Printable View
BNP Paribas: JPY to strenghten in the near-term as USD/JPY stays under pressure from lower US yields and an unwinding of JPY shorts, which is the largest position in the G-10 according to the banks Positioning Analysis indicator, persists.
Morgan Stanley bearish on GBP; note Sterlings's sensitivity to changing rate expectations suggests the introduction of forward rate guidance could initiate the next stage of the anticipated medium-term GBP/USD decline
EUR/USD
EUR Briefing - New York
[NEW YORK July 26, 2013 19:55 GMt] Europe failed to breech 1.3300 as DEM-USD 2 yr yield spread contraction abated & longs lightened up into the weekend. The pair slid from Europe’s high & sat near 1.3270 at NY’s open. NY took the pair lower early as EUR/JPY descended from 130.85 to 130.09. EUR/USD was dragged down to 1.3250/55 support but held & kept s-t stops sub-1.3245/50 safe for now. Yen strength waned & took some pressure off the JPY crosses. EUR/JPY lifted off the low & hit 130.55. EUR/USD followed & made a run at the o/n high. The rally was rejected as U. of Michigan data boosted the USD a bit. Another test of the range bottom ensued but held & the pair then spent the remainder of the session near the mid-point of the day’s range. Into the close the pair sat near 1.3275. A slew of event risk for next week likely aided to keep bulls in check into the weekend. Numerous central banks meet next week & the US releases significant data (GDP, PMI, NFP). Should the US data be USD positive & the ECB ramp up the dovish rhetoric, we could see EUR/USD make a run to the mid-July lows & 200 DMA near 1.3065/85.
Copyright (c) 2013 Thomson Reuters - IFRMarkets
EUR/USD - A weekly close above 1.3206 will have large bullish implication and the pair is likely to expose 1.3410 and retest 1.3710 levels, I think we have 3 options:
1- The pair will continue rising towards / beyond 1.3415 levels.
2- It might retest 1.3000 before exposing 1.3415....
3-If we have a large bearish candle on weekly - next week - if the pair mange to close below 1.3000 next week, it would mean that we had a false breakout above 1.3206 and pair is likely to return towards 1.2755 levels...otherwise the pair will fly.
Commerzbank - Next Week's Trading Ranges & Bias For EUR/USD, USD/JPY, & Other FX Spots
The flood of US data due for publication over the coming weeks is likely to confirm the image of a US economy that was struggling in Q2, but is now beginning to move up a gear, says Commerzbank.
"Against this background the Fed is unlikely to see any reason for a rapid reduction in QE3. In view of the improved sentiment indicators in the euro zone the ECB meeting is likely to be rather unspectacular," CB adds.
"As a result EUR-USD is likely to consolidate further with downside risks dominating, as all in all market participants are clearly euro negative," CB projects.
In the table below, Commerzbank outlines its expectations for next week's trading ranges and bias for EUR/USD, and a selection of other currency pairs.
EURUSD - Weekly Forecast 29 Jul - 02 Aug 2013
Rebound from 12755 levels continued last week towards 1.3296 levels, the daily close above 1.3255 levels opens the way towards 1.3330 ahead of 1.3420 levels, break of 1.3420 will extend gains towards 1.3517 levels, above 1.3517 may expose 1.3710 and target 1.3820 levels.
On the downside , as long as 1.3165 holds on a daily closing basis, rebound from 1.2755 is in progress and is likely to extend higher , below 1.3165 would delay the bullish move for retesting 1.3082, next support is at 1.2992 ahead of 1.2922 (main), but downside below 1.3165 should be contained well above 1.2922 and a higher leg may be seen above 1.3420 levels ,below 1.2922 will flip bias back to the downside for retesting 1.2755 levels.
On the weekly chart, the weekly close above 1.3206 levels is likely to have large bullish implication towards 1.3415 levels, and sudden gain is strongly suggested next week towards 1.3415 and possible higher towards 1.3710 levels.
Support and resistance levels : 1.2755,1.2992,1.3082,1.3175,1.3255,1.3415,1.3577,1 .3710
Trend Status : daily close
Bullish : above 1.3165
Neutral : 1.2922 - 1.3165
Bearish : below 1.2922
In the long term picture , fall from 1.6037 - 2008 high - treated as a consolidation pattern , this consolidation is likely over at 1.1875 -2010 low , resistance is at 1.3617 Jan 2013 high , break of 1.3617 will expose 1.3710 and suggest that rise from 1.2042 is resuming towards 1.4000 levels ahead of 1.4500 levels, below 1.2042 will reverse risks to the downside towards 1.1600 levels ahead of 1.1100 levels.
Cyprus, lenders set Bank of Cyprus bail-in at 47.5 pct,
(Reuters) - Cyprus and its international lenders have agreed to convert 47.5 percent of deposits exceeding 100,000 euros in Bank of Cyprus to equity to recapitalize it, banking sources said on Sunday.
Under a programme agreed between Cyprus and lenders in March, large depositors in Bank of Cyprus were earmarked to pay for the recapitalisation of the bank. Authorities initially converted 37.5 percent of deposits exceeding 100,000 euros into equity, and held an additional 22.5 percent as a buffer in the event of further needs.
"There was an agreement concluding at a final figure of 47.5 percent this morning," a source close to consultations told Reuters.
Merkel’s centre-right coalition loses lead over opposition -poll
An Enmid poll in Germany show’s the current ruling party losing its lead:
•Merkel’s party at 40 percent
•Her coalition partner, the Free Democrats (FDP), lost one point to 5%
•The main opposition parties remained steady: the Social Democrats (SPD) at 25%
•the Greens 13%
•Linke 8%
•Gives opposition parties a combined 46%, one point above Merkel’s coalition
Germany’s election is on 22 September, a loss for Merkel is likely to be a net euro negative
UK Business Secretary Vince Cable: “I am worried of the danger of getting into another housing bubble,”
EU 200 week MA looms above
200 week MA has twice been rejected in 2013
Strong weekly close last week sees next resistance at 200 wk MA
June high also in-line with MA - strong level around 1.34
Breaking above (third time lucky) MA would be a major bullish event
Morgan Stanley Has A $10 Million Limit Order To Buy AUD/USD At 0.9125
Morgan Stanley has an active limit order to buy $10 million AUD/USD at 0.9125, with a protective stop at 0.9025, and a target at 0.9600.
MS' rationale behind this macro tactical call is as follows:
'"After last week's more-hawkish-than-expected RBA minutes, we wish to position for tactical AUD strength as expectations for near-term easing may be overdone. Our positioning tracker has also shown short AUD positions are still in extreme territory," MS says.
"We like expressing this view against USD, given Bernanke’s dovish tone in his latest testimony and recent weakness in US data," MS adds.
However, over the longer term MS remains bearish AUD given its exposure to a slowing China.
The Taper is Coming
But when, and by how, much does Wall Street see the end of tapering, and what is the sell-side consensus? The list below summarizes the current view by bank.
•Goldman – Sept taper, – $20b in Tsys
• JPMorgan – Sept taper
• Credit Susse – Sept taper, -$20b via -$10b MBS and -$10b Tsys
• BNP – Dec taper w Sept’14 ending; – $10b ea Tsys/MBS; poss less MBS/more UST’s
• Barclays – Sept taper of – $10b Tsys/- $5b MBS, end buys in Mar’14
• Bank of America – Dec taper but ‘sizable chance’ of Sept
• Deutsche Bank – Sept taper, risk of Dec
• Pierpont- Sept taper;
• BMO – Sept taper;
• RBC – Sept taper likely
• Citi- Sept announce, start taper with Oct 1 buys to $60-65b, stop in mid’14
• ING – Sept taper in Tsys;
• BTM-UFJ – Sept taper
• ScotiaBank – Dec taper
• Jefferies – Oct announce taper, go to smaller buys in Nov
• Nomura – Sept announce taper, begin taper in Q4
• Cantor Fitzgerald -first taper in Sept, of Tsys -$10B and MBS -$5B
•Consensus: September tapering start with ~$20 billion in initial reduction.
EUR/USD
Credit Suisse Daily FX Technicals
•USDJPY’s break beneath 98.27 should clear the way for a deeper decline in the range to 96.96/75, potentially 94.54.
•EURJPY risk is seen lower for a test of 128.69/01, but with a break here needed to see a top
•AUDUSD stays in a choppy range, and only above .9346 would see a base established.
•NZDUSD targets.8139/80, which we look to cap for a turn lower.
•EURUSD aims at the 1.3342/1.3418 range highs which we look to cap.
• GBPUSD above 1.5394 should see a test of our 1.5534/76 target, which we look to cap.
•USDCHF is weighing on support at .9263/42. Beneath would target the range lows at .9165/30 which we would look to provide a floor.
JP Morgan Technical View
The last week was more or less dominated by another weak performance of the USD across the board, but having reached and defended key-support by the end of last week we now see the start window for a resumption of the underlying and broader USD up-trend as wide open again. Only a decisive break below key-support at 81.498 (int. 76.4 %) in the USD Index would support a deeper setback towards the next significant supports at 80.50 (June low) and at 80.053 (76.4 % on bigger scale).
This also applies for EUR/USD and Cable where key-resistance zones between 1.3262 and 1.3334 (int. 76.4 %/daily trend, EUR/USD) and between 1.5391 (daily Ichimoku-lagging) and 1.5530/67/93 (int. 76.4 %/200DMA/daily trend, Cable) are expected to trigger the resumption of the USD up-trend. If taken out though, we'd see room to extend the upside towards 1.3483/1.3521 (76.4 % on higher scale/pivot) in EUR/USD and to 1.5866 in Cable. In terms of risk markets we saw little to no change last week which means the up-bias remains intact and higher targets like 1775 (Fib.-projection, S & P 500) in focus as long as daily trend line support (at 1664 today) is not taken out.
The JPY provided fresh evidence that another recovery leg of bigger scale might be missing with Friday’s strong recovery. But in order to confirm a deeper setback towards internal 38.2 % retracements at 121.04 (EUR/JPY), at 93.57 (USD/JPY) and at 143.00/142.22 (GBP/JPY) it requires breaks below daily trend line supports cutting in at 128.69 (EUR/JPY), at 96.86 (USD/JPY) and at 149.94 (GBP/JPY). As for ZAR we are still bearish in the big picture but can’t exclude a slight extension of the latest recovery to internal 38.2 % retracements at 9.4827 or at 9.2308 in USD/ZAR and at 12.2985/12.2645 in EUR/ZAR where much better risk rewards would be given to re-establish strategic shorts in ZAR.