FX Daily Planet: Sydney/Asia Open

FX Daily Planet: Sydney/Asia Open

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The FX market remained quiet with the US market closed for the Presidents’ day holiday. As expected, only noteworthy event overnight, namely the Euro Area Financial Minister’s meeting, did not deliver any fresh details positive nor negative on the Greek supportive measure. While we still have Ecofin meeting scheduled for today, the market should remain oblivious to finance ministers’ reiteration of their support for Greek that lack details. In FX vol space, as front-end vols were heavily sold-off, vol curves steepened.

Moves in the Asian session should remain subdued with limited data releases and players as some Asian countries are still away for the Lunar New Year holiday. However, the market may resume its usual pace heading into the European and US session as we receive few important releases including Jan CPI from the UK and Dec TIC long-term net flows, Feb Empire state mfg. survey and Feb NAHB HPI from the US.

Lastly, the largest US treasury coupon and principal payments were due yesterday ($70.3bn in total, comprising $21.9bn in coupons and $48.4bn in principal payments. As yesterday was a US bank holiday, fund will be paid today). Some coupon payments will likely be taken back by foreign investors, leading to USD sales with foreigners accounting of 30% of Treasury holdings, which transfers to $6.4bn coupon payment possibly going to overseas. However, as central banks account for 2/3 of overall foreign holdings, which are likely to reinvest rather than repatriate, the overall impact on USD should be limited.

Overnight news

EUR: Eurogroup Chairman Juncker said, “We’ll check in March if Greece is on that track and if Greece wouldn’t be on that track, additional measures would be requested”.

EUR: Greek Finance Minister Papaconstantinou said “We are basically trying to change the course of the Titanic”, “People think we are in a terrible mess. And we are.”

EUR: EU economic and monetary affairs commissioner Rehn said “There’s a clear case for additional measures in line with the statement of the European Council”, “We expect that in due course the Greek government will take the necessary additional measures to reach its target (of reducing the budget deficit by 4% of GDP this year)”

EUR: ECB Governing Council Member Orphanides claimed default of Euro Area sovereign to be “unthinkable” saying, “I view the statement by the Heads of States of the European Union” issued last week “as very positive. The ECB expects and trusts that the Greek government will take all the necessary steps to get its public finances in order.”

EUR: EU commissioner Almunia said, “It’s needed for Greece and for the good functioning of the euro area to have a clear set of recommendations and a clear set of commitments”, “The recommendations are based on the ideas, objectives, targets, instruments included in the proposal adopted and sent to Brussels.”

USD: The latest IMM data showed that aggregate USD long positions increased to $77bn with EUR shorts vs USD further expanding to $9.7bn, marking a record high in EUR shorts.

Today’s watchlist (all times GMT; +11hrs for Sydney, +9hrs for Tokyo, -5hrs for New York)

NZD: 4Q PPI input (%q/q, sa) @21:45 (Cons: 0.5%) ; 4Q PPI output (%q/q, sa) @21:45 (Cons: 0.4%)

AUD: RBA minutes for February meeting @00:30; Jan NAB business confidence (%bal, sa) @00:30

Overnight price action

FX: There were no major moves in G-10 currencies.

FX vol: Front-end vols were sold-off with vol curves steepening

Commodities: Oil down 0.1%. Gold up 1.0%

Bonds: market closed for public holiday

Equities: market closed for public holiday

Research from the region you may have missed

FX Markets Weekly: Policy remains too murky – stay long USD

https://mm.jpmorgan.com/servlet/UserDocsHelperServlet?action=openpdf&docId=GPS-374486-0

The JPMorgan View: Through the fog, things are looking up

https://mm.jpmorgan.com/servlet/UserDocsHelperServlet?action=openpdf&docId=GPS-374503-0

Global Data Watch: “Have a carrot” said the mother bunny

https://mm.jpmorgan.com/servlet/UserDocsHelperServlet?action=openpdf&docId=GPS-374617-0

ENDS

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