UBS - "In the week ahead, Fed Chair Yellen makes two public appearances while US retail sales, CPI inflation, industrial production and the New York and Philadelphia Fed manufacturing surveys are released. The greenback has been held back in Q1'14 by weather-affected data. But the US economy is likely to record stronger prints in Q2'14 as the latest weekly jobless claims numbers show. That will increase the risk of the dollar recovering from its current weak levels. This week's key points…Continue
Added by Francesc Riverola on April 14, 2014 at 10:58am — No Comments
"The pain trade in the currency markets is the renewed weakness of the dollar against the euro, yen, Swiss franc and Australian dollar. Despite US jobless claims falling to its lowest levels since 2007, the greenback has been sold since March's Federal Open Market Committee minutes were published. In the very near term dollar longs may still be cut. But the market's position adjustment is also painful for policymakers outside the US seeking weaker domestic currencies against the greenback.…Continue
Added by Daologic on April 14, 2014 at 5:30am — No Comments
UBS - "The foreign exchange markets reacted to America's March employment report by favouring higher-yielding emerging markets and commodity currencies. But US data is unlikely to remain 'not too hot' to spur fears of Federal Reserve tightening and 'not too cold' to raise concerns about the recovery. Instead Friday's payrolls report clearly showed America's economy emerging from the winter slowdown. The Fed is thus on track to finish tapering its bond purchases by the autumn, raising the…Continue
Added by Francesc Riverola on April 8, 2014 at 10:37am — No Comments
"EURUSD: The pair itself was net sold, but flows through the euro overall
were finely balanced. Hedge fund sellers ran into corporates on the bid.
USDJPY, EURJPY: The yen was net sold in aggregate, but USDJPY flows were
USDCHF, EURCHF: The Swiss franc was net bought, both through EURCHF and
USDCHF. Turnover was only 82% of normal though, and hedge fund…
Added by Daologic on April 1, 2014 at 5:29am — No Comments
UBS - "The dollar has reached a major turning point against the euro. For the first time in eighteen months, relative central bank balance sheet growth is favouring the greenback as the Federal Reserve tapers its asset purchases. At the same time the European Central Bank's balance sheet contraction is also slowing as commercial banks cut their repayments of Longer-Term Refinancing Operation loans. Since the 2008 financial crisis such shifts have led to major turning points in the currency…Continue
Added by Francesc Riverola on March 31, 2014 at 8:49am — No Comments
1. Strong payrolls would spark sharp dollar rally
In our view the dollar has reached a major turning point against the
euro. Since the summer of 2012 the single currency has traded from 1.20
to almost 1.40 as the Federal Reserve's third round of quantitative
easing led to its balance sheet expanding while at the same time the
ECB's contracted through banks repaying Longer-Term Refinancing
Operation loans. But the Fed's balance sheet expansion is now…
Added by Daologic on March 31, 2014 at 6:39am — No Comments
CHF: KOF Leading Indicator (Mar 31, 07:00GMT)
The monthly KOF leading indicator is likely to remain unchanged in March at its
previous level of 2.03, pointing to firm expectations for the Swiss economy.
EUR: March CPI (Mar 31, 09:00GMT)
We expect March inflation to show further deceleration, to 0.50% (y/y) from 0.7%
(y/y) in February. But this decline is due to a statistical…
Added by Daologic on March 29, 2014 at 6:17am — No Comments
UBS - "The Federal Reserve is only likely to start raising interest rates next year. But this month's Open Market Committee meeting has primed the dollar for a major rally over the next few months. Policymakers agreed to taper monthly bond purchases by another $10bn. In addition, the Fed's forward guidance linking future interest rate hikes to a 6.5% unemployment rate was dropped. But the FOMC also surprised by retaining its bullish economic forecasts despite the winter slowdown in America,…Continue
Added by Francesc Riverola on March 24, 2014 at 2:42pm — No Comments
"1. Strong US data now will lead to sharp dollar rallies
The dollar is primed for a major rally following this month's Federal Open Market Committee meeting. The FOMC met expectations by cutting the Fed's pace of asset purchases by another $10bn to $55bn a month. But policymakers surprised on several other counts.
First, the FOMC dropped its forward guidance linking future interest rate hikes to specific levels of unemployment. The guidance had become increasingly irrelevant as…Continue
Added by Daologic on March 24, 2014 at 8:00am — No Comments
BRL: Current account / Long Term Rate TJLP / 1Q Inflation report / Feb budget (Mar
24 / 25 / 27)
The c/a deficit is expected to narrow along with FDI. Feb public sector budget results
should begin reflecting announced cuts; if not market will be disappointed. 1Q
Inflation Report will be important guide for future policy direction and forecast
revisions. No change expected in long term lending rate.
ILS: Policy rate decision…
Added by Daologic on March 24, 2014 at 6:21am — No Comments
EUR: PMI Indicators (Mar 24, 08:30/09:00GMT)
Consensus expects German manufacturing PMI to fall to 54.5 (from 54.8) and for
the Eurozone figure to drop to 53.0 (from 53.2). The German services index is
expected to decline to 55.5 (from 55.9) while the Eurozone services index is
expected at 52.5 (from 52.6).
EUR: German IFO/ CPI (Mar 25/28, 09:00/13:00GMT)
The survey on business climate and current assessment is likely to…
Added by Daologic on March 24, 2014 at 6:14am — No Comments
"In the week ahead January's trade and current account data will be released. The strength of the Eurozone's external balances has helped push the euro up to two year highs of 1.39 against the dollar. With the Eurozone only experiencing a modest recovery this year of around 1% of GDP growth, the single currency area's large trade balances are likely to persist in the near term as import demand remains constrained. That will keep the onus on the Federal Reserve to keep tapering for the dollar…Continue
Added by Daologic on March 17, 2014 at 5:35pm — No Comments
"We forecast the dollar to strengthen to 1.25 against the euro by the end of 2014 as the Federal Reserve progressively slows down and ends its third round of quantitative easing. The Federal Open Market Committee meeting in the week ahead will prove another modest step in this direction for the greenback - even if sustained dollar strength against the euro, yen, pound and Swiss franc is still likely to only occur when the Fed is getting closer towards the end of its asset purchases in the…Continue
Added by Daologic on March 17, 2014 at 5:31pm — No Comments
With bullish conditions in place, there’s more upside potential to test the
critical resistance at 1.4052. Any setbacks in the interim will be corrective
and limited to support at 1.3834 and then 1.3780.
USDJPY NEUTRAL The latest decline was staged from the important resistance at 103.65.
Support is at 101.20 ahead of 100.76. Near-term resistance is at 102.18.
GBPUSD BULLISH The recent setback doesn’t…
Added by Daologic on March 17, 2014 at 7:46am — No Comments
"Conviction Levels Still Subdued
Neither weekend developments in Ukraine nor China’s decision to widen the intraday trading band for USDCNY have been enough to inject much fresh volatility into FX markets. Last week, a rate hike by the RBNZ – the first by any G10 central bank since 2010 – also met with an uninspiring market reaction, and NZD atm implied vols remain stuck close to 9m lows. Clearly investor conviction levels remain subdued, and that provides an opportunity for underlying…
Added by Daologic on March 17, 2014 at 7:41am — No Comments
EUR: February CPI (Mar 17, 10:00GMT)
February's final CPI reading is due and expected to remain steady at
0.80% (y/y), remaining well below ECB target. Any further fall would
add to worries that the ECB would need to step up to avoid the
possibility of deflation, especially in light of Draghi's recent comments.
AUD: RBA Minutes (Mar 18, 00:30GMT)
The RBA's March minutes are unlikely to add much new –…
Added by Daologic on March 17, 2014 at 6:47am — No Comments
Any setbacks will be viewed as corrective and limited, with supports at
1.3812 and 1.3708. Resistance is at 1.3915, a break above this would
extend the strength to 1.4052.
The important resistance at 103.65 was tested on Friday and a close above
this will be positive, opening the way to 105.44. Support is at 102.48
ahead of 101.20.
GBPUSD BULLISH The recent setback doesn’t change…
Added by Daologic on March 12, 2014 at 6:56am — No Comments
"Minors Attract Inflows
Flows: Reaching for yield
We were net buyers of AUD and NZD last week - the former due to a sudden improvement in domestic economic data, the latter on the likelihood of an imminent RBNZ rate hike. Buying pressure was also seen in sterling and the Nordics, while the Swiss franc suffered the worst of the outflows. In the EM space, the Singapore dollar came under the strongest selling pressure,…
Added by Daologic on March 11, 2014 at 10:00am — No Comments
"Inflows trickling back into AUD
Japanese investors are making a tentative return to Australian bonds markets. That’s the clear message from portfolio flow data released last week, which includes activity up to end-January. That’s quite a reversal of sentiment given Japanese investors spent most of the past 18 months as net AUD sellers. It seems FX valuations have now fallen back to somewhat attractive levels again – low enough to pique investor interest once more. These inflows have…
Added by Daologic on March 11, 2014 at 9:15am — No Comments
Any setbacks will be viewed as corrective and limited, with supports at 1.3812 and 1.3708. Resistance is at 1.3915, a break above this would extend the strength to 1.4052.
The important resistance at 103.65 was tested on Friday and a close above this will be positive, opening the way to 105.44. Support is at 102.48 ahead of 101.20.
As bullish conditions persist, there’s…
Added by Daologic on March 11, 2014 at 9:00am — No Comments