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Mar 16 - 05:00 PM
GBP/USD: Are GBP Traders Underpricing Downside Risks? - CIBC
First appeared on eFXplus on Mar 16 - 12:45 PM

CIBC Research discusses GBP outlook and advises caution on GBP around current levels.

"Call it Brexit-fatigue, or call it simple complacency, but it’s beginning to look like currency markets are underestimating downside risks to sterling.

Implied volatility has been falling and investors have almost fully priced in another hike from the Bank of England by May. However, there remains the possibility that next week’s EU Leaders Summit does not end in an agreement on Brexit transition/implementation. Furthermore, wage growth, while having accelerated, is still negative in real terms, with consumer discretionary spending also looking weak of late.

All this suggests more caution regarding sterling than is currently priced into markets, with the potential for Brexit and BoE disappointment very possible," CIBC argues. 

CIBC Research
Mar 16 - 02:36 PM
GBP/USD - Finds Support Ahead Of 55-DMA By 1.3880
First appeared on eFXplus on Mar 16 - 12:20 PM
  • GBP/USD bounces off 1.3887 low by Lon fix, ends Lon session 1.3920
  • Pair offered after 1.3980 high in Europe, offered last 4 days pre-1.4000
  • Headwinds for GBP: UK-Russia politics related to spy attack, EU Summit, BoE
  • GBP/USD res 1.3941 30-HMA, 1.3949 daily pivot, 1.3980 Friday's high
  • Supt 1.3898 10-DMA, 55-DMA 1.3883, 1.3842 3/12 low, 1.3823 dly cloud base

Chart: Click here

Thomson Reuters IFR Markets
Mar 16 - 01:24 PM
GBP/USD: A Big Week For GBP Ahead; What To Expect? - BofAML
First appeared on eFXplus on Mar 16 - 11:15 AM

Bank of America Merrill Lynch Research discusses GBP/USD outlook and notes that could be a big week for GBP next week with the release of key macro data (CPI, labour market and retail sales data) and the EU Summit on 22/24 where the focus will be on whether a potential transition agreement will be finalized.

"Front-end cable implied volatility is likely to remain elevated ahead of the summit and with a heavy calendar for data. But we would not place too much emphasis on the failure to reach an agreement on transition. The EU Summit does not present a definitive deadline for markets and given that both sides agree that such an agreement is necessary, we remain confident that a deal will ultimately be reached.

As we have stated in the past, we think confirmation of a transition agreement will help cable sustainably trade in a higher range (1.40+) as it allows markets to put Brexit on the back-burner for the immediate future and focus on the UK rate outlook," BofAML argues. 

BofA Merrill Lynch Research
Mar 16 - 12:12 PM
USD/JPY - 106.30S Should Cap IP And Mich Sentiment Rebound
First appeared on eFXplus on Mar 16 - 10:50 AM
  • USD/JPY rebounds from 105.61 low after IP, CU & Mich Sent beat
  • Likely to falter in 106.30s by 100/200-HMAs, daily Tenkan
  • Treasury yields firmer, shake off noisy housing starts miss
  • Tsy 2-10 curve rebounds after dive toward '18 low by 50bp
  • 2-yr Fed Funds still only pricing 4 rate hikes pre FOMC
  • Potential risk-off factors underpin JPY nL1N1QY0PP



Chart: Click here

Thomson Reuters IFR Markets
Mar 16 - 11:00 AM
EUR/USD, USD/JPY: Turning Neutral Here; Key Ranges To Expect - BTMU
First appeared on eFXplus on Mar 16 - 08:37 AM

BTMU Research discusses EUR/USD and USD/JPY outlook, and shifts to a neutral bias in the near-term, seeing EUR/USD trading in a 1.2175-1.2475 and USD/JPY in a 104.50-107.50 range through the end of next week.

"Steady JPY-buying by exporters and the revenue repatriation by investors and companies have limited USD/JPY rise, but JPY-buying pressure should gradually fade towards the end of March. On the other hand, room for increased JPY-selling, mainly for overseas investment, is limited. Large scale investments will undoubtedly be restrained before the fiscal yearend. USD/JPY will likely soften a little. We return our USD/JPY bias to “neutral," BTMU argues. 

"The euro is currently consolidating against the US dollar between the 1.2000 and 1.2500-levels. The still cautious rhetoric from ECB policymakers is helping to dampen euro strength. The ECB does not want to encourage market participants to price in more rate hikes and provide a potential trigger for renewed euro upward momentum at the current juncture. The recent economic data flow from the eurozone has also turned less favourable," BTMU adds. 

BTMU Research
Mar 16 - 09:48 AM
G10FX: FX Volatility Now Giving Signals Of Late Cycle Patterns; A New Regime Ahead - BofAML
First appeared on eFXplus on Mar 15 - 02:15 PM

Bank of America Merrill Lynch Research warns of the risks of rising volatility over the coming months, arguing that as the US economy could be entering the late stages of expansionary cycle, there are significant risks for a turn and a rise in volatility.

"We find that FX volatility is now giving signals of late cycle patterns, as the term premium is rising, volatility asymmetry is widening and the risk premium is declining to a level away from the expansionary cycle level. 

As the US economy enters the late stages of the cycle, fundamentals could become increasingly vulnerable to shocks. Volatility is likely to migrate to a new regime, with higher risks of a downturn ahead," BofAML adds. 



BofA Merrill Lynch Research
Mar 16 - 08:36 AM
USD/CAD - Up To New Nine-Month High Amid Trump Focus
First appeared on eFXplus on Mar 16 - 06:45 AM
  • USD/CAD up to new nine-month high of 1.3084 ahead of the North American open
  • 1.3068 was Thursday's top after 1.3000+ stops tripped. 1.3072 was Asia high
  • CAD continues to suffer on the back of risk aversion and NAFTA concerns
  • Trump has decided to replace his national security adviser-Washington Post
  • See: nL1N1QY01X. 1.2804 was Monday's low--day before dovish Poloz hurt CAD
  • Canary currencies hint broader USD shift at hand nL1N1QX29S nL1N1QX0CL

USDCAD: Click here

Thomson Reuters IFR Markets
Mar 16 - 07:24 AM
GBP/USD - COMMENT-Event Risks Aplenty For Sterling Before EU Verdict
First appeared on eFXplus on Mar 16 - 05:30 AM

Sterling will be impacted by a host of UK-specific event risks next week, before the EU's Brexit transition deal decision.
UK February inflation data will kick things off Tuesday, with annualized CPI forecast to fall to 2.8% from 3.0% in January.
A softer than expected number would deal a blow to hawks advocating two or three BoE rate hikes this year, and could weigh on the pound.
Earnings and jobs data ensue on Wednesday, with headline and ex-bonus earnings both forecast at 2.6% from 2.5% previously.
An earnings beat would be positive for the pound.
ONS February retail sales figures are due Thursday, ahead of the same-day BoE MPA, with a 0.3% rise expected.
A 9-0 Bank Rate verdict is forecast by eight out of nine economists polled by Reuters: one or more votes for a hike could boost GBP.
The EU summit also gets underway Thursday, with hopes of a GBP-positive Brexit transition deal facing an Irish barrier nL8N1QX7LM.
Related comments: nL1N1QX093 nL1N1QV08Q nL1N1QU08I nL1N1QU0SE.

UK inflation data: Click here

UK earnings/jobs data: Click here

UK retail sales data: Click here

Thomson Reuters IFR Markets
Mar 16 - 06:12 AM
GBP/USD - 1.40 May Be A Bridge Too Far Amid Risk Aversion
First appeared on eFXplus on Mar 16 - 04:00 AM
  • Fresh offers expected pre-1.40 if cable extends north from 1.3911 (Asia low)
  • Pre-figure supply capped gains Tuesday-Thursday. Stops tipped above 1.4000
  • Asia low plumbed under influence of more GBP/JPY selling amid risk aversion
  • Prior GBP/JPY selling helped deflate cable from 1.3989 high 24 hours ago
  • Raft of event risks including EU summit to impact GBP next week nL1N1QX1FC
  • Hopes of Brexit transition deal face Irish barrier nL8N1QX7LM nL1N1QX093

GBPUSD 1.40: Click here

Thomson Reuters IFR Markets
Mar 16 - 05:00 AM
USD/JPY's Momentum Negative, Risk For A 105 Test Heightened
First appeared on eFXplus on Mar 16 - 02:40 AM
  • USD/JPY's scope is for an eventual drop to test the 105.24 2018 low
  • Once through 105.24 low will unmask the tough 105.00 psychological level
  • Fourteen-day momentum remains negative, this has been the case all week
  • Falling 30-DMA stemmed bulls on Tuesday, is now at 107.09
  • Bears in control. We remain short at 106.65 for our 105.05 target
  • Trailing stop has been lowered to 106.50 just above Thursday's 106.42 high

USD/JPY Trader:

Daily Fibo Chart: Click here

Thomson Reuters IFR Markets
Mar 16 - 03:48 AM
AUD/USD - Holds Support And Bounces But On Shaky Ground
First appeared on eFXplus on Mar 15 - 11:25 PM
  • AUD/USD down to 0.7771 before bouncing, holds triple lows from last week
  • Additional support found at the 76.4 Fibo at 0.7761, 100 DMA at 0.7777
  • Early pressure on AUD/JPY weighed on AUD as WH rumours persist nL1N1QY01X
  • Early high at 0.7801, 200 DMA at 0.7804 initial resistance
  • USD/AXJ well bid, stock markets under pressure keeping a lid on Aussie
  • Earlier on RBA's Debelle warned markets on rate risks nS9N1O502B

AUD daily: Click here

Thomson Reuters IFR Markets
Mar 16 - 02:36 AM
EUR/JPY Off Leg With USD/JPY, To 130.30
First appeared on eFXplus on Mar 15 - 11:15 PM
  • EUR/JPY off alongside USD/JPY on Tokyo risk-off sentiment, Moritomo rumors.
  • Cap firmly in place from well ahead of ascending 200-DMA at 131.65.
  • Cross likely to make tracks well away from 200-DMA if risk-off persists.
  • Some support eyed @130.00 big figure but really nothing till 129.35.
  • 129.35 spike low on March 5, trend low, lowest since 129.13 on Aug 25, '17.
  • Post-Draghi ECB appointment, new Italy government among market concerns.

EUR/JPY: Click here

Thomson Reuters IFR Markets
Mar 16 - 01:24 AM
EUR/USD: No Change In S/T Story (A Tired Rally) Or L/T Story (Heading To 1.30) - SocGen
First appeared on eFXplus on Mar 15 - 12:45 PM

Societe Generale Cross Asset Strategy Research discusses EUR/USD outlook and maintains its bullish medium-term bias over the coming months.

"EUR/USD tested 1.2450 and then fell just below 1.23 during Mario Draghi's ECB press conference a week ago. It's not really moved out of that range since. Softer US yields don't help much when Bund yields are falling too.

Neither the long-term story (ECB heading towards policy normalisation, EUR/USD heading to 1.30) or the short-term story (a tired rally) seems set to change," SocGen argues. 


Société Générale Research
Mar 16 - 12:12 AM
USD/JPY - Off On Moritomo Rumors, 106-Area Options Tether
First appeared on eFXplus on Mar 15 - 10:40 PM
  • USD/JPY off some on fresh risk-off sales on rumors surrounding Moritomo.
  • Difficult to confirm but talk two more Tax Bureau employees maybe missing.
  • Nikkei off 0.2% at 21,750 despite the mini-rally on Wall Street overnight.
  • USD/JPY 106.38 early to 105.94 before steadying, option expiries magnet.
  • Large USD1.7 bln in expiries 106.00-10, more below, total 4 bln+ 106.00-70.
  • Below, USD657 mln 105.80-95, hourly Ichi kijun 106.10, tenkan 106.17 above.

USD/JPY: Click here

Thomson Reuters IFR Markets
Mar 15 - 11:00 PM
GBP/USD - Holds In Well, But 1.40 A Tough Hurdle
First appeared on eFXplus on Mar 15 - 08:40 PM
  • Cable holds up relatively well o/n as EUR/GBP slumps
  • But the triple top just below 1.40 looks ominous for GBP/USD bulls
  • Further resistance seen at 50% retracement at 1.4029
  • Support comes in at Weds/Thurs lows at 1.3922/25, 10 DMA at 1.3900
  • EUR/GBP testing 50% retracement @ 0.8827, next stop 61.8 Fibo @ 0.8794
  • Next week a pivotal week for GBP with lots of event risk nL1N1QX1FC

GBP daily: Click here

EURGBP daily: Click here

Thomson Reuters IFR Markets
Mar 15 - 09:48 PM
EUR/JPY Treading Water With USD/JPY, Bias Down
First appeared on eFXplus on Mar 15 - 08:15 PM
  • EUR/JPY soggy alongside USD/JPY, in tight 130.77-88 range so far in Asia.
  • Bias down but clean break of 130.50 needed for more action to downside.
  • Towards base of recent range - 130.53 low March 8, 130.56 yesterday.
  • Clean break projects test towards 129.35 spike low on March 5.
  • Good underlying resistance above at ascending 200-DMA at 131.65.
  • Post-Draghi ECB appointment uncertainty, Italy among risk factors.

EUR/JPY: Click here

Thomson Reuters IFR Markets
Mar 15 - 08:36 PM
USD/JPY - At The Mercy Of Cross Flows
First appeared on eFXplus on Mar 15 - 07:10 PM
  • USD/JPY recovery lags the majors as risk-off sentiment dominates
  • Neutral set up with short term MAs mixed, middle of recent ranges
  • Greater interest in yen crosses as safe haven demand keeps a lid on USD/JPY
  • AUD/JPY down 1.3% takes the brunt of the risk-off selling, as usual
  • Thurs range of 105.79/106.42 initial support/resistance, Tenkan line @106.37

JPY daily: Click here

Thomson Reuters IFR Markets
Mar 15 - 05:00 PM
USD: Market Bidding Time Till Next Week's FOMC Meeting - Credit Agricole
First appeared on eFXplus on Mar 15 - 10:30 AM

Credit Agricole CIB Research discusses the USD outlook and notes that the currency has been lacking a clear direction this week and the data and events on the US calendar are unlikely to change that.

"We suspect markets are now biding time until next week’s FOMC meeting which should not only deliver a hike but clarify the Fed’s plans with respect to the number of hikes this year.

It’s worth noting that our economists have officially revised their view and now expect the March dot-plot to move from three to four hikes this year consistent with our own rate forecast," CACIB argues. 

Crédit Agricole Research
Mar 15 - 02:36 PM
EUR/USD - Yields And USD Pressure EUR/USD
First appeared on eFXplus on Mar 15 - 01:00 PM
  • UST yields bounce, DE-US yield spreads widen more, 2yr spread near -286 bps
  • USD broadly bid as rates lift, US index climbs further above the 21-DSMA
  • EUR/USD dives below the 10 & 21-DSMAs and nears the daily cloud top
  • March 9 & 12 lows and 55-DSMA sit 1.2273/91 and should find some buyers
  • 1.2240/50 zone is then support, little to stop bears thereafter until 1.2150

chart: Click here

Thomson Reuters IFR Markets
Mar 15 - 01:24 PM
USD: Fade Any White House Personnel Driven Rebound In The USD - Credit Suisse
First appeared on eFXplus on Mar 15 - 09:45 AM

Credit Suisse Research discusses the USD outlook and maintains a bearish bias, arguing that the appointment of the White House's new economic adviser, Larry Kudlow is not a game changer for the negative USD prospects.

We would be inclined to fade any White House personnel driven rebound in the USD, as the announcement of the executive order blocking the acquisition of US tech firm Qualcomm on national security grounds represents a significant escalation of the US administration’s protectionist stance, one that might further exacerbate the funding outlook for the US’ widening current account deficit. In this regard, the decision to block this deal brings further weight to our BOP-based case for further USD weakness

Against this backdrop, we continue to see no reason to deviate from our core bearish view on the USD. In particular we view the expansion of the US administration’s protectionist reach beyond the trade balance and to the capital account as an ulterior source of volatility and of USD weakness," CS argues. 

Credit Suisse Research
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