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
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.
Forex Weekly Outlook July 6-10 (based on forexcrunch article)
Greece has been left front and center, with safe haven currencies riding higher and commodity currencies lower. The climax is still ahead of us. The week commences with the Greek referendum but there are other important events as well: US ISM Non-Manufacturing PMI, the FOMC Meeting Minutes, rate decisions in Australia and the UK and more. These are the major Forex events for the coming week. Join us as we explore these main market-movers.
The Greek crisis has dominated the news. The situation deteriorated as talks broke down. Banks are closed, the country failed to pay the IMF and all eyes are now on the referendum on Sunday, where polls show a close race. However, this is far from being the end of the story, especially as we learned that the IMF supports debt restructuring. While Greece is only 2% of the euro-zone economies, the political implications are huge. For the euro, the reaction was mixed: a Sunday gap was followed by a rally (for various reasons), but this was eventually eroded.
Elsewhere, the US Non-Farm Payrolls showed the economy created 223,000 positions in June but the downwards revisions, disappointing wages and the low participation rate left a bad taste. This may slow the pace of rate hikes, but the first one could come still come in September. It also depends on Greece. Commodity currencies suffered with China: AUD/USD reached a 6 year low and also the kiwi and CAD suffered. Sterling stood relatively strong thanks to good positive UK data.
EUR/USD Forecast July 6-10 – Another Greek climate (based on forexcrunch article)
EUR/USD had a wild week, moving on the deterioration of the crisis, but not always in the most straightforward manner. The new week begins with the Greek referendum and continues with data from Germany and France. Greece will certainly remains in the headlines throughout the week. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
Greek summary: the announcement of the referendum was followed by the Eurogroup rejecting a short term extension, the ECB capping assistance to Greek banks and triggering capital controls. This escalation resulted in a Sunday gap for the euro, but it found ways to recover and even rally. We then had ongoing negotiations, the eventual default of Greece to the IMF, more offers as both sides stopped talking and awaited the Greferendum, the IMF came out suggesting debt restructuring. For the latest, see: Greek crisis – all the updates in one place
In other news, euro-zone inflation slowed to 0.2% as expected and PMIs also came out within expectations. The US gained 223K jobs in June, slightly below expectations but revisions were negative and the bigger disappointment came from wages. Nevertheless, the Fed seems to be on track for a hike in September, but Greece is having a growing impact also on Yellen.
US Week Ahead: FOMC Minutes, ISM, Trade Balance (based on efxnews article)
The June ISM non-manufacturing PMI likely bounced back to 56.6 after falling to 55.7 in May.
"The June ISM non-manufacturing PMI likely rebounded in June to 56.6
after hitting a more than one-year low of 55.7 in May. Other
service-sector surveys suggest that the sharp correction in May was a
one-off event. Our projection implies
that the ISM activity index averaged 56.7 in Q2, unchanged from Q1. As
we anticipate stronger growth in the second quarter, we see upside risk
to our expected June rebound in services activity."
The May international trade deficit is expected to widen modestly to $42.4 billion from $40.9 billion in April. "The
trade deficit likely widened by roughly $1.5bn to $42.4bn in May. The
deficit plunged in April to more normal levels as the Q1 data were
distorted by the West Coast port disruptions. We expect the May deficit
to reflect a rise in exports, led by industrial supplies and capital
The June FOMC minutes discussion will likely center on timing
of the first hike and the slow expected pace in the rate path. The
minutes of the June FOMC meeting will be read for participants’ comments
on how they assess progress towards the committee’s inflation and
employment objectives, as this will determine the timing of the first
rate hike expected later this year. Recall that the April 29
minutes noted that “many” thought it unlikely that the data would make a
sufficient case for tightening in June. It would enhance the FOMC’s communication
efforts with the markets by providing a bias for the intermeeting period
ahead, without any commitment. Both the FOMC and market participants
would then assess the incoming data in light of that bias. The
developments in Greece will not doubt be cited as a risk to be carefully
monitored but our sense is that Fed officials believe that the direct
effects on the US will not be significant and the indirect effects
through Europe and financial markets would not be of sufficient
magnitude to cause a rethink of the Fed’s current expectations. We believe
that the Fed would like, data permitting, to get the normalization
process started this fall. Recent comments from Williams, Dudley and
Powell suggest that a September lift-off remains in play."
Week Ahead by Crédit Agricole: Greece, Yellen, FOMC Minutes, Volatile EUR/USD (based on efxnews article)
"A 'no' vote will be a risk-negative outcome that will fuel
Grexit fears. EUR should fall, especially against the majors, while
European G10 currencies should underperform the rest. Market visibility will indeed worsen significantly, however, given that
it could take months before we know the ultimate fate of Greece. To the
extent that this keeps the hopes of a deal alive markets may even
return to their ‘holding pattern' after the initial sharp selloff. Indeed the greatest risk could lie in a ‘Yes’ and thus a
back-firing of Tsipras and Varoufakis plan to gain greater leverage over
its European creditors. Such an outcome could make for a highly
volatile EUR/USD in thin trading Monday morning. In particular, should initial exit polls signal a ‘no’ vote
(ie. in public protest) only to then be followed by a slow drift towards
a ‘yes’ throughout the evening as each constituency is counted, EUR/USD
price could easily catch traders wrong-footed."
'What we’re watching:
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
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
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
Which way will the EURUSD gap on Monday? (based on forexlive article)
What do we know about referendums and votes?
know that in the majority of cases the early opinion polls lie. The
most recent notable cases were the Scottish vote and then the UK general
election. At times you couldn't get a fag paper between the results of
countless polls yet both showed resounding final results. Despite the polls showing the
Greek referendum to be very tight I'm going to err on the side of
history and put myself in the yes camp. Irrespective of the fact that
this is a vote on the current deal put to Greece by the Troika many will
see it as the start of whether Greece stays or leaves the euro."
How will the euro react?
is no Greek expert either and it will move one way or another. A yes
vote should see the euro gap up and a no vote gap down. But how far can
it move? A yes vote will bring a kneejerk move but won't remove the risk
of continued negotiations and arguing, and it won't suddenly mean
everyone they owe gets paid. Those will be separate hurdles we'll have
to negotiate after. I
think the price action we saw Monday is probably a fair reflection of
the type of initial move we'll see but be wary of any gaps as we saw how
quickly they can reverse. If you are going to trade it then
be ready for a sizeable move and be prepare your trades accordingly. I'm
half tempted to take a small long into the weekend to back a yes vote
but that's a trade that's nothing more than a punt, so is not
proper trading. I may even just hit up the bookies and place a fixed
odds bet so at least I know my potential loss. Monday will be fun
and games whatever happens so we should at least be thankful for the
volatility. For our Greek friends, stay safe and for traders, trade
safe, or stay out if you're unsure, and lets see what gifts the market
brings next week."
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.
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.
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.
Credit Suisse about Grexit: 'You Don't Leave The Euro; It Leaves You' (based on efxnews article)
"Countries don’t leave the euro.
If countries try to leave, or show signs that they might, the euro leaves them first.
To avoid getting trapped, devalued or defaulted.
A liquidity crisis occurs and domestic liabilities are replaced by foreign ones that cannot be redenominated.
So on exit a solvency crisis appears certain.
As “the euro leaves”, it takes the country’s banking system, and country’s credit, with it.
So a Greek “failure” would mean sovereign and banking sector default more than it would mean a new currency, we think."
UBS: Trade Ideas for EURUSD, GBPUSD and AUDUSD (based on efxnews article)
EURUSD: "it has had a muted reaction despite the surprise
outcome from the Greece referendum. Even though the market is
positioned short, we expect the pair to test the downside sooner rather
than later this week. Keep it tight but prefer short and add on more
spikes above 1.1055 with stops above 1.1125."
GBPUSD: "Cable should remain vulnerable to Greek
updates. Cable could continue holding the recent downtrend with the
double top just ahead of 1.6000 while approaching the 200-day moving
average at 1.5447. Stay flexible and keep stops extremely tight, but
AUDUSD: "The reaction to the Greek 'No' vote has been
muted so far but risk should trade soft given the likelihood of further
escalation of the crisis. Sell rallies to 0.7500-0.7550 with stops