The real yield spread suggests USD/JPY can trade to new long term cyclical highs. Rapid trade balance deterioration further undermines JPY. EM tensions have helped boost JPY, but in light of clear fundamental shifts against the JPY, we see significant upside potential.
Rapid deterioration in JPY fundamentals
We thought the market might be more unsettled by the weak Chinese flash PMI. However, after the initial reaction there was little follow through in Asia and EM…
"EURUSD BULLISH The bullish development was a close above resistance at 1.3739. This suggests more upside in the near-term with next resistance at 1.3844 ahead of 1.3893. Support is at 1.3674 ahead of 1.3562.
USDJPY NEUTRAL Resistance is at 103.10, a break above which would open 103.65. Support is at 101.39 ahead of 100.76.
GBPUSD BULLISH Any setback will be viewed as corrective and limited to support at 1.6605. Resistance is at…
Added by Daologic on February 19, 2014 at 7:30am — No Comments
"EURUSD NEUTRAL The pair is approaching resistance at 1.3739. A close above this would be a bullish development opening the way to 1.38545 and then 1.3893. Support is at 1.3600 ahead of 1.3477.
USDJPY NEUTRAL Resistance is at 102.70, a break above which would open 103.65. Support is at 101.39 ahead of 100.76.
GBPUSD BULLISH Any setback will be viewed as corrective and limited to support at 1.6605. Resistance is at 1.6878, a break above this would open 1.7043.
Added by Daologic on February 18, 2014 at 10:30am — No Comments
"TSF figures losing relevance for Australia
The RBA minutes overnight affirmed the effects of expansionary policy but warned the economy was below-trend. Yet, optimism is tempting: Australia's data surprises have generally been on a six-month uptrend, and expectations may run high for a further export boost in the wake of China's record total social financing numbers (TSF). While this position has merits, we expect TSF numbers' impact on AUD to be marginal at best: the burden of price…
Added by Daologic on February 18, 2014 at 8:44am — No Comments
"EURUSD NEUTRAL Any further recovery will find resistance at 1.3739. A close above this would be a bullish development opening the way to 1.3893. Support is at
1.3562 ahead of 1.3477.
USDJPY NEUTRAL Support is at 100.76 ahead of 99.97. Resistance is at 102.70 ahead of 103.65.
GBPUSD BULLISH Further support developed as the pair advanced sharply and is trading within striking distance of resistance at 1.6878. A break above which would open critical 1.7043. Support is at…
Added by Daologic on February 17, 2014 at 9:38am — No Comments
"Case Builds For Further BoJ Easing
Suddenly it all seems to be going wrong for USDJPY. An interview with GPIF President Mitani in the weekend press suggests that any diversification of the pension fund’s portfolio away from JGBs is likely to proceed very gradually. Elsewhere, media reports claim new language could be inserted into the upcoming G20 communique, to discourage the practice of conducting monetary policy with the intention of affecting
exchange rates. Then finally, adding…
Added by Daologic on February 17, 2014 at 9:30am — No Comments
JPY: Q4 GDP/BoJ Meeting (Feb 16/18)
The first estimate of Japanese Q4 GDP is likely to show growth rising to +0.80%
from +0.30%. As for policy we do not expect any major adjustment by the BoJ.
AUD: RBA Minutes (Feb 18, 00:30 GMT)
The RBA's February meeting minutes will have less 'new' information than usual,
given the SOMP has detailed their now 'neutral' bias.
Added by Daologic on February 16, 2014 at 9:30am — No Comments
"EURUSD NEUTRAL Initial support is at 1.3556, a break below which would extend the weakness to 1.3477. Resistance is at 1.3685 ahead of 1.3739.
USDJPY NEUTRAL Resistance is at 103.10 ahead of 103.65. Support is at 101.47 ahead of 100.76.
GBPUSD BULLISH The pair resumed its broader bullish trend and resistance focus is at 1.6668. A break above which would open the way to 1.6747. Support is at 1.6426.
USDCHF NEUTRAL There is a strong support at 0.8903. A break through this level…
Added by Daologic on February 13, 2014 at 10:45am — No Comments
"EURUSD BEARISH While resistance holds at 1.3639, the risk is for resumption of downtrend as bearish conditions are in place. Support is at 1.3552 ahead of 1.3458.
USDJPY NEUTRAL The latest recovery suggests extension of the broader consolidation phase. Resistance is at 103.10 and 103.65. Support is at 100.76 ahead of 99.97.
As a reaction to the recent sharp sell-off which stalled just above main support at 1.6220, there’s scope for upside in the near-term.…
Added by Daologic on February 10, 2014 at 10:00am — No Comments
UBS - "In the week ahead Federal Reserve Chairwoman Yellen appears before Congress and Bank of England Governor Carney will present the February Inflation Report. (...) policymakers in both the US and UK are likely to signal interest rate increases will still only start from next year.
That will temper rallies in the dollar and pound. But we expect the greenback still to outperform this year as the Fed steadily cuts its pace of quantitative easing. The Fed's slowing balance sheet…Continue
Added by Francesc Riverola on February 10, 2014 at 9:33am — No Comments
"The Yen-Independence Mirage
Still exposed to FX after all
Japanese investors have been slow to embrace FX risk in the wake the BoJ's QQE program - at least that's the common interpretation of official portfolio flow data.
Sizeable flows into foreign bonds have so far failed to materialise. Japanese investors have even sold overseas stocks and ploughed the proceeds back into domestic equities. Flows into Toushin funds show where the money is headed, and…
Added by Daologic on February 5, 2014 at 8:34am — No Comments
UBS - "In the next three months the Federal Reserve, European Central Bank and the Banks of Japan and England will all publish new economic projections. The upcoming forecast rounds will be important for currencies as they have the potential to shift the course of monetary policy across the major economies.
(...) This week's key points for currencies are:
- stronger data challenging Fed's forecasts
- ECB to keep explicit easing bias in the week ahead
- Japanese CPI…
Added by Francesc Riverola on February 3, 2014 at 11:46am — No Comments
The bearish development on Friday was a close below retracement support at 1.3524. This suggests more downside in the near-term with next support at 1.3400 ahead of 1.3296. Resistance is at 1.3573.
USDJPY NEUTRAL The pair has been consolidating over the past few weeks, with support at 101.63 ahead of 99.96. Resistance is at 103.44 ahead of 104.84.
The pair has been correcting and downside should be limited as bullish conditions persist. Strong…
Added by Daologic on February 3, 2014 at 8:56am — No Comments
"Act III, Scene I
The FX market’s most liquid currency pair does not fall easily. In 2010, it took the threat of a Greek sovereign default to trigger a sharp decline in EURUSD. In 2012, the inconclusive outcome of the first of Greece’s two general elections did the damage. This time around, the threat of Eurozone deflation – and the policy response which might be provoked to avoid it – has the potential to push EURUSD closer to our end- 2014 forecast of 1.25. To be clear, UBS economics…
The ECB, BoE and RBA meet but no major changes are expected anywhere. We see the RBA sounding 'less easy' due to recent inflation readings, but the ECB may come under pressure to act again in light of the soft flash CPI result. US payrolls will be the key data release and jobs reports will also be out in New Zealand and Canada.
China's official PMIs will be the focus to start the week after HSBC PMI equivalent signalled a weakening outlook. EM jitters could be…
Added by Daologic on February 1, 2014 at 8:15am — No Comments
"EURUSD NEUTRAL MACD has breached the zero line in favour of the bulls. Potential test of resistance at 1.3746 ahead of 1.3893. Support is at 1.3623.
USDJPY NEUTRAL The much expected recovery has finally commenced as the pair tests resistance at 103.67, ahead of 104.84. Support is at 102.078.
As bullish conditions persist, there’s further upside potential to resistance at 1.6747. A break above which would open the way to 1.7043. Support is at 1.6447 ahead of…
Added by Daologic on January 29, 2014 at 7:29am — No Comments
"A question of when, not if.
There has not been a policy rate adjustment in New Zealand since March 2011, when a 50bp ‘insurance cut’ followed in the wake of the Canterbury earthquake.
A lot has changed since, and the case for a rate hike in the coming weeks seems compelling: CPI is moving back to target and rising fast; business confidence is running high; the terms of trade are still elevated. House prices continue to boom too, despite cooling measures introduced in October – and…
Added by Daologic on January 29, 2014 at 7:24am — No Comments
" EURUSD: Slightly net sold in aggregate, despite hedge funds changing tactics and turning buyers for a change.
USDJPY: Net sold overall, mainly by hedge funds and asset managers. The private client community provided some half-hearted upside interest.
USDCHF: Gentle net buying pressure seen from a broad mix of investor segments.
EURCHF: Modestly net bought overall. Asset managers, corporates and private clients joined forces to gently buy the cross, while hedge funds were…
Added by Daologic on January 28, 2014 at 11:18am — No Comments
UBS - "This week's key points for currencies are
- Fed tapering in the week ahead will push dollar higher
- Eurozone PMI keeping euro supported for now
- CPI inflation key in the week ahead for yen
- BoE to keep stressing no imminent need to hike rates
- EURCHF bulls should ignore bank capital buffer increase
- RBA comments keeping Australian dollar sell on rallies
- NZ dollar to rise into RBNZ meeting in the week ahead
- BoC concern on low inflation…
Added by Francesc Riverola on January 27, 2014 at 7:40pm — No Comments
UBS - "The search for inflation is becoming central to currency markets (...) In the week ahead, Canada, Australia and New Zealand all release their latest consumer price indices. The Bank of Canada also meets. We expect no change in policy but a weaker than consensus inflation print will increase expectations the BoC may cut its overnight rate from 1.00% later in the year. Australia's CPI release will also be closely followed after December's weaker than anticipated payrolls report. In…Continue
Added by Francesc Riverola on January 20, 2014 at 10:31am — No Comments