Westpac - "EUR Bias: Risks building for a bigger topside break through 1.34, despite firming tapering expectations.
Likely decent German GDP and ZEW data vs probable spotty updates on US retail sales and the first of the Aug business surveys (odds of a second consecutive monthly surge seem low) should see EUR bought into dips for the week.
Note too that while tapering expectations have pushed bund-Tsy spreads out to 7 year wides,EUR/USD is more typically driven by…
Added by Francesc Riverola on August 8, 2013 at 9:42am — No Comments
National Australia Bank - "We remain short of AUD/USD from 0.9210 with a stop at 0.9350.
We have taken profit at 1.1469 on our short AUD/NZD position established at 1.1813.
EUR/USD is at the very top of the trading range we have been talking about for the last four weeks. In the absence of US data disappointments, look to fade this rally.
Our recommendation to buy USD/JPY at 100.29 proved to be a bad trade: either the wrong entry level, the wrong time, or both. We still expect…
Added by Francesc Riverola on July 29, 2013 at 4:30pm — No Comments
Westpac - "USD Bias: We stick with a constructive, albeit more cautious, 1 and 3mth USD view.
Bernanke did not deliver anything particularly new but risk remains that tapering is not delivered in Sep given his accent on the downside risks (“jobs situation far from satisfactory”, fiscal headwinds might restrain growth “more than we currently expect”, the economy “remains vulnerable to unanticipated shocks”).
US data flow looking more spotty of late too(claims, housing starts), as…
Added by Francesc Riverola on July 18, 2013 at 1:49pm — No Comments
Westpac - "Super strong reversal off key support at 1.2745 (2013 YTD lows) following Bernanke’s more dovish account of the US economy suggests a strong low is in place. Pair may see 1.33 and even 1.34 given strong odds Bernanke repeat a more dovish tone at next week’s semi annual testimony. However, prefer to sit on the sideline and sell into 1.34. Longer term Fed is still more likely to ease the pace of accommodation before the ECB and political risks are slowly building again across the…Continue
Added by Francesc Riverola on July 11, 2013 at 10:21am — No Comments
Westpac - "So if Japanese investors have sold AUD at the most aggressive pace in ten years, where are the proceeds going? Foreign currency Toshin assets are down by 27% in ¥ from the extreme highs seen in October 2007. However, they are also up 21% from recent lows seen in Dec 2011. So Japanese investors have not stopped investing offshore - just not in Australia.
So where is this capital flowing too? Somewhat surprisingly to me, European markets have not seen the kind of investment…
Added by Francesc Riverola on July 10, 2013 at 11:01am — No Comments
Westpac - "AUD/USD: The A$ simply does not trade as if a near term low is in sight - for this we need the Fed to push back on tapering; China expressing concern about the slowing economy; stronger Australian data and signs of Japanese buying. Prefer to see AUD closer to 0.9300 and AUD/JPY too and possibly through 90.00 before we can be happier a low is finally in place.
NZD/USD: The long-awaited unwind of extremely long speculative NZD/USD positioning has further to run, but watch out…Continue
Added by Francesc Riverola on June 11, 2013 at 9:25am — No Comments
Westpac - "We have taken profit on the USD/CAD leg of our long CAD basket today (Friday) for a 1.2% gain. The trade was entered on 22 May (along with EUR/CAD), motivated by a mix of bullish G10 model signals for CAD and expectations that the Canadian economy was on the cusp of a firm patch. The local data in recent sessions has played up that theme in spades - Q1 GDP rose 2.5% vs 2.3% expected, April building permits rose 10.5% vs -3% expected, the May IVEY PMI rose to 63.1 vs 56 expected…Continue
Westpac - "Last week we argued the precipitous fall in A$ positioning and sentiment had gone too far. A number of A$ crosses, including GBP/AUD had simply fallen too far too fast in our view.
However, that call proved to be premature. The A$ had an aggressive move lower in London trading on Friday, our stop was hit and we are now out of that position. We do sense that at least some of the weakness seen in AUD was driven by month and quarter end fixes. So perhaps therein lies a lesson for…
Added by Francesc Riverola on June 3, 2013 at 6:41pm — No Comments
Westpac - "We have entered a short GBP/AUD position at 1.5651 and target a correction back to the low 1.5200 region in the next 1-2 weeks. We would sell more on a push back to 1.5730, while our stop would be just above the 1.5850 level.
(...) We still see risks that USD trend ultimately breaks higher and this, combined with weaker terms of trade picture, should deliver a weaker A$ over the medium term. However, in the near term, positioning, a more resilient domestic economic picture…
Added by Francesc Riverola on May 30, 2013 at 7:30am — No Comments
Added by Francesc Riverola on May 27, 2013 at 10:24am — No Comments
Westpac - "Over the last month the optimal currency to have owned CAD against has been AUD. For the week ahead however we wonder whether USD/CAD may be the better pair. USD/CAD is currently hovering just below 1.03, levels where previous rallies this year have failed. The key data release in Canada this week is March retail sales. (...) On balance model signals and event risk seem to suggest a sustained break in USD/CAD above 1.03 is a bridge too far, at least for the week ahead. EUR/CAD…Continue
Added by Francesc Riverola on May 22, 2013 at 10:37am — No Comments
Westpac - "USD strength has been a key theme of late. The bulk of its gains however have been posted against a motley bunch of currencies. In the last month USD strength has been concentrated primarily against the likes of AUD, SEK, NZD and CHF. Over the last week JPY, NZD, AUD and CHF have ceded the most ground to the USD. EUR on the other hand, while lower over both the last week and month against the USD, has weathered the USD’s rally comparatively well.
(...) Our longer term…
Added by Francesc Riverola on May 15, 2013 at 10:02am — No Comments
Westpac - "AUD/USD: Broad USD strength has been punishing AUD more than most, just as the opposite usually holds true. Stronger local data calls into question when the RBA will cut again, helping limit AUD/USD downside. But the cleanout could easily extend to 0.9850/70 near term before bouncing back above 1.00 on stretched short positioning.
NZD/USD: A possible peak in NZ economic momentum and record spec long NZD positions in the futures market dovetail with the stronger USD move to…
Added by Francesc Riverola on May 13, 2013 at 2:54pm — No Comments
Westpac - "We have run with a positive bias on GBP for some time now, having chosen to hold this via short EUR/GBP. On Feb 26, we recommended selling EUR/GBP on strength. On March 28 we recommend taking back half of that short position.
On April 11th, we recommended buying GBP outright on the grounds that it was under-owned and was likely to benefit more than most from an improved risk sentiment post the BoJ's QQME announcement. We established long GBP at 1.5333 and added on dips to…
Added by Francesc Riverola on May 8, 2013 at 10:54am — No Comments
Westpac - "Dollar Index survived a test of important support around 81.40/50 as USD’s safe haven status came to the fore. But if the dollar trades the employment report as a growth currency, it could be in some trouble as the risks look to be for another sub-consensus reading. Then we have the post-NFP data lull. We will retain our 83 one month target for now but suspect achieving this will be heavily reliant on EUR weakness.
(...) Eurozone bond markets are pricing in a great deal of…
Added by Francesc Riverola on May 2, 2013 at 1:27pm — No Comments
Westpac - "AUD/JPY is likely to be volatile in coming months. Our base case is for a pullback to around 98-99 over the next month as the BoJ doesn’t announce any new easing measures and investment outflows from Japan remain patchy. By mid-2013 however there is likely to be renewed upward pressure on AUD/JPY, with scope for 107/108, as BoJ easing in full swing encourages Japanese life insurers and others to invest abroad. To reinforce the potential volatility, we look for AUD/JPY to fall back…Continue
Added by Francesc Riverola on May 1, 2013 at 8:00am — No Comments
Westpac - "The outlook for the global economy has received a number of set backs this week. However, commodities and equity markets are showing signs of resilience. Global liquidity could also get another shot in the arm next week, with rising speculation of an ECB rate cut.
US$ outlook: US data momentum has clearly rolled over and so has expectations of QE coming to a premature end. This should see the DXY struggle to break through the 83.00 level in the near term.…
Added by Francesc Riverola on April 25, 2013 at 11:07am — No Comments
Westpac - "Gold’s “flash crash” accounted for much of the recent AUD/USD reversal and shouldn’t be repeated. However weakness in base metals prices and growing market pricing for RBA easing in Q2 should see the pair test 1.0150 in coming weeks. The outlook brightens from mid-year though as BoJ QE should dovetail with the Fed’s to push AUD/USD back towards this year’s highs around 1.06.
(...) Shorter term, support looks to lie around 1.0260 then 1.0225, the 76.4% retracement of the 1.0115…
Added by Francesc Riverola on April 19, 2013 at 7:40am — No Comments
Westpac - "Underwhelming Chinese data, elevated ECB easing risk and broad weakness across a swathe of commodities all play to a positive narrative for the USD. Dollar Index could see fresh yearly highs on this run. Fedspeak has been admittedly on the dovish side in the past week but the USD has held up well for some months now in the face of open ended asset purchases.
(...) Advance regional PMI data for April likely to emphasize the case for ECB easing. Italy likely to have new…
Added by Francesc Riverola on April 18, 2013 at 9:00am — No Comments
Westpac - "We have run with a positive bias on GBP for some time now, having chosen to hold this via short EUR/GBP. On Feb 26, we recommended selling EUR/GBP on strength, establishing a full short position at an average price of 0.8718. On March 28 we recommend taking back half of that short position at 0.8440.
We have hit our trailing stop (0.8585) on the balance of this position and have now closed it for a 2.36% return to our portfolio.
On April 11 we recommended rolling from…
Added by Francesc Riverola on April 17, 2013 at 7:44am — No Comments