• Options expire 10-am New York/15.00GMT - big strikes often attract

• EUR/USD: 1.0740 (230M), 1.0845-55 (840M). EUR/GBP: 0.8325-35 (290M)

• USD/JPY: 112.00 (875M). AUD/JPY: 73.40 (306M). USD/CHF: 0.9850 (410M)

• EUR/JPY: 118.00 (1.1B), 119.15 (284M), 120.00 (360M), 121.00 (380M)

• USD/CAD: 1.3150 (520M), 1.3250-55 (921M), 1.3270 (370M), 1.3280-85 (568M)

• AUD/USD: 0.6670-80 (641M), 0.6700 (364M)

• NZD/USD: 0.6440 (245M), 0.6600 (516M). Options Maturity Calendar: TGM2369

• +0.1% in a 2.2880-1.2895 range, with light flow, focus on Asian currencies

• POLL - goods trade deal likely, 'hard' EU exit at 25% from 20% nL8N2AJ3ET

• Flash UK PMI's for February significant event risk, see chart for poll

• Lower 21 day Bolli a base yesterday - comes in as 1.2840 support today

• Charts - momentum studies, 21 day Bolli bands, 10 & 21 DMAs edge lower

• Bearish setup targets support at 1.2822, the range base in late November

• 1.2849 NY low and 1.2925 London post data bounce, support-resistance

CIBC Research discusses CAD outlook and now expects USD/CAD to trade around 1.32 by end of Q1 before moving towards 1.34 by end of Q2.

"If fears abate and sentiment eventually improves in the next few months, oil prices should rebound and the loonie will likely be dragged along for the ride. As such, the C$ should end Q1 slightly stronger than its current level, seeing USDCAD hover around 1.32. However, that rebound will likely be short-lived, as softness in GDP growth continues and strength in the labour market wanes accordingly," CIBC notes. 

"Moreover, that will likely be compounded by the repercussions of the coronavirus on global supply chains and production, and potentially current rail disruptions. That could be enough reason to see the Bank of Canada cut interest rates by 25 bps in April. Given that such a move is not currently priced into markets, that surprise would take a bite out of shortterm rates and send the currency weaker, with USDCAD reaching 1.34 by the end of Q2," CIBC adds.  

• EUR/USD opened 1.0784 and traded in a 1.0784/93 in Asia

• Talk of option barrier at 1.0775 discouraged fresh selling

• Asia turned risk-off late morning, but had no impact in EUR/USD

• Resistance at 10-day MA at 1.0838 and break could spark small correction

• Trend indicators still pointing lower, as USD strength broadens

• Risk assets turned decidedly negative on coronavirus and global growth fears

• No single news item behind risk selling, as was the case during US session

• AUD/USD below 0.6600 - trading down to 0.6592 for a fresh 11-year low

• S&P futures down 0.37% while AXJ equity index down 0.80%

• There isn't any technical support in the AUD/USD within 200 pips

  
  

  
  

• AUD/USD better bid this morning after yesterday's 1.0% tumble

• Talk of buyers ahead of 0.6600 discouraging fresh selling

• Sentiment bearish as strong USD, coronavirus fears and domestic data weigh

• Sellers tipped around 0.6650 with resistance at former trend low at 0.6657

  
  

  
  

• GBP/USD off new 2020 low, ends NY 1.2875, NY range 1.2888-49 nL1N2AK17V

• Broad USD bid sinks pair; EU-UK trade, upcoming budget uncertainties loom

• UK retail therapy fails Brexit-beleaguered sterling nL1N2AK0RP

• Below 2020 low 1.2849 support at 1.2769 Nov 8 low, 1.2694 200-DMA

• Bears in control sub-55DMA 1.3062; bulls in control abv 1.3210, Jan 31 high

• EUR/GBP +0.24% to 0.8382, Thurs range 0.8415-0.8358; EUR buying vs GBP, JPY retards EUR decline

Citi discusses Gold prices and notes a setup in options markets reminiscent to 2010/2011 when Gold last traded to $1,800-1,900/oz before declining through 2015.

"Cit analysts point to the set-up in Gold options markets and call skew as being reminiscent of 2010/2011, when Gold last traded to $1,800-1,900/oz. Meanwhile, gold net long positioning—when normalized for the expanded asset base—is at only half the levels of the 2011 peak. Slowing physical demand in Asia, especially jewelry sales, which still take down ~45% of annual world supply, is a bearish risk for bullion," Citi notes. 

"But investor inflows and central bank gold buying are significant buffers for gold consumption and more importantly, the gains in Gold come even as the USD continues to strengthen (breaking the inverse correlation between Gold and USD)," Citi adds. 

• Pair heavy early but filled gap, 1.0775 barrier drive a bounce nL1N2AK0KH

• EUR/JPY rally lifts EUR/USD near 1.0820, daily techs warn shortsnL1N2AK0SR

• Sellers take over again as EUR/JPY gains erode, pair near 1.0795 late

• Meager bounce after gap filled should concern EUR/USD longs nL1N2AK0YS

• Daily doji forms, investors indecisive ahead of key PMI data on Friday

• If PMI is downbeat EUR/USD bears are likely to take greater control

The two-day yen-selling spree ran out of steam after coronavirus news took a less benign turn. Bidding up USD/JPY also became a less attractive near-term prospect as it approached its 2019 peak, charts flashed overbought signals and global PMIs loomed on Friday to update markets on the impact of COVID-19.
Philly Fed data beat nicely, but was an afterthought.
Profit-taking halted EUR/USD's slide -- despite indications of post-Brexit EU budgetary infighting -- after today's drop to a near-three-year low of 1.0778 filled a chart gap from 2017.
Otherwise, the dollar extended its broader breakout and took cable to new 2020 lows.
AUD’s jobless rate miss, USD/CNY’s 0.36% rise to new 2020 highs, a haircut for holders of Argentine debt and falling stocks kept commodity and emerging markets currencies defensive. Oil gained 1%, but more on supply disruption fears than hopes for rebounding global demand.
Copper and silver listed, while safe-haven gold gained.

Credit Agricole CIB Research discusses AUD outlook in light of the RBA policy trajectory after this week's jobs report. 

"AUD/USD reached a 11-year low during the Asian session on the back of USD strength as well as a jump in Australia’s unemployment rate from 5.1% to 5.3%. Australia’s underemployment rate (unemployment as well as people wanting to work more hours) also jumped from 8.3% to 8.6% and to a 2-year high," CACIB notes. 

"Currently, the trend in the unemployment rate is flat at 5.2%, but if the unemployment rate were higher again next month, the April RBA meeting would definitely be live for a rate cut. The market is currently pricing that prospect at a bit over a 20% chance. Leading indicators for the labour market continue to point to a further slowing in employment growth and a higher unemployment rate. Indeed, high-indebted Australian households will continue to participate in the labour force in record numbers and go in search of many more jobs than there are available. So, we continue to expect the RBA to start cutting rates again in the coming months and further AUD weakness," CACIB adds. 

British retail sales surpassed forecasts, adding to a string of expectations-beating data, but the sterling outlook is once again succumbing to EU-UK trade uncertainties.
GBP/USD remains offered, trading at 1.2875 slightly above new 2020 lows at 1.2849.
Traders are focused on a potential impasse over EU supervision of so-called level playing field issues, after UK's David Frost said giving up control on this would contradict the point of Brexit nL8N2AH4IE.
EU-UK trade and China virus uncertainties could trump incremental UK data beats and keep the BoE on dovish hold.
BOEWATCH on Eikon shows a near 80% chance for a UK rate cut by December 2020 and a fairly flat short-sterling curve over the next few years.
While the U.S. Eurodollar curve shows nearly two Fed cuts by March 2021, which may benefit GBP/USD, no-deal Brexit fears and the large U.S. rate advantage should mute sterling gains.
Bulls need to regain the 55-DMA at 1.3062, but remain at a disadvantage below the Jan. 31 high at 1.3210.
Bears remain in control, eyeing support at 1.2822, the Nov. 22 low, and 1.2769, the Nov.
8 low.
More firm support comes at 1.2694, the 200-DMA.

TD Research discusses the current FX market conditions and notes that USD/JPY is getting expensive on the short-term valuation metrics. 

"The currency market is a constantly evolving machine that captures and processes information at rapid clips. That's mostly the reason why the main drivers and key market factors sit in a state of flux. Still, throughout the Trump and Brexit era, the one common theme has been the relative focus on growth and equities..Since the trade wars, relative equity performance has dovetailed more closely with broad currency movements than rate differentials. That's partly a function of Trump's awkward macro/micro policy mix," TD notes. 

"With USDJPY trading at a 3.5% to high-frequency fair value (HFFV), the rally sits on thin ice. We note that the USD is still closely watching relative equity performance. We dust-off our positioning tracker, highlighting that nearly all major global equity benchmarks look overbought. MSCI US suffers from a mix of frothy valuations and a well-populated long trade," TD adds. 

• AU January unemployment rate to 5.3% from 5.1% nL4N2AK0BB

• Follows Q2 wage data showing stagnant wage growth nL4N2AI517

• AU yields collapse, AU-US spreads widen, AUD sold broadly, AUD/USD sinks

• AUD/USD consolidation ends with break to new trend low, 0.6620 neared

• Techs are bearish, 10-DMA caps, RSIs imply bear momentum intact

• 0.6600 barrier likely, will likely be only a speed bump to bears

• Diverging US-AU econ data could lead to sub-0.6300 levels nL1N2AJ0TO

Japanese investors, led by Japan's Government Pension Investment Fund (GPIF), seem to have stepped up USD/JPY buying, causing it to explode higher.
A run of dire economic news out of Japan has stirred talk the country is already in recession and that Japanese funds were dumping local assets in favour of U.S. shares and gold nL8N2AK324.
In times of improving risk appetite, funds usually flow out of the safe-haven yen.
On Wednesday, USD/JPY saw its biggest daily gain since Aug.
13 2019, breaking through to close above the major 110.53 Fibonacci level, a 76.4% retrace of the 112.40 to 104.46 (April to August 2019) drop.
FX traders wanting to insure against a USD/JPY rise could buy a two-week 112.00 USD call option at a cost of 50 pips, priced with spot at 112.00.
Profit potential is unlimited if spot is above the 112.50 break-even point at the Mar.
5 expiry.
Losses are limited to the 50-pip premium paid.
Related nL1N2A50AH

EUR/USD will probably keep falling until speculators build a large bet on its decline.
At the moment, speculators are short and they have undoubtedly sold more euros since CFTC data was last compiled on Feb.
11.
EUR/USD has since dropped more than 1%.
But it's unlikely traders have built a market-stopping bet since then or that they will do so for some time.
The record EUR/USD short held when EUR/USD broke down to current levels in 2015 was roughly three times greater than that held on Feb.
11.
Volatility today is much lower than it was when that record short was established.
Low vols should encourage risk taking.
Current conditions may lead to the establishment of another record short, but to get there the amount of fresh selling will weigh on EUR/USD.
Low vols also mean interest rates matter more, and the rate gap weighing on EUR/USD is much bigger than it was in 2015.
Related comments nL1N2AK06KnL1N2AK06GnL1N2AK06Q

• Cable hits 1.2885 after early Ldn break below 1.2900 (1.2901 was Asia low)

• 1.2885 is lowest level since Feb 10 -- 1.2873 was 10-week low that day

• USD continues to benefit from steady, optimistic Fed nL1N2AJ10D

• EU-UK trade friction fears are weighing on the pound nL8N2AJ2VQ

• 1.2908 (Wednesday's low) is now a GBP/USD resistance level

• UK ONS Jan retail sales data due 0930GMT, +0.7% f/c vs -0.6% in Dec

• Options expire 10-am New York/15.00GMT - big strikes often attract

• EUR/USD: 1.0750 (200M), 1.0775 (306M), 1.0845-50 (416M), 1.0870-75 (517M)

• USD/JPY: 110.00 (2.8B). 111.00 (365M). AUD/JPY: 74.00 (380M)

• GBP/USD: 1.2980 (232M), 1.3000 (292M), 1.3020 (228M)

• EUR/GBP: 0.8350 (275M), 0.8400 (511M), 0.8430 (640M). EUR/NOK: 10.00 (240M)

• AUD/USD: 0.6700 (2.1B), 0.6750 (481M). NZD/USD: 0.6450 (300M), 0.6595 (306M)

• USD/CAD: 1.3150 (340M), 1.3170 (400M), 1.3200 (256M), 1.3295 (654M)

• Options Maturity Calendar: TGM2369

• Tenkan and kijun lines remain positive aligned = bullish structure

• Overall bullish bias for the 2019 112.40 peak. Our bid raised to 110.90

• Wednesday saw biggest white candle (close above open) since August 13 2019

• Spot broke and closed well above the major 110.53 Fibonacci level

• 110.53 is 76.4% of the 112.40 to 104.46 (April to August) drop

• USD/JPY has seen a 111.12-111.49​ range, according to prices on the EBS

• EUR/JPY sees 120.10​​-120.40. Prev nL1N2AJ03Z. USD/JPY Trader TGM2336

• Touch softer in a 1.2912-1.2928 range, but with solid cross related interest

• UK employers offer lowest pay awards since Dec 2018 - XpertHR nL8N2AJ5YL

• Jan retail sales key to gauge post election consumer strength - see chart

• Yesterday's dip turned daily charts from neutral to a modest negative setup

• Momentum studies crest, 21 day Bolli bands, 5, 10 & 21 DMAs edge lower

• 1.2873 2020 low supports - 1.2952, 38.2% of yesterday's fall resistance

• 1.2855 lower 21 day Bolli likely resilient, test an opportunity for bulls