== $ == Banks Orders Book == $ ==

[Abo Abdullah]

Japan government to consider compiling an extra budget in Autumn – Sankei
On the wires now, via Bloomberg.

Sankei Shimbun is a daily newspaper in Japan focusing on industry and the economy.

[Abo Abdullah]

Goldman Sachs on EUR

A slow start to the week seems in prospect and one gets the slight sense that the market may be losing patience with the long dollar trade. The immediate risk is perhaps for a push towards stops above the post Bernanke Q+A high of 1.3208 but it is not easy to get too excited about the EUR upside any more than it is the downside. On Wednesday we get the EZ PMIs which will attract interest, but in the meantime or until we get another catalyst, it is a case of scratching around in the range. Support seen at 1.3115/20, followed by 1.3080 with the main immediate resistance at 1.3208 (10th July high).

[Abo Abdullah]

EU Brief - New York

[NEW YORK July 22, 2013 19:55 GMT] A break above the daily cloud top (1.3157) in Europe awoke a slumbering EUR/USD market & elicited a spike up to 1.3192. A pullback into NY’s open had it near 1.3175 as EUR/JPY failed to breach s-t res near 131.80. Early NY saw the cloud top tested from the topside as EUR/JPY slid just below 131.15. EUR/USD failed to break back into the cloud & reversed course as the weak Chicago Fed & existing home sales data softened the USD & tapering thoughts waned. The data misses & large 1.3200 expiries saw 1.3200 cleared & stops above 1.3210 run. A high of 1.3218 was hit before s-t spec profit taking kicked in. The remainder of the session saw the pair hold within the 1.3180/1.3200 range with price settling the day near the mid-point of that range. Bulls continue to gain an advantage. The close above the daily cloud top combines with a rising RSI & the USD losing some yield advantage to bolster the idea of higher levels to come. The rising cloud top could provide further lift for the pair & aid in a test of solid resistance near 1.3255 & 1.3300/05. (CR) Copyright (c) 2013 Thomson Reuters - IFRMarkets

[Abo Abdullah]

EU back at 1.3200 RESISTANCE

1.32 is strong historical resistance level - price retesting
Recent consolidation held above 1.30 round number
Daily closes remained above 50 / 200 day MA supports - bullish omen
Expect price to trade up towards June high / 200 week MA above 1.34
Signs of holding above 1.32 will cause even more shorts to cover

[Abo Abdullah]

EU pushing EXTREME Edge

EUR/USD is pushing "extreme end of current ranges" having come under pressure overnight on disappointing US housing data, says Alex Hill, head of trading at HiFX. Without much due during the next 24 hours, it's Wednesday's data, including China's HSBC Flash PMI data, and euro-zone PMI that the market is looking to for cues on the health of the global economy, Hill says. He puts short term support at 1.3150 with resistance coming in at 1.3250. (lucy craymer at com)

[Abo Abdullah]

Asia Market Report

FX OVERVIEW
•Swiss account noted as buying USD/CHF
•USD/JPY saw selling from corporate accounts
•Asian accounts were sellers of AUD/USD at the .9250 level
•US leveraged names noted buyers of GBP/USD
•Japanese accounts buying dips in USD/JPY

EUR/USD

•Outlook is negative for important data releases this week, along with overall economic and political outlook on the Euro Zone; despite this, stops over 1.3210 successfully hunted
•Offers from 1.3200 through 1.3220
•Buy stops above 1.3230
•Bids light at 1.3180, in better size at 1.3150 and large at 1.3100
•Sell stops below the mid figure and under 1.3090

USD/JPY

•Offers from 100.00 up to 100.20, in good size ahead of 101.00
•Buy stops above 100.30 and 100.80
•Bids ahead of 99.20, stronger at 99.00
•Sell stops below both bid levels

AUD/USD
•Offers at .9270, heavy selling interest ahead of .9300
•Buy stops above the big figure in good size
•Bids at .9200 and .9150
•Sell stops below the big figure

NZD/USD
•Offers in good size ahead of .8000, currently not much more resistance above that
•Buy stops above the big figure also large
•Bids at .7950 and .7900
•Sell stops light under the mid figure and heavy under the big figure

EUR/JPY
•Light offers at 131.50, larger offers at 132.00
•Buy stops above 131.80
•Bids at 131.10 down to 131.00
•Large sell stops under 131.00

AUD/JPY
•Offers light at 92.20, heavy at 92.50
•Buy stops above 92.30 and large above 92.60
•Bids at 92.00 and 91.60
•Sell stops below 91.80 and under 91.50

[Abo Abdullah]

EU poised to move HIGHER

EUR/USD opens Asia with bid tone after trading as high as 1.3218 on Monday
Daily moving average studies suggest trend higher is starting to take hold
Relief the Portugal political crisis has been put off adding support
Main support from fading expectations the Fed will taper QE before year-end
EUR/JPY selling in aftermath of Japan upper house election capping for now
Break and close above 1.3210 targets a run towards the June 19 high at 1.3417
John.Noonan at thom

[Abo Abdullah]

Commerzbank - USD/JPY Failed To Clear S/T Resistance Line; Get Ready To Sell

USD/JPY crept higher all of last week but attempt to clear the three month resistance line at 100.87 have so far failed, notes Commerzbank.

"While this level caps, the base of the cloud at circa 97.92/93 could be revisited. It remains sandwiched between these two levels, but we suspect that overall risk is still on the downside," CB projects.

"Should the base of the cloud be eroded, it will leave the market under pressure and likely to slide back to 96.75/95.40 en route to the 93.75 recent low," CB adds.

To negate this immediate bearish view, according to Commerzbank, the pair would need to have a close above 101.60 which could then put bulls back on the map shooting for 103.74 May peak.

In line with this view, CB advises its clients to get ready to reinstate tiny shorts at 100.85, and to add this short at 101.30, with a stop at 101.65.

[Abo Abdullah]

EUR/USD - sovereign offers capped the earlier rally and short-term specs are now selling; stops below 1.3150 are targeted, but some bids seen ahead

GBP/USD - took out the light sell stops sub-1.5350, but remains well-bid overall; demand seen at 1.5320 and 1.53 with more stops below these levels

USD/JPY getting a lift by the sudden USD strength, but offers at 100. have held so far; more selling interest at the big figure and at 100.20 with stops building above; current bias favors selling rallies in the pair, looking for a move back to 99.20

AUD/USD - buying interest expected at 0.9220; a clear break below would probably see stops sub-0.92 endangered

AUD/USD - momentum funds looking to sell break of 0.9220 level; stops below through 0.9190

GBP/USD - US short-term funds noted sellers as we broke below 1.5340; some bids seen at 1.5320 but weak sell stops noted beneath

[Abo Abdullah]

Barclays looking for signs of topping for the EUR/USD and GBP/USD, as the pairs have been rallying on declining volumes recently

Barclays looking to buy USD/JPY at lower levels as the bank says the break below 99.90 warns of a small offered tone coming into the market, although support down at 98.25 should hold firm.

[Abo Abdullah]

Morgan Stanley: Preferred strategy is to sell rallies above 1.32 in EUR/USD, while a break below 1.3150 would signal a resumption of the major downtrend.

[Abo Abdullah]

Citi - EUR/USD: Of Rate Spreads & Other Drivers

"EUR/USD remains driven by the relative rate outlook between the ECB and Fed captured by the 2y EUR-USD swap rate differential. Other drivers like sovereign debt risks and risk aversion have rather limited impact at the moment. In Figure 5 we look at the FX sensitivity to changes in rate spread, peripheral risks and risk aversion. The correlation between EURUSD and EUR-USD rate differential is positive and statistically significant. The correlations with the other drivers are statistically insignificant and in the case of peripheral risks has the wrong sign. The latest EURUSD resilience seems consistent with the renewed widening of EUR-USD 2y rate spread and could be attributed to Chairman Bernanke’s efforts to alleviate market concerns about imminent tapering in the last couple of weeks. It remains to be seen whether the latest retreat of US yields could prove a sustained drag on the dollar. The Fed and ECB meetings loom large next week. More efforts by the Governing Council to talk down the euro short-term rates could contrast with an unchanged Fed statement and outlook for the economy. This could weigh on EURUSD before long."

Dr. Valentin Marinov is Director and Citi's Head of European G10 FX Strategy

[Abo Abdullah]

Morgan Stanley - Stay Tactical Short USD/JPY For 95, Structural Long For 107

Morgan Stanley maintains its tactical short USD/JPY position from early July with a stop at 101.70, and a target at 95.

MS' rationale behind this macro-tactical USD/JPY view is as follows:

"We believe the drivers of USDJPY are evolving. While previously US-Japan rate spreads were highly correlated with USDJPY, this relationship has broken down. In our view, this is due to increasing use of the JPY as a funding currency. If higher US yields undermine risky asset holdings in G10 and EM, selling of these assets will force JPY buying. With slowing global growth, concerns about Chinese financial deleveraging, and ongoing political risk in Europe, we think global risk appetite could suffer. As such, we look for USDJPY to fall towards 95 before resuming its uptrend," MS clarifies.

In the mean time, MS is also a structurally bullish on the pair targeting 107 by the year-end.

"Indeed, we remain long-term USDJPY bulls; as inflation expectations pick up in Japan, Japanese investors should gradually reallocate abroad. We forecast USDJPY to reach 107 by year-end," MS adds.

[Abo Abdullah]

Bank of America Merrill -EUR/USD Upside Pressure .. USD/JPY Tops Out .. Gold Squeeze Is On

Further corrective, upward pressure on EUR/USD should continue before the larger bear trend resumes, says Bank of American Merrill Lynch.

"Look for a top into 1.3276/1.3300, while a break of 1.2994 says the bear trend has resumed for 1.2457 and potentially below," BofA projects.

Turning to USD/JPY, BofA is looking for a near term top and turn lower within the context of the ongoing 103.74/90.91 medium term range trade.

"A break of 98.76/98.30 confirms the top and turn, targeting 93.65/93.79 and potentially 90.91 before renewed basing," BofA adds.

Finally, BofA believes that the current squeeze higher in Gold is still intact with the closing break above 1270 confirmed a near term base and bullish breakout, particularly as the extremes in the weekly ADX are at levels that have traditionally resulted in reversals of between 25% and 30% of the previous trend.

"With specs shorts still at significant extremes (although off from their all time highs) we look for a push towards 1439, channel resistance, before renewed stalling," BofA projects.

[Abo Abdullah]

Credit Agricole - Plenty Of Scope For AUD/USD Short Covering, Stay Long For 0.95

The trajectory of the AUD looks a little more encouraging of late. Like other high beta currencies the AUD has benefited from the soothing words from Fed Chairman Bernanke and the subsequent drop in US yields although notably AUD appeared to be stabilizing even earlier.

The currency is not out of the woods just yet but we remain constructive, looking for further gains over coming weeks as reflected in our open long AUD/USD trade idea.

Speculative sentiment has reached an extreme level in the last week falling to all time low and if anything, this highlights the rather large scope for a rally.

Some direction will come from the release of inflation data tomorrow especially as it will give important clues ahead of the 6 August RBA meeting. A likely subdued CPI reading will give further impetus to a policy rate cut