Francesc Riverola's Blog (2,706)

Westpac - EUR/AUD 1.2350 is the next target

Westpac - "The return of genuine political concerns in the Eurozone should continue to chip away at EUR/USD multi-week while AUD/USD trades broad ranges, leaving EUR/AUD biased to further decline near term. EUR/AUD 1.2350 is the next target but Nov’s 1.22 lows are probably just out of reach so long as Australia’s domestic outlook is soft enough to keep the RBA warning of further monetary easing. The ECB’s bond market backstop plan also argues against substantial further EUR/AUD…


Added by Francesc Riverola on March 19, 2013 at 12:44pm — No Comments

Danske Bank - US Recovery: this time is different

Danske Bank - "We believe the economy will finally be able to reach sustained growth above trend. Fundamentals in the private sector have improved, the housing market should be a significant positive factor and business caution last year has left pent-up demand in investments. Fiscal contraction will weigh on growth, but the fiscal drag is no larger than last year and fundamentals are better.

Consumers have not yet reacted to the significant tax increase imposed in January and we…


Added by Francesc Riverola on March 19, 2013 at 12:37pm — No Comments

RBS - Weekend news flow would suggest that EUR/GBP has downside; For Cable, we see further declines

Royal Bank of Scotland - "The weekend news from Cyprus looks set to dominate market sentiment at the beginning of the week. How EUR/GBP reacts to this news flow will inform on whether GBP weakness this year has been due to a deterioration in UK fundamentals or has been due to an unwinding of safe haven flows. If EUR/GBP can't decline given this weekend's news flow, then UK fundamentals would appear to have dominated. While EUR/GBP may fall if the EUR comes under pressure, we do not expect…


Added by Francesc Riverola on March 19, 2013 at 12:14pm — No Comments

BofAML - Cyprus: Damage should be contained in the short run

Bank of America Merrill Lynch - "We assess the ECB’s possible course of acti on to limit the fallout from the crisis in Cyprus and avoid financial market disruption that could derail the fragile and nascent Eurozone recovery. Although short-term damage may be limited if an agreement on Cyprus can be reached quickly, longer-term damage could be more significant reflecting the lack of strategy of the Eurozone when it comes to restructuring. In addition, the Cyprus deal shows once again the…


Added by Francesc Riverola on March 19, 2013 at 11:03am — No Comments

Rabobank - Heading into the budget we continue to favour selling sterling on rallies

Rabobank - "As expected UK CPI inflation has crept higher to 2.8% y/y. Sterling has risen in the wake on the data which technically should give the BoE a little less room to soften monetary policy settings.

(...) Tomorrow’s UK budget may have more significant implications for BoE policy then today’s CPI report. Recent reports that soon-to-be BoE Governor has had talks with Treasury officials have underpinned speculation that the Chancellor could announce a new mandate for the BoE…


Added by Francesc Riverola on March 19, 2013 at 10:52am — No Comments

BTMU - Cyprus: We assume sense will prevail

Bank of Tokyo-Mitsubishi - "After a long time of relative calm in euro-zone financial markets, we are back to headline watching as we await the outcome of the parliamentary vote from Cyprus. The euro has dropped a bit in the last 30mins on the news from CNBC that the Cypriot president has told Angela Merkel that parliament will not pass the bank deposit tax legislation. It is clear that the most logical and now necessary step that needs to be taken is for the levy under 100k to be scrapped…


Added by Francesc Riverola on March 19, 2013 at 10:49am — No Comments

ANZ - India: Take Profit on Short USD/INR Trade. Look to Re-Enter at 55. Stay Long 5Y Bonds

ANZ - "The Reserve Bank of India delivered a 25bp cut in the policy rate as expected, taking the repo rate to 7.50% and the reverse repo rate to 6.50%.

(...) Also, DMK, the ruling UPA government’s largest ally, announced that it is pulling out from the coalition. While the UPA, together with support from smaller parties, can continue to govern as a minority government, it cannot afford the departure of another coalition partner.

Over the longer term, we think that there could be more…


Added by Francesc Riverola on March 19, 2013 at 10:39am — No Comments

UBS - So you want to be short EUR?

UBS - "As the dust continues to settle from the Cyprus fallout, it cannot be denied that the way the country’s bailout was handled has simply reinforced the prejudices of many investors who have a structural bias against the euro. From muddled messages to the lack of coordination, clients looking from afar will ask: if such a small country can cause so much stress, then what will happen if a larger periphery country faced…


Added by Francesc Riverola on March 19, 2013 at 10:31am — No Comments

Goldman Sachs - Dollar Weakness Ahead

Goldman Sachs - "Our core view over the medium and longer term is to expect broad Dollar weakness. This is due to the structural, large deficits in the balance of payments and government budget that are likely to persist, and the easy monetary policy stance of the Fed. In December, the FOMC announced open-ended asset purchases at a rate of US$85bn per month funded by balance sheet expansion, until the labour market improves ‘substantially’, and we expect these purchases to continue through…


Added by Francesc Riverola on March 19, 2013 at 10:29am — No Comments

UBS - We downgrade our one and three month EURUSD forecasts

UBS - "This year we expect the euro to trade back to 1.20 against the dollar by year end as America's economy outperforms, the Federal Reserve starts scaling back its asset purchases in the second half of the year, foreign central bank and sovereign wealth fund managers desist from dollar diversification and America's shale energy boom cuts the US current account deficit.

But we had expected this year's range so far in the euro of 1.30-1.37 to remain intact into Q2'13.

(...) Italy's…


Added by Francesc Riverola on March 18, 2013 at 6:49pm — No Comments

TD Securities - USD/CAD Look to buy dips

TD Securities - "The twin rejections at 1.0340 and the subsequent loss of short-term range support and the double top neckline trigger at 1.0257 clearly puts a softer spin on the charts for USD/CAD. Trend momentum has turned negative on the short-term term studies, suggesting limited scope for USD/CAD gains at the moment. But downside scope may also be limited. The measured move target derived from the 1.0340 double top has already been largely reached (1.0174). The USD has, so far, found…


Added by Francesc Riverola on March 18, 2013 at 6:43pm — No Comments

AllianceBdernstein - UK Budget: No Fiscal Consolidation, But Looser Money Ahead

AllianceBdernstein - "We expect little change in UK fiscal policy in Wednesday’s budget. Instead the Chancellor George Osborne may try to nudge the Bank of England towards more aggressive monetary easing, putting further pressure on the pound.

This week, British Chancellor George Osborne will present his fourth annual budget. He will do so with the economy flat-lining, deficit-reduction stalling and many commentators calling for a loosening of fiscal policy to re-start growth. Having…


Added by Francesc Riverola on March 18, 2013 at 3:42pm — No Comments

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Added by Francesc Riverola on March 18, 2013 at 1:00pm — 97 Comments

Westpac - We remain short EUR/USD from 1.3021 and short EUR/GBP from 0.8718

Westpac - "AUD/USD: Domestic indicators are sufficiently mixed to leave the pair inside a rough 1.02-1.0425 range, with RBA easing probable but not imminent. Commodities are broadly weak, capping gains. Renewed Cyprus/Italy jitters help AUD vs EUR but not vs USD.

NZD/USD: Remains vulnerable to a deeper decline in the near term. The main reasons for this are (a) global risk sentiment has soured a little, (b) the speculative world remains extremely long the NZD, and (c) the drought has…


Added by Francesc Riverola on March 18, 2013 at 11:46am — 1 Comment

Societe Generale - Selling EUR/USD on rallies

Societé Generale - "Following the Cyprus rescue package, EURUSD gapped lower but failed to take out the key support at 1.2880 (82 was the low) and has since retraced a bit. Longer term money is yet to react fully suggesting a sell on rally strategy remains appropriate. They will likely wait for the decision of the Cyprus parliament.

Initial reports were that it was set for for 10am EDT. With questionable odds it will pass, it seems we are seeing some back door negotiation between Cyprus…


Added by Francesc Riverola on March 18, 2013 at 11:36am — No Comments

Goldman Sachs - Sterling Realignment but Little Change in the Dollar

Goldman Sachs - "FX markets remain dominated by offsetting policy forces, which we described as a non-cooperative Global Exchange rate Mechanism (...) Within such a regime, much of the market focus has to be on the risk of ‘realignments’, or policy shifts, which have the potential to move a currency to a new level. Such a shift has happened in the Yen already. Our view is that the risks from current levels are broadly balanced, and this is reflected in our new forecasts, centred around $/JPY…


Added by Francesc Riverola on March 18, 2013 at 10:25am — No Comments

Danske Bank - Buy EUR/GBP and buy US 30 Year Bond yields

Danske Bank - "EUR/GBP – Strong trend favours dip buying

• Strategy Summary – Buy at .8576 for an objective of .9084. Place stop at .8441.

(...) While the current price congestion may persist over the shorter-term, only a breach of the 11 February low at .8442 would cause us to stand aside and revaluate.

US 30-Year Bond Yield – Bull MACD cross signals further upside

• Strategy Summary – Buy yields on weakness for 3.492%, with scope for an extension towards 3.648%. Place a…


Added by Francesc Riverola on March 18, 2013 at 10:16am — No Comments

BTMU - Cyprus to dominate after shock 'deposit tax' announcement

Bank of Tokyo-Mitsubishi - "The immediate focus at the outset of the London trading session today will be whether or not the deal will be passed in parliament in Cyprus. The ECB had urged for a vote yesterday before the markets opened today but that was postponed – so the focus is very much on getting this passed in parliament.

There are apparent negotiations ongoing in tweaking the tax rate levels for deposits under 100k – this may be required in order to get the necessary support in…


Added by Francesc Riverola on March 18, 2013 at 10:06am — No Comments

RBS - EUR downtrend continues as Eurogroup takes a punt on Cyprus

Royal Bank of Scotland - "The EUR was up on Friday with some broad-based USD weakness. But it failed to rise above the recent high around 1.314, reaching a high of 1.3107. The chart below identifies 1.314 to 1.317 as significant resistance from trading over the last 7 months. As such, EUR remains essentially in a downtrend since its high on 1 Feb. It is now testing significant resistance around 1.288, and the lower end of a recent declining channel.

(...) GBP rebounded from recent lows…


Added by Francesc Riverola on March 18, 2013 at 10:00am — No Comments

BBH - Euro & Sterling: Risk for another leg down before a more sustained correction unfolds

Brown Brothers Harriman - "The euro's recent losses have met the minimum objective of the large head and shoulders topping pattern we previously identified (the right shoulder was carved out in the second half of Dec '12, the head was created by the brief move above $1.3700, and the right shoulder was formed in mid-Feb). This, coupled with retracement targets, suggested a test on the $1.2880-$1.2900. The euro neared $1.2900 (~$1.2911 on March 14) before bouncing almost two cents to briefly…


Added by Francesc Riverola on March 18, 2013 at 9:45am — No Comments

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