There seems to be a bit of a growing consensus in the client base for a CAD catch up trade to the likes of EUR, AUD, NZD. don’t see the fundamental argument to be bullish Canada but I am bearish the USD and technically a move below 1.3200 would be significant and should spark momentum selling. 1.2960/00 would be a reasonable target for shorts, with resistance...
We eventually got the squeeze back up to 66c in NZDUSD that I was expecting after the RBNZ’s disappointment. But it actually just came at the whim of the bid tone in EURUSD which, having held 1.17, seems like a trend that one doesn’t want to get in the way of, in the form of USD longs anywhere. Ironically, the RBNZ shelfing foreign asset purchases and exchange...
Positive risk sentiment and a recovery in the euro has taken USDCHF back towards recent lows, with support sitting at 0.9050. The 0.92 level mentioned before has held fairly well, and any rallies back to this level should look to be sold into given the weakness in the dollar. EURCHF meanwhile remains fairly range-bound, struggling to find momentum on topside moves.
G10 FX has been caught in the cross current of two opposing forces the past couple of days as its seemed like there has been large persistent interest to buy USDJPY as well as interest to buy EURUSD back towards the 1.1700 support level. The latter is increasingly looking like an emerging trend and a force that one doesn’t want to be in the way of. As such, I...
Although it's hard to find some fundamental factors to further bearish JPY, holding a tactical long position look for 107.12/37 does make sense for now.
Above 1.1695, the falling wedge is still valid. However, a daily bearish ouside bar is flagged, only close above 1.1916/26 should open the door to 1.2144/55. 1.1775/50 is key level to watch, which will be the near term floor or top.
Earlier in the week I suggested that EUR/USD may be in for a period of consolidation with price action more two way and this was clearly evident yesterday. After rallying back above 1.1800, EUR/USD, closed the session near the day’s lows on the back of a broader rally in the USD after U.S. yields rallied and Gold saw an aggressive selloff. These 2 dynamics are...
Dollar strength has been notable in G7 over the last two sessions taking cable towards the lower end of its recent range. Second quarter UK GDP this morning confirmed the UK has contracted over 20% in Q2, making it the worst decline out of any of the major European country. The general mood in the UK seems to have darkened over the recent days, with comments...
The RBNZ outcome was indeed quite nuanced as the bank expanded the QE programme by 75% to a massive N$100bn but also extended it by 15 months, the net result of which is essentially continuing asset purchases at the same pace but for a longer time. They also left foreign asset purchases and negative interest rates on the table, potentially for a later date. I...
Bad day for JPY yesterday as cross JPY was well supported as gold sold off hard. USDJPY rallied up through the 106.50/70 resistance area I have been highlighting here recently and so far I haven’t seen signs of local supply accepting this USD trend lower, which is concerning for shorts. Clinging onto USDJPY shorts while EURUSD remains above 1.17 seems...
EURCHF remains fairly range bound and we continue to prefer to sell into rallies above 1.08. USDCHF meanwhile is struggling to break above 0.92, and selling above here remains the preferred stance.
At 0.22 (vs 0.64 last week), our Risk Index moved back into neutral territory. Better sentiment was well reflected in falling credit spreads, lower safe haven assets such as gold and underperforming defensive stock market sectors such as utilities. Elsewhere, gold has been under pressure this week. While the yellow metal benefitted hand in hand with easing risk...
Little to report yesterday as the market was in summer mode, with cable trading in a 1.30/31 range. This morning’s unemployment number of 3.9% beat expectations, although given the extent and depth of the furlough scheme it is unlikely this is a true reflection of the jobs market right now, with expectations it will be closer to 7.5% once the furlough scheme is...
Volumes were light yesterday as the summer lull grips markets, but the euro drifted lower on short term profit taking. We are in the middle of the holiday season, which could mean we are in for a period of consolidation as enthusiasm wanes, but the recent selloff has done little to challenge the view and, as noted before, we should expect pullbacks in the region...
The GBP was in demand, partly on the back of last week’s BoE monetary policy announcement failing to make a bigger case of negative rates being considered anytime soon. However, with price action staying muted and as both Brexit-related and growth uncertainty is likely to remain high, we believe caution is likely to stay warranted around the current levels. This...
According to our FX positioning gauge, the EUR was bought for most of the last week with speculative-oriented investors such as hedge funds being the main driver of the latest development. From that angle, and when considering last week’s price action, it appears that the single currency was bought on dips. This also implies that the EUR is now trading in even...
GBPUSD remains capped as expected ahead of the key February and March highs at 1.3200/15 and although our broader bias stays higher as a result of the completion of a major top for the USD itself, we continue to look for 1.3215 to cap for now for a lengthier consolidation phase to emerge, with a potential small top now threatening. Support moves to 1.3042/35...
The S&P 500 is grinding its way higher following its break above resistance from the top of the February price gap at 3328/38 and whilst we remain concerned the trend is getting overstretched this suggests we can see strength extend further yet with resistance above 3356 seen next at 3373 and then and critically the 3394 record high, where we would expect to see...