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Sergey Golubev, 2015.06.25 11:38
Key FX Strategy & Themes - ANZ (based on efxnews article)
"OVERVIEW AND STRATEGY: The USD depreciated through
June, though overall it remained relatively well supported. The Fed
eased market fears once again by emphasising that any tightening path
will be gradual, while at the same time firming expectations that the
first hike would occur in 2015. However, this reprieve does not present
an attractive opportunity to reload carry trades, and the distribution
of outcomes remains disproportionately skewed to a stronger USD. In the
interim, domestic fundamentals remain in focus and idiosyncratic events
will continue to be the primary driver of currency performance."
"THEMES: The euro area is still in need of very loose financial conditions, and a soft
EUR is a part of that mix. In this environment, further strength
remains constrained, and risks remain to the downside. Conversely, in
the UK, signs of a broadening of growth will continue to underpin
expectations of policy normalisation and support the GBP. Thematically
our view on the AUD and NZD remains unchanged. The outlook for the AUD
is looking more balanced, while the NZD remains an underperformer story.
In Asia, economic data continues to disappoint and further policy
easing is likely forthcoming. Here our bias remains to buy USD/Asia on
Sergey Golubev, 2015.06.25 18:15
Deutsche Bank - 4 Reasons To Stay Long USD/JPY Targeting 128 (based on efxnews article)
Deutsche Bank advises clients to stay long USD/JPY
reiterating its view that USD/JPY should gradually trade up to 128 over
the course of Q3. DB outlines the following 4 reasons behind this view.
1- "Japanese institutional investors continue to buy foreign assets, and not only on dips.
Lifers in particular have ramped up purchases with limited sensitivity
to the exchange rate. We think pensions, albeit more sensitive, have
lifted their trailing dip-buying level closer to ¥122," DB argues.
2- "The trade surplus posted in March—the first in four years—proved shortlived, as the trade balance has shifted back into deficit. We expect recent deficits of ¥200bn to narrow only slowly," DB notes.
3- "Although speculative short positions in JPY remain heavier than before the recent move up to ¥125, a fresh widening of the rate differential should help break that level," DB adds,
4- "This is likely to be driven by US monetary policy expectations, but the Japanese leg could also help.
Our baseline is that inflation well below the 2% target will induce the
BoJ to maintain QQE at the current rate well beyond 2015," DB
Sergey Golubev, 2015.06.26 08:38
Trading Video: Preparing for Euro and Dollar Moves (based on dailyfx article)
Markets will soon face a reckoning after this extended period of quiet
complacency. On the risk front, officials are running out of time and
liquidity to find an acceptable compromise over Greece's strained
financial health. After Thursday's failed talks, all parties will
reconvene on Saturday and try to push through a solution before a IMF
payment and the official expiration of the country's rescue program on
Tuesday. For a monetary policy focus - the most productive fundamental
theme over the past year - US rate expectations will be charged by June
NFPs, but the lead in will be particularly interesting between
anticipation and expected holiday trading conditions. Meanwhile, it is
worthwhile looking outside of the Euro, Dollar and Yen
(the most risk-sensitive) for less restrained opportunities. We look at
the potential building up and playing out in today's Trading Video.
Sergey Golubev, 2015.06.26 19:28
EURUSD Continues Trading in Range (based on dailyfx article)
The EURUSD has started Fridays trading ranging between values of support
and resistance. Price is currently retesting support at the bottom of
today’s trading range found at the S3 camarilla pivot at a price of
1.1180. It should be noted that price has already moved through today’s
40 pip trading range twice at this point in time. In the event that
values of support hold, it raises the possibility of prices returning to
values of resistance, including the R3 pivot found at 1.1220. If prices
continue to range, this would mark the third straight day of
consolidation for the pair.
Alternatively, if prices continue to fall below the S3 support pivot,
traders will begin looking for a breakout under the S4 pivot point at
1.1160.Price has already attempted to breakout once this morning, and
abearish breakout would signal an end to current range bound market
conditions. In this scenario traders can begin looking for new trend
based positions on the creation of new lower lows.
Sergey Golubev, 2015.06.27 06:28
Tech Setups For EUR/USD, GBP/USD, AUD/USD, USD/CAD - Barclays (based on efxnews article)
EUR/USD: No change. We are bearish and prefer to fade
upticks against resistance in the 1.1300 area. A move below 1.1135 would
signal lower towards our targets near the 1.1050 area and then the
1.0815 May lows. Our greater downside targets are at the 1.0460
GBP/USD: Thursday’s bullish engulfing candle has
encouraged us to re-instate our bullish view. We are looking for a move
back towards the 1.5930 range highs. Above there would confirm upside
towards our greater targets near 1.6000 and then 1.6200.
AUD/USD: No change. We are bearish against the 0.7850
recent highs and look for a move lower towards targets near 0.7600 and
then the 0.7530 year-to-date lows. Further out, we are targeting the
USD/CAD: Our bullish view would be encouraged by a
break above 1.2425. Our initial targets are towards the 1.2565 June
highs and then the 1.2835 year-to-date highs.
Sergey Golubev, 2015.06.27 20:16
Crédit Agricole for US Week Ahead: NFP, ISM, Factory Orders, Cons Conf, Housing (based on efxnews article)
We look for continued growth in May pending home sales, albeit at a slower pace of 0.6%. Pending
sales of existing homes likely maintained its upward trajectory in May,
albeit at a slower pace of 0.6%. As of April, pending sales, or signed
contracts that have not closed, are up almost 10% so far this year. That
pace is likely not sustainable although we do not expect a sharp
retracement yet. Mortgage applications for purchase stabilized in May
following sharp jumps in the prior two months, suggesting a slower pace
of pending sales growth in May. Our projection for continued sales
growth points to another rise in existing home sales (closings) in
June consumer confidence likely edged higher to 98.0 from 95.4. The
Conference Board consumer confidence index is expected to edge higher
in June to 98.0 from 95.4. In the past four months the index has
retreated from its post-recession high of 103.8 in January, hitting a
low of 94.3 in April. Yet the slightly higher May index of 95.4 still
stands close to pre-crisis averages. In line with our view that the
unemployment rate will continue to fall this year with a steady pace of
job growth, we expect confidence to revert back on its upward course. A
recovery in consumer spirits has already been captured by the University
of Michigan survey, which rose over 5 points in June. One risk to our
scenario is sluggish wage gains, but so far we are seeing signs of a
pickup in the near term.
Construction spending likely slowed to a 0.4% increase in May following a 2.2% pop in April. May
construction spending likely softened to a 0.4% rise after a 2.2% jump
in April. The strength in the prior month reflected robust growth across
private residential and non-residential as well as public construction.
In May we expect residential spending (excluding improvements) to
posted a softer increase given the reversal in housing starts. Private
non-residential spending, which saw strong growth in March and April,
likely moderated. Despite slower expected growth in May, our estimates
are consistent with stronger residential investment and an improvement
in structures spending in Q2.
The ISM manufacturing PMI likely saw modest improvement in June, rising to 53.0 from 52.8.
We look for a modest increase in the June ISM Manufacturing PMI of 0.2
percentage points to 53.0. The index bounced back smartly in May after
running at a low of 51.5 for two straight months. Regional Fed surveys
suggest only a small improvement this month. The June Philly Fed index,
after adjustment to ISM weighting, firmed almost 2 points to a 6-month
high, while the adjusted Empire State index slipped a touch but remained
above its March/April lows. Our June projection of 53.0 would put the
ISM index slightly above its Q1 average, indicating a small recovery in
manufacturing activity in the second quarter.
June vehicle sales likely slowed roughly 2% to a 17.4 million unit rate after hitting 17.7 million units in May.
We expect a modest slowing in June vehicle sales to a 17.4 million unit
rate. Sales surged over 7% last month to 17.7 million units, so the
June projection reflects a slight retracement. With gasoline prices on
average remaining cheap compared to last June, the surge in popularity
for utility and truck models is expected to hold. While the reversal
suggests a more modest gain in June retail sales, it remains consistent
with an acceleration in Q2 consumer spending to at least a 2.8% pace, up
from 2.1% in the first quarter.
We expect a 230K gain in June nonfarm payrolls with the
unemployment rate falling back to 5.4%. We believe the labor market as a
whole remained on a robust path of recovery in June. June
nonfarm payrolls are expected to rise by 230K after rising a strong 280K
in May. Jobless claims edged lower to 267K in the reporting week down
from 273K in May, consistent with a solid payroll print and falling
unemployment. The softer expected gain in June reflects slower growth in
private service-sector jobs, which previously jumped 256K—the third
sharpest increase in the post-crisis period. By contrast we look for
some improvement in goods-producing payrolls, led by a robust rise in
construction jobs. Manufacturing employment, which grew by 7K in May,
likely saw a similar rise in June as regional Fed employment indicators
indicated continued growth but no signal of a significant acceleration.
Employment in the mining industries likely continued to contract though
the stabilization in the oil and gas rig count decline suggests a
slightly more modest drop than in May. To note, our June NFP projection
relies on limited data at hand as we await the June ISM manufacturing,
ADP employment and Conference Board confidence releases. We expect the
unemployment rate to fall back to 5.4% in line with the declining trend
in initial claims among other survey indicators. The labor force
participation rate likely slipped back to 62.8%. Following a 0.3% pickup
in May, average hourly earnings likely rose 0.2% which may push on-year
growth down to +2.2% YoY. Finally, the average workweek is expected to
be unchanged at 34.5 hours.
Factory orders likely slipped 0.2% in May on a drop in durable goods orders. May
factory orders are expected to fall 0.2% reflecting a 1.8% reported
drop in durable goods orders. The May decline was driven by a plunge in
aircraft orders; orders outside of transportation rose 0.5%. Orders for
nondurables, the new data in the release, likely saw an increase in May
in line with higher crude oil and commodity prices.
Sergey Golubev, 2015.06.28 08:30
Crédit Agricole for US Week Ahead and What We’re Watching: NFP, EUR, USD, JPY & Greece Outcomes (based on efxnews article)
USD. Next week’s labour data should keep Fed rate expectations supported to the benefit of the greenback.
EUR. Regardless of any positive
developments, related to Greece, we expect the EUR to remain subject to
downside risk. This is due to the ECB’s aggressive policy stance.
JPY. Tankan unlikely to lift investor spirits. In keeping with the more cautious BoJ message expressed in recent weeks, key Japanese indicators this week should remain soft.
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
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."
Sergey Golubev, 2015.06.28 21:25
COT report by Scotiabank: Takeaways On USD, EUR, AUD, & Other Majors (based on efxnews article)
EUR sentiment deteriorated for the first week in four,
the net short widening $1.3bn to $13.9bn. Its w/w shift was the result
of a paring back in both long and short positions, highlighting a
broader trend of withdrawal in traders’ participation as a result of
elevated uncertainty and the binary nature of Greek risk.
Investors pared back JPY risk in a manner similar to that observed in EUR,
albeit to a greater degree with a $2.7bn decline in gross longs and
$2.0bn decline in gross shorts. The pattern suggests that traders await a
greater degree of certainty in the face of binary Greek risk.
CAD sentiment has deteriorated for the third week in four,
the net short widening $0.4bn to $1.4bn on the back of a decline in
gross longs—falling to their lowest levels since June 2013. AUD sentiment is also bearish, albeit modestly so
with a net short at $0.7bn. Investors in appear cautious in adding to
risk in either CAD or AUD, waiting for a breakout of their relatively
Sergey Golubev, 2015.06.29 07:17
Forex technical analysis: EURUSD gaps. What is the trading strategy? (based on forexlive article)
'Looking at the daily chart below, the price has been able to extend
below the 50% of the move up from the March low at 1.04617 to the high
from May at 1.14658. That level comes in at 1.09638. This remains a key
level to get below - and satay below if the bears are to extend the