Skandinaviska Enskilda Banken - Long-Term Tech Outlook for EURUSD, USDJPY, AUDUSD and USDCAD

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Press review

Sergey Golubev, 2015.07.03 21:05

Tech Setups For USD/JPY, GBP/USD, AUD/USD - Barclays (based on efxnews article)

USD/JPY: Thursday’s sell-off into the close signals a short-term top that caps the recent rally attempt. We prefer to use any subsequent dip as an opportunity to buy at better levels and expect buying interest near 122.00 to underpin a move towards the 124.40 area. A break above the latter would open the 125.85 greater range highs. Further out, we are targeting the 132.20 area. 

GBP/USD: Yesterday’s “doji” candle has compelled us to re-establish a bullish view. A break above 1.5670 would add to our bullish conviction and open our targets near 1.5790 and then the 1.5930 highs. 

AUD/USD: The break below the 0.7585 range lows endorses our bearish view reachnig our initial targets near the 0.7530 lows. Further out, we look for a move towards the 0.7100 area.

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Sergey Golubev, 2015.07.05 14:52

Weekly outlook by Morgan Stanley for USD, EUR, JPY, GBP, CHF (based on efxnews article)

USD: Neutral
"We see scope for USD to remain supported against most currencies in G10. Data over the past week has been strong, most notably consumer confidence. At the same time, the market has pushed back the timing of the first Fed hike due to uncertainty in Greece. We see scope for this to come forward on the back of a resolution in Greece in either direction, offering support to USD."

EUR: Bearish
"We believe there is little scope for EUR to rally, regardless of the outcome in Greece. A ‘No’ vote in the referendum is likely to lead to Greece exit from the euro over time. The ECB may well have to undertake aggressive action to stabilize markets, and the enhanced liquidity is likely to weigh on the currency. On the other hand, a ‘Yes’ vote without a credible plan for the future, but rather a ‘muddle through’ solution is likely to keep uncertainty high and reduce appetite for eurozone assets."

JPY: Bullish
"In an environment of soft risk appetite, we think that JPY is likely to be an outperformer. Higher volatility is likely to drive some repatriation flows as well, and we note that portfolio flows have turned more positive. JPY is the most overvalued G10 currency on a PPP basis, supporting our view that there is scope for strength. Stronger data mean the policy tone is changing, and we expect the currency to remain supported."

GBP: Neutral
"GBPUSD has weakened from Greek risks and weaker-than-expected manufacturing PMI; however, we still see strength in the more important services sector. In particular wages here appear to be picking up which has supported rate expectations in the UK and therefore GBP. 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."

CHF: Bearish
"The SNB announced that it intervened following the Greek referendum announcement. This suggests to us that the SNB is less worried about the level of EURCHF and intervened more on the anticipation of rapid CHF strength. While Greek risks remain, the rapid falls in EURCHF are likely to be limited. We wait for opportunities to buy USDCHF as longer term we will start to see the negative economic impact of the stronger currency."

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Sergey Golubev, 2015.07.06 06:09

The Meaning Of No (based on seekingalpha article)

It appears that a majority of Greek votes have been cast for rejecting the creditors' offer. The government campaigned for this result. Prime Minister Tsipras may find, however, that it has not strengthened his negotiating hand. To the contrary, the range of options has narrowed and the financial system is collapsing.

Tsipras has said he will go to Brussels and sign a revised deal within 24 hours. This is most unlikely. The second assistance program ended on June 30. A new one will have to be negotiated. This appears to require some parliaments, like Germany's, to authorize the negotiations. It is not only a function of time but desire. Judging from the IMF's report last week, without debt relief for Greece, the multilateral lender might not participate in a third program either.

The ECB reportedly will meet to discuss the Greek central bank's request for new ELA access. There is no reason to expect this to be forthcoming. The job of the ECB is not to support banks unconditionally. They need to be solvent. Bank can use a broader range of collateral in ELA borrowings than on loans from the ECB. There has been a concern that Greek banks were exhausting their supply of such assets. The past week only exacerbated this pressure.

Without ELA funding, the image of monetary asphyxiation seems fitting (though it gives the Greek government no reason, then, to threaten to hold its breath). Banks are running out of cash. Some suggest that there are sufficient notes until around mid-week, but not one seems to know. The longer it persists, of course, the greater the economic impact. Business failures, in turn, worsen the quality of the Greek banks' loan book.

A 2-bln T-bill matures on Friday, July 10. To secure the funding, the government plans on auctioning bills on Wednesday. Greek banks are primary buyers of the government bills, simply to roll-over their current holdings. While this has been a fairly routine exercise, it could be more problematic this week. It is worth noting the auction as a potential event risk.

The results of the referendum do not necessarily mean that Greece will leave the monetary union. There are still many steps to get from here to there. The political commitment to the irreversible nature of monetary union should not be under-estimated.

The euro is set to open lower, but within the range seen a week ago. A "no" victory was largely anticipated. The key now is the response by policymakers. The creditors may be somewhat more divided now. Tsipras may feel bolder, but he is playing with the same, or fewer, cards now.