Morgan Stanley made some fundamental/technical outlook for this week related to USD, EUR, JPY, GBP and AUD. It is about some fundamental news events coming and the strategies to be used for trading.
"USD: Bullish.
In an environment of fading risk appetite and high uncertainty due to
China and Greece, we believe USD will be a relative outperformer. Oil
prices are also on a downward trend, which could boost USD as well. The
market has pushed back the timing of the first Fed hike significantly,
creating room for upside moves if US data does surprise on the strong
side. We will watch the upcoming retail sales and CPI prints.
We believe that with or without a Greek deal, EUR is likely to weaken. Should Greece sign a deal, the market will return to funding in EUR, weighing on the currency. On the other hand, if a Grexit develops, this will force markets to price a higher risk premium of exit into all European assets, as this is a risk that cannot be hedged out. This will weigh on EUR as well. All eyes will be on the upcoming ECB meeting.
JPY: Bullish.
JPY is likely to remain an outperformer over the coming week.
Uncertainty surrounding Greece and China remain high, which should
support safe haven flows and repatriation by Japanese investors.
Demographics also should support JPY going forward. As the population
ages, pension funds will need to liquidate foreign assets in order to
pay out. Finally, Japan’s balance of payments has turned positive, also
boosting JPY.
GBP: Neutral.
We believe that GBP will strengthen to its peak in the coming months
with short-term performance driven by rate expectations in anticipation
of the first vote for a rate hike in August. The Budget announced this
week supports this view pointing to potential upside risks to inflation
in the near term so we will be watching the CPI. However, front loaded
fiscal tightening indicates growth headwinds and GBP strength coming
under pressure in the medium term.
AUD: Bearish.
AUD is doubly hit by concerns about China growth, both by the direct
impact via trade linkages, and the indirect commodity impact. Indeed,
iron ore prices have fallen significantly this month, and it is no
surprise AUD was the underperformer in the G10 currencies over the past
week. Uncertainty in Greece could also weigh on AUD, should it have a
larger impact on global risk appetite."
