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TUESDAY, SEPTEMBER 20, 2016

THOMSON REUTERS/HKEX RMB CURRENCY INDICES (RXY)

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THINNING MARKET AHEAD BOJ/FED: USD SOFT
Market Briefs
USD/JPY -0.14%, EUR/USD +0.11%, GBP/USD -0.15%
DXY -0.05%, DAX + 0.5%, Brent -0.4%, Iron +1.9%
CH Aug Trade Bal. CHF 3025 mln vs 2930 mln prev
DE Aug Producer Prices -1.6% y/y vs -2.0% prev, -1.6% exp
Swiss Govt sees 2016 GDP at 1.5% vs 1.4% previous estimate
RBA minutes dont shed any fresh light on the CBs intentions
BoJ may rattle global bond market as Fed seen on hold
BoJ may shift policy focus to rates as monetary firepower wanes Rtrs
Japanese easing policy almost ready for face-lift Nikkei
Japan FinMin Aso Specific monetary policy steps BoJ prerogative Rtrs
Japan PM Abe sees TPP jump-starting Japan's growth Nikkei
Moodys Probability of downgrade for SA less than 50%
China Prem Li Yuan to remain basically stable at reasonable-balanced lvl
Li no basis for sustained devaluation Xinhua
AU coal prices hit fresh high as Asia power demand soars Rtrs
Looking Ahead - Economic Data (GMT)
12:30 Housing Starts Aug mkt 1.190 mln, prev 1.211 mln
12:30 Building Permits Aug mkt 1.170 mln, prev 1.144 mln
12:30 Philly Fed NBOS Sep prev 19.5
12:55 Redbook Wkly Same-Store Sales Idx prev +0.4% y/y
n/a Atlanta Fed GDP Now Q3 prev 3.0% q/q
Looking Ahead - Events, Other Releases (GMT)
16.35 BoCs Governor Poloz speaking in Quebec
17:00 FOMC two-day meeting begins
Currency Summaries
EUR/USD
EUR/USD jumps from 1.1175 area to 1.1214 in early Europe
Move flow driven with no news or data to support it

U.S. FX MARKETS OPEN

High matches 21-DMA & just head hourly Ichimoku cloud top @ 1.1217
200-HMA 1.1224. Pair circa 1.1230 before Fri's USD boosting CPI
Gradual drift lower as vast bulk of traders sit on hands ahead FOMC
200-DMA @ 1.1148 continues to influence dip buyers
USD/JPY
USD/JPY found support @101.54 in early London
102.07 was the peak in Asia, heavy above 102.00
Corporate bids and semi-official names said near the lows
101.52 pivot point underpins in the near-term
Post BoJ we expect a lower USD/JPY, most likely reaction will be to buy yen
EUR/CHF
EUR/CHF continues to pivot around the 200DMA
Much of Mondays 1.0925-1.0960 rally cancelled out
Technicals giving little guidance: Neutral at best
Cross plays 1.0931-1.0960
USD/CHF also heavy and falls sharply from the 200DMA at 0.9808
Failure to close above the l/t average Frid/Mon leads to sell off
Swiss govt revises up its 2016 GDP estimate to 1.5% vs 1.4% prev
Swiss Aug trade surplus increases to CHF 3.025 bln vs 2.8 bln prev
Chart: 1) http://reut.rs/2d0FFdT 2) http://reut.rs/2cDYVej
GBP/USD
GBP/USD has fallen to a 5wk low of 1.2978 amid ongoing Brexit concerns
The harder the Brexit, the worse for the pound is the perception
1.3065 was early Europe high, before EUR/GBP rose thru 0.86
Large EUR buy order tipped as catalyst for cross rise to 0.8616
0.8616 = 4wk high. 0.8567 was early Europe low
USD/CAD
USD/CAD traded a 33 pip range thru the European am, 1.3190-1.3223
Stops are tipped above 1.3250/55 (1.3248 was last Fridays 7wk high)
1.3255 was late July 4mth high. 1.3257 = 200DMA
Poloz slated to speak in Quebec at 1235 ET
AUD/USD
AUD/USD scaled an intra-day peak of 0.7565 during the European am
7530-0.7554 was Asia range. Offers are tipped around 0.7573
0.7573 was Mondays 10-day high. 0.7578 = 55DMA
NZD/USD
NZD/USD rose to a 1wk high of 0.7356 during the European am
0.7294-0.7325 was Asia range. Fonterra auction result due circa 10am ET
Relatively high NZ interest rates are key source of support for NZ
OPTIONS
USD/JPY O/n is around 36 vols or 153 pips break even over BoJ
EUR/USD Thursday vol currently 12.5 or 80 pips over FOMC
Low realised cap demand for most G10 implied vols
Cable vols below realised, but market long via exotics/binaries
AUD/USD needs sub .7500 setback to reignite vol buying

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U.S. FX MARKETS OPEN

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