EURUSD Technical Analysis 2015, 28.06 - 05.07: Descending Triangle for breakdown

Forum on trading, automated trading systems and testing trading strategies

Press review

Sergey Golubev, 2015.06.29 13:46

Credit Agricole - 'A Referendum On EUR': What's Next For Greece? (based on efxnews article)

"The upcoming referendum is in fact a referendum on the Greek membership in the Eurozone. Indeed, if the people of Greece turn down the reform proposal, the country will end up with no creditor funding (and no ECB support for its banks). A default should follow and, with Greece still cut off from the global capital markets and with no sovereign default resolution mechanism in place in the Eurozone, the government will be forced to raid domestic deposits or issue IOUs. The latter will be in violation of the EZ treaties and mean Greece should ultimately leave the EUR."

"Needless to say, social tensions should escalate and political uncertainty soar, pushing the economy closer to the precipice."

"Given the gravity of the decision, we still think the people of Greece will choose to stay in the EUR and agree to the creditors' reform proposal on July 5."

Forum on trading, automated trading systems and testing trading strategies

Press review

Sergey Golubev, 2015.06.28 18:44

Morgan Stanley - EUR, JPY, GBP, AUD, CAD: Outlooks For The Coming Week (based on efxnews article)

"EUR: Markets Still Waiting for Greece. Bearish.

We remain bearish EUR over the medium term but believe that short term trading will be dominated by market risk appetite. Should European equities sell off as concerns about Greece rise, European investors would need to buy back their short EUR currency hedges, supporting the currency. That said, Greece remains a major risk and tensions are escalating, which could drive markets to increase the risk premia in the price of EUR, weighing on the currency.

JPY: Flows Keep JPY Supported. Bullish.

We believe JPY is likely to be one of the outperformers over the coming months and treat it like our quasi-dollar. Flow data suggests that Japanese investors continue to be net sellers of foreign bonds, driven by the higher volatility and thus this prevents the JPY weakening further. The key risk over the coming weeks is market’s risk appetite. A deterioration from negative news from Greece could be a further support for the JPY. We like medium term EURJPY short positions.

GBP: Strong Wages Keep GBP Supported. Neutral.

GBPUSD is being mainly driven by rate expectations and should the recent strong wage data be sustained then this should bring forward rate expectations. This week the BoE’s Weale suggested that he could vote for a rate hike as early as August. We believe there is potential for GBPUSD to reach 1.60 but prefer buying on the crosses, in particular against the NOK where an accommodative central bank highlights the divergences between the two currencies.

CAD: Trades with Oil. Bearish.  

We believe CAD is likely to weaken over the medium term in line with other commodity currencies and still observe a strong correlation with oil. The upcoming CPI print will be important, given prices have been on a down trend, and we believe the Bank of Canada could generally be too optimistic. Markets are pricing in little chance of a cut, and should this increase, it could weaken CAD in an environment of broader USD strength.

AUD: External and Domestic Pressures. Bearish.

We expect the AUDUSD uptrend to remain limited and would sell on rebounds. The outlook on the economy remains weak and now that iron ore prices are expected to weaken over the coming months from increased supply, there could be a renewed story to support the next leg lower in the AUD. Indeed, the RBA needs to remain dovish for our near term story to hold so it is a risk if the governor sounds less dovish than markets have come to rely on. 0.76 is a key support level."

Forum on trading, automated trading systems and testing trading strategies

Press review

Sergey Golubev, 2015.06.30 12:44

Euro area annual inflation down to 0.2% (based on official report)

Euro area annual inflation is expected to be 0.2% in June 2015, down from 0.3% in May 2015, according to a flash estimate from Eurostat, the statistical office of the European Union.

EURUSD M5: 35 pips price movement by EUR - CPI Flash Estimate news event:

Forum on trading, automated trading systems and testing trading strategies

Press review

Sergey Golubev, 2015.06.30 19:30

Bank of America Merrill Lynch about Non-Farm Payrolls on Thursday (based on efxnews article)

• "The employment report is likely to show another solid month of job creation in June. We look for job growth of 220,000, a slowdown from the 280,000 pace in May but consistent with the recent trend.
  As a result, the unemployment rate will likely lower to 5.4% from 5.5%. With the continued tightening in the labor market, we think average hourly earnings (AHE) will increase a “strong” 0.2%, allowing the yoy rate to hold at 2.3%."
• "Within the components of the establishment survey, we expect private payrolls of 215,000 with the government only adding 5,000. Similar to last month, we expect the goods side of the economy to reveal weaker job creation, consistent with the softer trajectory of industrial production and capital expenditures. Moreover, we have yet to see the end of job cuts in the energy-related sectors. That said, there should be some support from greater construction hiring given the improvement in homebuilding. On the services side, we look for broad-based expansion in jobs with particular gains in leisure and hospitality and overall business services."
• "The household survey, which provides the data on the unemployment rate, should also show solid job growth. The three-month average has been a bit softer than nonfarm payrolls, with growth of only 166,000, but the six-month average has been consistent at 244,000. A wildcard is the change in labor force participation. After a sharp gain of 0.11% in May, we look for little change in June, given the volatile nature of the series. Smoothing through, the labor force participation rate has been essentially moving sideways since last fall, suggesting that a cyclical gain has managed to offset the secular downward pull."