President Draghi, who will testify in Brussels before the European Parliament's Economic and Monetary Affairs committee.
Douglas adds that "we may see more discussion here of the impact of QE, and perhaps on the big move lower in the EUR." Will Dragi sound slightly more upbeat? As RBS notes, "activity data in the EU have outperformed modest expectations of late, leading Draghi to say in his March press conference that risks to growth “remain on the downside but have diminished.”
Looking at the technical picture for the EUR and GBP vs USD, Valeria Bednarik, Chief Analyst at FXStreet, shared her views. With respect to EUR/USD, Valeria said that "there's not yet a confirmation that the pair has reached a bottom, with the need of some follow through above the 1.0865 area, should lead to a steady advance, up to 1.0900 first, and beyond this last towards 1.0945." As per GBP/USD, and in line with the potential for further broad-based USD weakness this week, Valeria notes that "there are limited chances of a downward acceleration, with an upward acceleration through the 1.5000 required to confirm additional advances."