EURUSD: Short Term levels.
Support to watch 1.2805/10 - 1.2755 - 1.2665
Resistance: 1.2940/60 - 1.3000/35
To relieve the bearish pressure, we would need to go back above 1.2940/60 to test the more important 1.3000/35. Until then SELL rally ( ideally) with a S/L 1.2975 or 1.3055
Week End News:
[ul]
[li]Current proposed G20 growth measures would add 1.8 pct to global growth by 2018 - german g20 source
[/li][li]Germany’s Schaeuble sees potential risk of bubbles in share and real estate markets - german g20 source
[/li][li]Schaeuble underlined need for structural reforms and consolidation to foster sustainable growth - german source
[/li][li]German fin min Schaeuble sees solid fiscal policy necessary to create room to act if risks materialize
[/li][li]
[/li][li]
[/li][/ul]
Noyer says QE not on ECB agenda at the moment
[ul]
[li]ECB waiting for results of current stimulus steps
[/li][li]Noyer says euro zone “certainly not in deflation”
[/li][li]But inflation too low for too long is “is dangerous”
[/li][li]Weaker euro would be helpful to restore price stability
[/li][/ul]
EUR/USD TECHS-Candles reinforce bear view
1.2868 (Asia High) caps intraday for now. 1.2928 ( Friday high)
The lows from Friday at 1.2828 could come back under threat
Bearish engulfing weekly candle reinforces the short view
but watch day studies which are showing signs of a bounce
Target stays 1.2740 - look to lower the stop on a 1.2800 break
We might see some consolidation before the next move.
What was said today:
[ul]
[li]Fed’s Dudley dot plot doesn’t capture uncertainty of officials views, low inflation means economy remains slack, value of USD not a policy goal
[/li][li]Bank of Canada’s Wilkins cont’d monetary stimulus needed to return Canada to sustainable growth, premature withdrawal could undermine the expansion, has no target for USD/CAD
[/li][li]ECB’s Draghi Sep/Dec TLTRO’s should be assesses in combination, Structural reforms crucial
[/li][li]ECB’s Draghi will continue to remain expansionary, stress tests may have caused contraction in credit, exchange rate is not a policy target but is very important for price stability
[/li][li]ECB’s Praet need IMF to be more independent from political influence, perception is not correct that there is willingness to talk down the euro
[/li][li]Germany’s Merkel says sees France’s efforts, important to uphold EU budget rules but these are flexible
[/li][/ul]
[B]Cable[/B] was bid, now it’s offered. There’s lots of talk why. Our flow has certainly flipped and most are pointing to reports that US - Treasury Secretary Jacob Lew’s crackdown on tax inversions will get an immediate test. This has apparently weighed on UK pharmas and one would assume may impact CAD as well if Burger King’s move to Canada gets stymied.
Of course, in reality few people will know if US companies loaded up on GBP and it’s highly unlikely that they just bailed out. But it appears to have impacted sentiment. Cable is now 1.6321.
AUDUSD: Back to test 0.8920/25 early in the day with better china numbers and ending
the day on the soft size making new low.
Small support @ 0.8825/30 next 0.8780 - 0.8685/95.
Resistance 0.8920/30 should hold now to renew weakness.
Sell Rally with a stop above 0.8920/30.
[B]EUR/GBP[/B] continues its path lower and 0.7810 is a key support and a close below should gather downside momentum for a test of 0.7755. Any rally towards 0.7900 should find selling interest. We are keeping our core short.
Straight [B]Cable[/B] is currently in a range trade. 1.6250 / 1.6475. A weekly close either side is needed to provide new direction. Customer’s interest has been light with a small skew towards purchasing GBP from the RM/Fund community. We remain short.
[B]NZD/USD[/B] made a marginally new low for the year after the cut in milk price. NZD should remain a sell on rally in the current USD environment.
NZ Fonterra cuts 2015/15 milk payout forecast to NZ$5.30/kg from NZ$6.00 on uncertain global outlook.
NZ Aug trade deficit unexpectedly narrows to Nzd 472m (f/c -1125m) amidst 6.9% rise in exports.
Overnight:
Kiwi took a knock on the head
RBNZ Gov Wheeler - Experience shows when NZD starts to fall, ultimate adjustment can be large – Reuters.
New Zealand’s exchange rate: why the RBNZ believes its level is unjustified and unsustainable – Reserve Bank of New Zealand.
Japan EconMin Amari – No progress with US in TPP trade talks – Reuters.
Japan Aug corporate goods price index -0.2% m/m, +3.5% y/y, +0.8% y/y ex-April sales tax hike impact.
China SAFE Guo Song – Will gradually exempt FX restrictions under capital account, sees no obvious changes in capital inflows-outflows, Shanghai-Hong Kong stock connect won’t cause big cross border flows – Reuters.
China weighs replacing central bank chief – Wall Street Journal.
ECB Pres Draghi –H2 EZ growth likely modest, determined to counter risks to inflation outlook, ready to use more unconventional tools if necessary, high unemployment-weak credit growth damper on recovery – Verslo Zinios.
Summer shutdowns pull UK car production 20% lower in August – Reuters.
Australia Aug qtr job vacancies -0.7%, prev qtr +2.4%, highest in a year.
Support and Resistance for 25 Sep 2014.
Wildest US-GER 3 year rate differentials
GBP/USD-Within strike of 1.6305-10 option expiries
- USD bull trend may help prevent cable climbing too far pre-weekend
- 1.6333 (Asia high) & 1.6342 (Thurs high) among resistance levels
- Ascent to 1.6342 was fuelled by relatively hawkish Carney
- 1.6294 = subsequent pullback low. 1.6287 = early Europe low
- Support points include 1.6276 (Thurs low), 1.6267 & 1.6247
- 1.6305-10 option expiries today (closest-to-market)
EURGBP: Dip < 0.7800. potential P/T ahead of the week end.
EUR/USD TECHS-Target Bollinger base
- A retest of the lows from yday at 1.2696 is favored next
- Base of Bollinger at 1.2677 supports mkt but a break is not ruled out
- Beyond sees 1.2502 = 76.4% of 1.2042-1.3995 (Jul 2012/May2014)
- New trend low yday keeps the bear bias alive and well
Some E 3.12 Yards in vanilla exp today 1.2750.
Dovish ECB expectations - Bias EUR lower.
AUD/USD: Still a struggle
AUD still struggling overnight.
AUD New yearly low, taking barriers at 0.8750.
Sup: 0.8749 (Asia Low) 0.8659 (14 low)
Res: 0.8815 (pivot) 0.8884 (yday high)
Sell rally.
[B]NZD/USD[/B]-0.7912 flips to resistance, RBNZ dominates
- NZD/USD met headwind circa 0.7912 (Thurs low) after firming from 0.7886
- 0.7886 = early Europe 12mth low. 0.7957 = Asia high
- NZD continues to suffer on the back of RBNZ view
- AUD/NZD back at 1.11 (Thurs 2wk high) vs 1.0920 2mth low earlier this week
- RBNZ Aug FX data due Monday at 03:00GMT
- NZD/USD bear targets include 0.7750 & 0.7670 (Sept 2013 low)
OPTIONS-Larger DTCC expiries for NY cut
- AUD/USD: 0.8750 (301M), 0.8900 (136M)
- USD/CAD: 1.1045-50 (281M), 1.1100 (100M), 1.1165-75 (276M)
- EUR/USD: 1.2695 (512M), 1.2750 (2.69BLN), 1.2800-05 (650M)
- GBP/USD: 1.6305-10 (300M), 1.6475-80 (460M), 1.6500 (600M)
- EUR/GBP: 0.7750 (150M), 0.7870 (240M)
- USD/JPY: 108.30 (500M), 108.50-55 (435M), 109.50 (250M)
NZD/G10: This an index I created. NZD against the other G10 pairs. It s equally weighted. Just heading on the trend line support. Perhaps time for NZD to consolidate.
As I mentioned 2 days ago that the NZD reached a support against the other G10 pairs, we had an almost 2% move back up the last 48 hours.
NZD was one of the biggest move overnight, first steadily then messily as stops kicked in.
AUD followed with strong building data adding to weak USD sentiment
USDJPY and Nikkei moved lower in tandem with macro and structured names selling both. No sign of local buyers in $JPY at all overnight.
EUR was bid of course but supply on the highs suggests the market still believes in the ECB/FOMC divergence story. More on that from Draghi today of course!
[B]Orders:[/B]
EUR/USD bids 1.2620, 1.26, 1.2580
Offers 1.27, 1.2715-20, 1.2740-50, 1.2635 350m exp, 1.2650 400m, 1.27 2.0b
USD/JPY bids 108.50, offers 108.90-00, 109.25-30, 109.40-50
USD/CHF bids 0.9525, 0.9510, 0.9500, offers 0.9580-90, 0.9600
EUR/JPY bids 137.15, 137.00-05, stops, offers 138.20, 138.40-50
AUD/USD bids 0.8720-30, offers 0.8820-30
USD/CAD bids 1.1070-75, 1.1040-50, offers 1.1115-20, 1.1140-50
[B]OPTIONS[/B]-Larger DTCC expiries for NY cut
EUR/USD: 1.2635 (352M), 1.2650 (402M), 1.2700 (2BLN)
1.2720-25 (440M), 1.2800-05 (530M)
GBP/USD: 1.6100 (1.64BLN), 1.6200 (308M), 1.6240 (270M),
1.6265-70 (319M), 1.6285 (181M)
EUR/GBP: 0.7730-35 (300M), 0.7820 (300M), 0.7840-50 (445M)
USD/JPY: 108.00 (1.1bln), 108.40 (450m), 109.00 (501M), 109.20 (720M)
USD/CAD: 1.1070 (322M), 1.1150 (150M)
Leverage name selling a lot of USDYEN reducing long ahead of the 2 big events. ECB and NFP tomorrow
[B]Today’s Highlights:[/B]
USDJPY immediate risk stays lower for 106.81/55, potentially as far as 105.58/48.
EURJPY has declined to key support at 135.55/39, but with a break below here needed to mark a more important top.
EURUSD below 1.2583 should again expose the 1.2500/2460 support.
GBPUSD remains capped by the 50% retracement barrier and 21-day average at 1.6222/28
EURGBP is expected to try and attempt to turn lower again from “neckline” resistance at .7900/06.
USDCAD risk stays bullish for the 1.1280 high.
AUDUSD continues to hold key support at .8654/43.
[B]OPTIONS-[/B]Larger expirires for NY cut
EUR/USD: 1.2650 (205M), 1.2685 (811M), 1.2700 (855M), 1.2730 (252M)
AUD/USD: 0.8665-75 (340M), 0.8700 (756M), 0.8720-25 (502M)
0.8750 (433M), 0.8800 (486M), 0.8850 (1.1BLN), 0.8900 (1.15BLN)
NZD/USD: 0.7870 (301M). GBP/USD: 1.6220 (252M), 1.6230 (598M)
[B]ORDERS[/B]
EUR/USD bids 1.2600-05 and 1.2575-80
EUR/USD Offers 1.2700, 1.2720, 1.2730-40, 1.2750
USD/JPY bids 107.00-10, 106.80, 106.70, offers 107.45-50, 107.75-80
USD/CHF bids 0.9520, 0.9500, 0.9470, offers 0.9590-00.
EUR/JPY bids 135.50-60, stops, offers 136.40-50, 136.70, 137.00-10
AUD/USD bids 0.8650-70, offers 0.8750, 0.8780, 0.8795-00
USD/CAD bids 1.1150, 1.1120, offers 1.1200-10, 1.1230-40, 1.1260-
[B]For a change, some thought about the SP500[/B].
When QE1 ended the S&P 500 fell just under 20% in a roughly three-month period before the QE2 recovery. When the QE2 ended the S&P 500 fell about 20% in a three-month period before the next Fed-inspired bounce (aided by the ECB). QE3 is ending this month. The S&P 500 peaked in the low 2000s in Aug/Sept. So, -20% and three months would take us to 1600 by late November. This is clearly not a scientific analysis, but it may provide some food for thought.
