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Trending Economic 26/06
The dollar is pretty flat and trading ranges are very narrow. JPY is the weakest G10 currency. The strongest G10 currency is CAD up approximately 0.10% versus USD. In the Equities space, Nikkei closed up 0.10% still above the 20,000 mark. The European equities have opened firmer after a weak performance last week; FTSE, DAX and CAC40 are now up 0.47%, 0.56%, and 0.85%, respectively. The US 10 year treasuries continue to be flat with the yield at 2.16% which once again shows undecided markets. In the energy space, the Brent crude continues to improve, trading at $46.32, up 1.13% so far.
In terms of data so far, the German Ifo business climate has come in better than expected (115.1 actual vs. 114.4 expected). However, we may not see any large moves in EUR before Mario Draghi’s speech on Tuesday as the investor are wary of a possible signal for the July meeting; in our view, this may not happen as economic indicators are far from satisfactory. Elsewhere, GBP is likely to remain well offered as we head into the vote on the Queen’s speech on the 27th. That said, BoE Mark Carney will be speaking at the Sintra forum and may clarify on the recent hawkish comments of his colleagues.
In the US session, the market will focus on the US durable goods orders at 1230 GMT; the expectations are of a weak print at -0.6%. In our view, a surprise can cause some short-term moves in USD but medium-term outlook is likely to be unaffected.
G10 FX Economic
G10 FX Economic - The US dollar is up for the day consolidating after losses late last week. The trading ranges are very narrow but there is a slight risk-on theme with risky currencies outperforming the safe havens. In the Equities space, the Nikkei closed up 0.10% and the European futures have also opened firmer after a weak performance last week; FTSE, DAX and CAC40 are up 0.47%, 0.56%, and 0.85%, respectively. The US 10 year treasuries continue to be flat with the yield trading around 2.16% over the past few days. In the energy space, the Brent crude continues to improve, trading at $46.32, up 1.13% so far. In terms of data so far, the German Ifo business climate has come in better than expected (115.1 actual vs. 114.4 expected). However, we may not see any large moves in EUR before Mario Draghi’s speech on Tuesday as the investor are wary of a possible signal for the July meeting. Elsewhere, GBP recovered morning losses following a “confidence and supply deal” between the Conservatives and the DUP ahead of the vote on Queen’s speech. The market will now focus on the speech from BoE’s Mark Carney at the Sintra forum where he may clarify on the recent hawkish comments of his colleagues. In the US session, the market will focus on the US durable goods orders at 1230 GMT; the expectations are of a weak print at -0.6%. In our view, a surprise can cause some short-term moves in USD but medium-term outlook is likely to be unaffected as Fed speakers continue to reiterate a neutral message. EURUSD continues to trade within a narrow range of 1.11 and 1.12 with momentum indicators flat over the past few weeks. A break of 1.11 can now turn outlook bearish but while above 1.11 we favour the 1.13 target. GBPUSD is trading within a range of 200bp between 1.2600 and 1.2800 post-UK election results. The momentum indicators are bearish and we still prefer to sell rallies. That said, a break above 1.2810 will question downside. USDJPY has completed a triangle pattern on a weekly chart and we are now targeting 112.10 resistance area. Support now comes in around the 111.20-111.40 area where consolidation was seen in the later part of last week.
Trending Economic 28/06
The US dollar continues to be weak, now the third weakest G10 currency after NOK and NZD. On the other side, EUR and CAD are the strongest G10 currencies so far. In the equities space, the Nikkei closed down 0.47% and the European market has also opened lower with FTSE -0.3%, DAX -0.7% and CAC40 -0.5%. In the rates market, the US 10-year treasuries continue to fall after yesterday’s sell-off with the yield rising 3bp to 2.23% today. The German 10-year yield has also added to yesterday’s rise, up approximately 4bp to 0.39%. In the energy space, the WTI front month continues to improve, now trading around $44.00. We may see a slight pause before the EIA crude inventory data later today. However, we are still slightly positive oil as money manager net positioning showed falling short-positions.
Looking ahead, there will no tier 1 release on Wednesday, however, expect plenty of action given that a number of Central bankers are due to speak including ECB’s Lautenschlager, BoC Governor Poloz, BoE Governor Carney and Fed’s Williams.
CAD Update 28/06
We continue to be bullish CAD given the BoC Governor Poloz hawkish comments in an interview with CNBC where he said;
The rate cut of 50bp in 2015 was to deal with the oil price shock.
The rate cuts have done their job.
“We’re just approaching a new interest rate decision so I don’t want to prejudge, But certainly, we need to be at least considering that whole situation now that the capacity excess capacity is being used up steadily”.
This interview overshadows Poloz much-anticipated appearance at the ECB Forum panel 1430 GMT. That said, we will keep a keep eye on his comments.
You can read the full interview at http://www.cnbc.com/2017/06/28/cnbc-transcript-stephen-poloz-bank-of-canada-governor.html
We are looking to sell NZDCAD as it’s reversing from the bear channel top around .9750 and we see a dip towards .9445 initially, .9274 March lows over the coming weeks given the MACD is reversing from the overbought level. Above the bear channel top at .9739 will be needed to change the outlook.
Trending Economic 28/06
A lot has happened since our morning update but one thing is consistent and that is USD weakness. The market is still not buying the dollar as investor look for a pick up in data to build longs. Also, the US Senate has delayed the vote on the health care bill until after the 4th of July. There is now more downside risk from data deteriorating than the US data improving. That said, we still hold a positive outlook on USDJPY. Elsewhere, we’ve had a change of fortune for GBP now the second strongest G10 currency in over two weeks following a surprisingly hawkish stance from Mark Carney. He said that the removal of monetary stimulus is likely to be needed and rate hike to be discussed “in the coming months”. Click bit.ly/2tkPF8J to read his comments. US
EUR fell sharply following reports from Reuters and Bloomberg that according to the ECB sources – Draghi’s comments were intended to prepare markets for a change in stimulus at the end of the year; EURUSD shot 90bp lower but the market is likely to look past these comments as the investors are eyeing the bigger picture.
In the commodity space, CAD is rallying fuelled by hawkish comments from BoC Poloz, we expect a further sharp upside if oil can rally further post the EIA crude inventory data today. We are also bullish AUD we expect a potentially hawkish RBA next week. We have turned negative NZD as it seems overbought.
On Thursday, the Euro-area business confidence and the German inflation rate (Preliminary) will both attract attention.
Trending Economic 29/06
The US dollar is not seeing any recovery post upward revision in the Q1 GDP and this is understandable as this data print is unlikely to move Feds policy stance any more hawkish. SEK and AUD are now number one and two among the G10 currencies as their respective central banks are meeting next week and investor anticipate for a hawkish surprise. In the equities space, the European market has fallen sharply in contrast to the firm opening this morning with FTSE down 0.7%, DAX down 1.44% and CAC40 down 1.52% so far. In the rates market, the US 10-year treasuries continue to fall with yield rising for the third consecutive time, up 4bp to 2.27% today. The German 10-year yields are also up 10bp now trading around the 0.45% mark. In the energy space, the WTI front month continues to improve, now trading around $45.29. Outlook for crude looks positive given that money managers reduced there short positions in oil this week.
Looking ahead, Japanese inflation and unemployment rate is due at 1130 GMT followed by NBS Manufacturing PMI at 0100 GMT early on Friday. Norway’s retail sales may also attract some attention however; focus will firmly remain on the Euro-area inflation rate (flash) for June where a positive surprise may be enough for EURUSD to make multi-year highs.
Trending Economic: 30/06
USD is vulnerable to a weaker than expected PCE as there is a lack of hawkish comments from the Fed speakers lately. AUD is the weakest currency in the G10 market but we don’t see any change in positive outlook before RBA meeting next week. SEK is also strong as investor prepare for a possible change of stance at the Riksbank next week. In the equities space, the Nikkei closed down 0.92% but the European markets have opened mixed with FTSE -0.2%, DAX -0.02% and CAC40 +0.1%. In the rates market, the US 10-year treasuries are still trading within yesterday’s range at 2.28%. The German 10-year yield is also trading largely flat at around 0.45%. In the energy space, the WTI front month continues to improve, now trading above the $45.00 mark in over two weeks. The outlook for Crude looks positive given that money managers reduced their short positions in oil this week.
Overnight the Japanese inflation rate came in unchanged at 0.4% lower than the 0.5% expected. JPY recovered largely due to the weakness was seen in the equities space and risk aversion heading into the weekend. However, we still see scope for JPY to move lower as Japanese data suggest that BoJ is still far from even considering tapering.
In terms of data today, the Euro-area inflation rate (flash) at 0900GMT remains the key with a positive surprise enough for EURUSD to make multi-year highs.
Trending Economic 03/07
The US dollar is up slightly since the Asian Market open, now the strongest currency in the G10 alongside GBP. There is no real theme in the market but JPY is at the bottom of the pile. In the equities space, the Nikkei closed up 0.11% and the European markets have also opened firmer with FTSE up 0.1%, DAX up 0.6% and CAC40 up 0.6%. In the rates market, the US 10-year treasuries continue to fall after with yield up 1.5bp to 2.315% today. The German 10-year yields are also up 1bp now trading around the 0.47%. In the energy space, the WTI front month rallied to $46.35 on Friday and we are now seeing a consolidation around that level. The outlook for crude looks positive given that money managers reduced their short positions in oil last week.
China’s Caixin Manufacturing PMIs rose to a three-month high at 50.4 in June from 49.6 in May, above the 49.5 expected. The Manufacturing PMIs from Asia also reported improved numbers and the Swedish and Norwegian Manufacturing PMIs have also exceeded expectations coming in at 62.4 and 55.1 respectively. Overall, these ties in with our theme that global data is improving gradually.
Later today, the UK Manufacturing PMI is due at 0830 followed by Fed Bullard speech at 0835GMT and the Euro-area Unemployment rate at 0900 GMT. In the US session, the ISM Manufacturing PMI at 1400 GMT will be the key release.
Looking further ahead, the RBA policy meeting on Tuesday and FOMC minutes on Wednesday will be keenly watched but the main focus will be on US NFP data on Friday.
AUD/USD MACD has moved into the negative territory
Trending Economic 04/07
In terms of key events, the RBA rates decision is due at 0430 GMT on Tuesday and we expect the RBA to change its policy stance slightly hawkish; in our view, a hawkish stance is needed to keep AUD supported with the risks now skewed to the AUD downside from a neutral RBA. That said, the medium-term outlook is still positive and we are looking to buy dips whatever the outcome of the policy meeting. .7600 and .7710 the levels to watch on AUDUSD.
SEK will also be in focus ahead of the Riksbank meeting on 0730 GMT; In our view, SEK can move further up if Riksbank changes its rhetoric to even slightly hawkish given that SEK long positions are still light and there is scope for long positions to build. In an event of no change to the policy stance (possible as the Riksbank is concerned about SEK strength), we may see some SEK weakness, however, the CPI next week will then be in focus to show the way.
Apart from these key events focus will remain on the UK Services PMI and Global dairy prices at 0830 and 1500 GMT respectively. Both GBP and NZD are vuklnerabe to a weak print.
TraderMade FX Research: Economic Observation 04/07
The US dollar is flat for the day still keeping its yesterday’s gains. AUD and SEK are the weakest among the G10 currencies after their respective central banks disappointed bulls. Otherwise, there is no real theme in the market and understandably so as the US is celebrating the Independence Day. In the equities space, the Nikkei closed down 0.12% at 20,032 and the European markets also opened lower with FTSE down 0.5%, DAX down 0.5% and CAC40 down 0.2% (though we have seen a slight recovery). In the energy space, the WTI front month is now trading within very narrow ranges, just under the $47.00 mark, after rising sharply yesterday.
Earlier, the RBA left the cash rate unchanged at 1.5%. There was no material change to the rates statement from last month, with no real signal to the change the policy rate anytime soon. AUDUSD sold-off as we suggested, however, we still hold a positive view on AUD over the medium-term.
Elsewhere, The Riksbank disappointed SEK bulls by sticking to a cautious tone, leaving the first rate hike to mid-2018 (same as before). That said, the Riksbank did remove the easing bias by stating that it is “less likely than before that the Riksbank will cut the repo rate in the near term”. The GDP forecast for 2017 was lowered to 2.2% from 2.8% and inflation forecast for 2018 was also revised down to 2% from 2.1%. We may see some SEK weakness; however, the CPI next week will be in focus to show the way.
The Global Dairy Trade (GDT) prices will be due 1500 GMT with NZD vulnerable to a weak print. In terms of central bank speakers, ECB’s Praet and Mersch will be speaking at 1230 and 1740 GMT, respectively
EUR/JPY MACD on a daily chart is moving up from near the zero line and hence we expect a further upside to 129.78. Below 1.2806 to open 1.2746.
EUR/USD technical and fundamental research.
Trending Economic 05/07
The US dollar is still trading flat within yesterday’s range. SEK is now the strongest G10 currency after Swedish industrial production came in stronger then expected. There is no real theme in the FX market but JPY continues to be the weakest currency. In the equities space, the Nikkei closed up 0.25% at 20,082 but the European markets have been mixed with FTSE up 0.28%, DAX down 0.04% and CAC40 up 0.12%. In the rates market, the US Treasuries continue to be offered with the 10-year yield trading around 2.35%. Also, the German 10-year Bunds continue to fall with the yield approaching the 0.50% mark; this should be supportive of EUR. In the energy space, the Brent future is now consolidating below the $50 mark at $49.61 ahead of the EIA crude inventory data later today.
In terms of data so far, the Caixin services PMI came in weaker than expected while Euro-area Services PMI (final) was revised upwards to 55.4 from 54.7. Elsewhere, the UK services PMI came in line with expectations at 53.4, down from 53.8 previous.
Looking ahead Euro-area retail sales will be due at 0900GMT followed by the FOMC minutes later today at 1800 GMT.
Trending Economic 06/07
The US FOMC minutes didn’t reveal anything new US dollar stalled as a result. The US Treasuries caught a bid with 10-year yield retreating 2bp to 2.32% following the release of the minutes. The focus will now turn to the US NFP data on Friday but we doubt that the single release would be able to push the dollar significantly higher given we have seen several months of negative data surprises from the US. The US CPI/retail sales next week is more important in our view, hence, any upside move is likely to be limited. We still see support at 1.13 on EURUSD with buyers likely to come in even if US NFP comes in positive.
Overnight, the Australian trade balance came in strong with exports rising sharply but this has had little impact. We still hold a bullish AUD view as domestic data remains strong.
In the G10 currencies NOK is number one with NZD number ten; however, the market ranges are very tight today with top gainer and loser only 0.4% apart. In the equities space, Nikkei 225 has closed 0.44% down at 19994.06 and the European Equities have so far been mixed with FTSE down 0.3%, DAX up 0.2% and CAC 40 down 0.1%. In the rates market, in contrast to the US treasuries, the German bunds are still being offered with the 10-year yield trading at 0.49%.
USD/JPY is now trading flat with no real signal from the short-term MACD. However, there is plenty of support at 112.92 and momentum-indicators on medium-term are all bullish. Hence, we still see upside to 114.36. Below 112.92 will complete a HandS top for 112.11-112.58 area.
Trending Update 06/07:
The German and the US 10-year yields continue to march higher with German 10-yield up 7bp to 0.55% and the US 10-year up 5bp to 2.37%. Looking ahead, the ECB minutes are due to be released at 11:30 GMT followed by a joint appearance from Nowotny and Weidmann later today. The calendar is also busy during the US session with the ADP employment change at 1215, both the US and Canada trade balance at 1230 GMT and ISM non-manufacturing at 1400 GMT. The focus will then turn to the US NFP data on Friday but we doubt that the single release would be able to push the dollar significantly higher given we have seen several months of negative data surprises from the US. The US CPI/retail sales next week is more important in our view, hence, any upside move is likely to be limited. We still see support at 1.13 on EURUSD with buyers likely to come in even if US NFP comes in positive.
In the G10 currencies NOK and SEK is number one and two with NZD still number ten. In the equities space, the European Equities are still mixed with FTSE down 0.2%, DAX up 0.06% and CAC 40 down 0.3%. In the energy space, the WTI front month is recovering (now $45.88) following a sharp fall from $47.50 on news that Russia will appose further deepening of cuts to the oil production cut with OPEC.
Trending Economic 07/07
The focus will remain on the US NFP data today but we doubt that the single release would be able to push the dollar significantly higher given we have seen several months of negative data surprises from the US. That said, a weaker than expected jobs report can cause USD sell-off. The US CPI/retail sales next week is more important in our view, hence, any upside move from positive surprise is likely to be limited. We still see support at 1.13 on EURUSD with buyers likely to come in even if US NFP beats expectations.
In the G10 currencies, AUD (+0.11%) and NZD (0.7%) are number one and two with JPY (-0.48%) number ten. In the equities space, the Nikkei has closed 0.32% down at 19.929. The European equities are also expected to open lower with FTSE -0.1%, DAX futures -0.1% and CAC 40 -0.1%. In the rates market, the US and German bonds are consolidating after yesterday’s sell-off with the US and German 10 year yield trading at 0.56% and 2.38%, respectively. In the energy space, WTI front month has fallen sharply (now at $45.00) after failing to regain the mid-week high ($47.50) despite EIA Crude inventory data showing larger than expected drawdown in oil inventory yesterday.
AUDUSD in a descending triangle.
