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By eFXdata  —  Mar 04 - 10:45 AM

Danske Research flags a scope for EUR/USD downside if the exemption of bank reserves from the supplementary leverage ratio expires in the US on March 31.

"The supplementary leverage ratio (SLR) require US banks to hold capital against their stock of bank reserves. Regulators temporarily exempted bank reserves from the SLR calculation last year, which allowed banks to accumulate the rise in reserves on the back of Federal Reserves balance sheet expansion. The exemption is set to expire 31 March unless regulators extend it further or even make it permanent," Danske notes. 

"We think it is most likely regulators extend the exemption. Otherwise, Fed risks making monetary policy impotent, but the fact that a decision is still pending means there must be a chance they will not. In our view, markets are not pricing such outcome and it would lead to (1) a drop in US inflation expectations and rise in real rates, (2) drop in EUR/USD FX spot, (3) a wider EURUSD OIS basis on tighter USD funding conditions and (4) tighter US asset swap spreads," Danske adds. 

Danske Research/Market Commentary
By Paul Spirgel  —  Mar 04 - 10:18 AM

Sterling's run to new session highs by 1.3984, hints that the dollar and the pound might be running on parallel tracks with regard to rate and recovery expectations.

Currency moves were muted on Thursday as markets awaited comments by Fed Chair Jerome Powell at 12:05 PM EST on expectations that he would address the recent rise in U.S. long-term rates.

Though sterling is 2-1/2-big figures below its recent trend high, UK and U.S. rates have been following a similar trajectory.
The rise in UK growth expectations, and diminished outlook for UK negative rates, has been a key factor in sterling's rise from early December 2020 lows by 1.31.

Powell statements are likely to have hurt sterling less as a walk-back on U.S. and global rates by Powell would remove only one catalyst of its recent strength.

Upbeat COVID and post-Brexit recovery tones are likely to maintain GBP's relative strength versus the USD and EUR as long as recent UK successes fighting the virus and re-igniting UK growth are maintained.
For more click on FXBUZ

GBP Chart: Click here

UK rates Chart: Click here

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Mar 04 - 09:40 AM

Citi summarizes its expectations for today's speech by Fed Powell (12:05 pm EST).

"All eyes today will understandably be on Fed Chair Powell who speaks at 17:05 GMT. Powell’s speech is accompanied by a Q&A session," Citi notes. 

"CitiFX Strategy believes that Powell is likely to talk down rates activity in a bid to ease anxieties prior to the FOMC blackout period. Nonetheless, risk of volatility remains prominent if Powell fails to appease markets," Citi adds. 

Citi Research/Market Commentary
By eFXdata  —  Mar 04 - 08:36 AM

Credit Suisse discusses USD/CAD technical outlook and highlights the importance of the 1.2730/49 level for near-term directional bias.

"We continue to look for 1.2730/49 to ideally cap and see support initially at 1.2625, removal of which would ease the recent upside pressure. Below here can see 1.2587 next, beneath which would negate the small base and see a move back to the current low for the year at 1.2468, just shy of the mid -February 2018 low at 1.2452, where a more concerted effort to hold is expected to maintain a new range," CS noes.

"Above 1.2749 would suggest an even deeper correction higher than expected and reassert the prior range, with resistance initially seen at 1.2763/66," CS adds. 

Credit Suisse Research/Market Commentary
By Christopher Romano  —  Mar 04 - 07:12 AM
  • AUD/USD rallies from 0.7753 low set in Asia, lift stalls short of 10-DMA

  • Broad US$ buying, drops in equities & copper drive pair lower in Europe

  • 0.7765 neared before drop stalls, US$ bid fades & US rates/yields slide

  • AUD/USD bounces nears flat at NY open, large daily doji candle forms

  • Investors await Fed's Powell talk on US econ at WSJ jobs summit

  • Daily techs suggest rallies are corrections for last week's sharp fall

  • 10-DMA, 50% Fib 0.8007-0.7693, Feb 26 high are impediments for bulls

  • Break below 55-DMA, Feb 26 low, daily cloud top gives bears more control

  • For more click on FXBUZ

aud/usd Click here

Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  Mar 04 - 06:20 AM
  • Likely the Fed chief adopts a neutral line at today's Wall St call in

  • UST 10-yr yield back below 1.5% and even at last wk's peak was still low

  • However, yield differentials likely to widen on Fed-ECB rhetoric divergence

  • EUR/USD struggling to make bearish headway today but risk of bear resumption

  • Thrs option expiries could add to support-resistance due to related hedging

  • Key EUR/USD levels 1.1992 Tues low and 1.2113 Wed high: cloud twist warning

  • Bear bias holding but note the 1.2093-1.2111 Mar 11 twist risk: EBS pricing

For more click on FXBUZ

EUR/USD daily candle chart: Click here

Refinitiv IFR Research/Market Commentary
By Rob Howard  —  Mar 04 - 05:40 AM
  • AUD/USD hits 0.7768 after extending south from 0.7815 (early Europe high)

  • Drop to 0.7768 influenced by 3% copper price fall nL5N2L22VInL2N2L20BQ

  • European equity losses are also weighing on risk-sensitive AUD nL5N2L23FB

  • 0.7753 (Asia low) and 0.7737 (Tuesday's low) are AUD/USD support points

  • Tuesday's low was plumbed after dovish RBA. Fed's Powell speaks at 1705GMT

  • See: nL2N2L126D. AUD/USD option expiries aplenty at 1500GMT nL5N2L22B2

AUDUSD Click here

Refinitiv IFR Research/Market Commentary
By Richard Pace  —  Mar 04 - 04:02 AM
  • Option dealers will cover areas where they are short inventory if threatened

  • Related flows can therefore show any growing concerns/need to cover

  • Many FX traders were expecting retail offers/barriers at 107.00 to hold

  • But on Monday, options were covering for gains above 107.00 nL2N2KZ116

  • There's more interest to buy strikes above alleged large 108.00 barriers now

  • Likely short gamma above 108.00, could see increased volatility if broken

  • Big expiries below nL2N2KZ116. Powell and NFP risk premium nL2N2L20HD

For more click on FXBUZ

JPY=EBS Click here

Refinitiv IFR Research/Market Commentary
By Rob Howard  —  Mar 04 - 02:42 AM
  • Cable has traded a 48 pip range thus far Thursday, 1.3920-1.3968

  • 1.3921 was Wednesday's low: subsequent rally topped out 7 pips shy of 1.40

  • Offers just above 1.40 capped Wednesday's pre-UK budget speech gains

  • See: nL2N2L10DX. 1.3860 was Tuesday's low (lowest level since Feb 18)

  • EU vows legal response as UK moves unilaterally on N.Ireland nL5N2L13ZA

  • NI loyalist paramilitaries withdraw support for peace deal-Belfast Telegraph

  • See: nL5N2L21OD. Powell comments may impact USD later today nL2N2L10LF

GBPUSD Click here

Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  Mar 04 - 02:36 AM
  • Long upper and lower candle shadows highlight market indecision

  • Pullback from the 1.4240 trend high stalling badly but gains also laboured

  • Our 1.3895 long is in play but vulnerable to a bearish continuation pattern

  • Breakout risk from 1.3860-1.4006 s/t range skewed bear side

  • Bull trend resumption seen above 50% Fibo 1.4240-1.3860 at 1.4050

  • Weekly inverted hammer is struggling to draw bearish confirmation

    For more click on FXBUZ

GBP/USD Trader:

GBP/USD daily candle chart: Click here

Refinitiv IFR Research/Market Commentary
By Martin Miller  —  Mar 04 - 02:14 AM
  • EUR/USD bulls fight back was stymied ahead of tenkan line at 1.2118

  • Market recovery peaked at 1.2113 on Wednesday, according to EBS data

  • Spot has since dropped and is now trading wholly back below daily cloud

  • Daily cloud resistance currently spans the 1.2074-1.2162 region

  • Bias is bearish, but a daily close above tenkan would be a positive sign

  • EUR/USD Trader TGM2334 Previous update nL2N2L10HJ

Daily Chart: Click here

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Mar 03 - 10:13 PM
  • EUR/USD opened 0.23% lower at 1.2062 after the USD and US yields firmed

  • EUR/USD dipped to 1.2044 in early Asia when E-minis fell at the open

  • Buyers emerged at the low and EUR/USD steadied between 1.2050/60

  • EUR/USD resistance is at the 10-day MA at 1.2109

  • EUR/USD support is at Tuesday's 1.1992 low and trend low at 1.1952

  • EUR/USD will likely remain in range at least until Powell speech today nL3N2L209W

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Mar 03 - 10:04 PM
  • -0.1% with the USD a touch firmer in middle of a slow 1.3920-1.3955 range

  • Amazon's first cashierless store arrives in Britain nL2N2L13RG

  • English COVID-19 prevalence rate declining at a slower pace nL5N2L16U8

  • Potential clouds on the horizon for UK economy and sterling nL2N2L13SN

  • Charts; 1.3860-1.4021 consolidation for a week - neutral 5, 10 & 21 DMAs

  • Close below rising 21 DMA - 1.3912 today would be a negative signal

  • Bias is higher while 21 DMA holds - support on the close in 2021

  • 1.3823, 61.8% of the February rise is pivotal support

For more click on FXBUZ

gbp mar 4 Click here

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Mar 03 - 10:03 PM
  • AUD/USD opened 0.7775 and eased to 0.7753 when E-minis opened 0.3% down

  • AUD/USD settled around 0.7760 when Aus retail sales and trade data released

  • Trade data was strong while retail sales was slightly lower than expected nAZN0MWU00nAZN0NWU00

  • AUD/USD moved higher after the data with AUD/JPY demand out of Tokyo helping

  • Oddly - AUD/USD traded to 0.7792 while Asian equity market slide accelerated

  • AXJ equity index was down around 1.8% while the AUD/USD hit session high

  • Talk in market that Japanese retail bought AUD/JPY and caught market short

  • Heading into the afternoon the AUD/USD is just below high at 0.7785/90

  • Resistance is at 10-day MA at 0.7839 while support at 55-day MA at 0.7714

  • Key later today will be bond market reaction to Powell speech

  • For more click on FXBUZ

aud/usd Click here

Refinitiv IFR Research/Market Commentary
Mar 03 - 09:55 PM

AUD/USD - Edges After Mixed Aus Data

By John Noonan  —  Mar 03 - 07:40 PM
  • Aus retail sales form Jan slightly worse than expected at +0.5% nAZN0NWU00

  • Aus trade surplus for Jan better than expected at +10.142 Bln nAZN0MWU00

  • AUD/USD settling around 0.7775 after trading 0.7765 before the data

  • It fell to 0.7753 in earlier when risk assets slipped lower at the open

  • Support at 55-day MA at 0.7717 and resistance at 10-day MA ay 0.7839

  • For more click on FXBUZ

aud/usd Click here

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Mar 03 - 06:45 PM
  • AUD/USD fell from 0.7775 to 0.7753 after E-mini futures opened 0.3% lower

  • Fall in risk may be related to news US House cancelling Thursday session

  • Reason for cancellation is due to concerns of a possible plot on Capitol nL2N2L11ZC

  • Market has steadied after initial knee-jerk sell and AUD/USD back to 0.7760

  • AUD/USD support is at the 55-day MA at 0.7717

  • For more click on FXBUZ

aud/usd Click here

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Mar 03 - 05:57 PM
  • EUR/USD opens 0.23% lower after higher US yields underpinned the USD nL2N2L13F6

  • The 10-day MA (1.2110) validated as resistance by this week's price action

  • Support is at Tuesday's 1.1992 low and the trend low is at 1.1952

  • EUR/USD likely to continue patter of whippy range trading without a trend

  • Asia should maintain narrow range ahead of Powell's speech Thursday

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Mar 03 - 05:22 PM
  • AUD/USD opens 0.58% after USD broadly firmed and Wall Street slumped nL2N2L13FE

  • AUD/USD fell hard in last two hours as Wall Street weakened into the close

  • Higher US Treasury yields supported USD and weighed on risk assets

  • Key commodities weakened with NY copper falling over 2.0%

  • AUD/USD resistance at 10-day MA at 0.7839 validated by price action

  • Support comes in at the 55-day MA around 0.7717 and last week's 0.7692 low

  • AUD vulnerable while bond market volatility rattles risk assets

  • Aus January retail sales today with market expecting +0.60%

  • For more click on FXBUZ

aud/usd Click here

Refinitiv IFR Research/Market Commentary
By Randolph Donney  —  Mar 03 - 02:47 PM

The dollar gave up much of its early gains after ADP and ISM services reports disappointed expectations nL2N2L02B7, but rising U.S. yields helped to prevent a full-scale retreat in the U.S. currency.

EUR/USD only bounced from 1.2043 to 1.2080, with Treasury yields stubbornly clinging to sizeable gains, underpinned by rapidly expanding U.S. COVID-19 vaccinations and supplies nL3N2L035W versus heavily lagging efforts in the EU and Japan.

The Fed and other policy-makers have focused on the pandemic trajectory as the most important variable for economic recovery, though there are concerns that restrictions might be lifted too quickly nL2N2L02I3nW1N2KA01O.

The market showed little reaction to the Fed's beige book report nL2N2L12UO showing that the U.S. economic recovery continued at a modest pace over the first weeks of this year.

EUR/USD remains near the middle of February's 1.1952-2435 range on EBS, though looking heavy nL2N2L11SU in face of speculation about whether the ECB might address rising yields nS0N2J300OnL5N2L159S through its pandemic emergency purchase programme nL5N2L12G6.

The market will scrutinize Fed Chair Jerome Powell's comments Thursday.
He and other policy-makers have foreseen a strong recovery this year but no need for tightening because long-term inflation and employment goals remain far off.

The dollar index will need to close above its pivotal 100-day moving average and February's recovery high at 91.25/60 to put a period on the pandemic downtrend nL2N2L11UB.

USD/JPY hit a 7-month high right at the 50% Fibo of the entire pandemic plunge at 107.16, perhaps marking a near-term, overbought recovery high and start of an overdue correction.
Without a close above 107.16, the 106.22 Feb.
17 swing high by a cleared 50% Fibo would offer decent support nL2N2L125W for a correction.

Friday's CFTC positioning data could be illuminating after USD/JPY ran well above where most of the spec shorts were accumulated in late 2020 and early January.

Sterling struggled to get much above Monday's 1.3999 high, despite UK Finance minister Rishi Sunak's "whatever it takes" budget, as markets also looked ahead at the promise of a corporate tax hike in 2023 nL2N2L11OC.
This comes amid fresh friction between Britain and the EU regarding the Northern Ireland border nL5N2L13ZA.

Setbacks in stocks amid rebounding Treasury yields weakened most high-beta currencies, including the Mexican peso, despite more than 3% gains in WTI on expectations OPEC+ would refrain from reversing production cuts at Thursday's meeting.
The severe weather that impacted the ADP and ISM data also played a huge role in weekly EIA petroleum inventories data nL2N2L104K.

jobless claims and Powell's speech top Thursday's event risks, though Friday's payrolls report will set the tone for next week, along with details on the relief bill being adjusted in the Senate before going back to the House nL2N2L119S.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Christopher Romano  —  Mar 03 - 01:42 PM
  • EUR/USD rallies to 1.21135 (EBS) in Europe, slide ensues as US$ goes bid

  • Rise in US rate complex helps buoy the US$, buying intensifies after data

  • Rates, US$ remain firm after below estimate Feb ADP, ISM non-manufacturing

  • EUR/USD trades down to 1.2043 (EBS) but risk shifts, bounce ensues

  • Stocks bounce off lows, oil breaks Tuesday high, US yields slip

  • EUR/USD rallies above 1.2075, sits near the daily cloud base late

  • Daily doji candle forms, suggests investors are a bit indecisive

  • Yields & techs should keep EUR/USD downside risks intact nL2N2L11SU

  • For more click on FXBUZ

eur/usd Click here

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Mar 03 - 01:30 PM

CIBC Research discusses CAD outlook and targets USD/CAD at 1.24 by mid-year and at 1.27 by year-end.

"Given higher levels of crude than previously assumed, and the persistence in the CAD’s correlation with movements in the broader USD index, we now see scope for an appreciation in the C$ over the next few months, with USDCAD expected to sit near 1.24 at midyear, and likely testing even lower levels in the interim," CIBC notes.

"Simply put, momentum trading and enthusiasm for commodities currencies could swamp longer-term fundamentals, including a chronic trade deficit, that suggest that the C$ is already too rich for the economy’s blood," CIBC adds. 

CIBC Research/Market Commentary
By Christopher Romano  —  Mar 03 - 12:33 PM
  • Sharp rally off the March 2 low extends in overnight trade

  • 21-DMA gets pierced but offers near the 10-DMA help stem the rally

  • US$ buying takes hold as US rates rise & risk sours a bit

  • EUR/USD erases gains, turns negative, falls below 21-DMA, daily cloud

  • Daily RSI diverges on the high & a daily doji candle forms

  • Signals suggests Tuesday's rally was likely a corrective bounce

  • Test of key 1.1950/55 support still likely, break targets 200-DMA

  • For more click on FXBUZ

eur/usd Click here

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Mar 03 - 10:45 AM

Credit Agricole CIB Research likes long exposures in AUD and NZD against EUR and JPY.

"The Antipodean currencies will experience a super-fast cycle rather than a super-long cycle, which means they are unlikely to reach the heights of the post-GFC era. Unlike the period following the GFC, China is not recovering much faster than the US...And, while FOMC officials will continue to push back against any idea of a tapering of its asset purchases in 2021, high vaccination rates and fiscal stimulus in the US mean tapering could occur in 2022," CACIB notes. 

"The best way to take advantage of the friendly environment for the Antipodean currencies is to buy them against funding currencies such as the EUR and JPY rather than the USD," CACIB adds. 

Crédit Agricole Research/Market Commentary
By Paul Spirgel  —  Mar 03 - 10:22 AM

Sterling held little changed on the day on Wednesday, ignoring the optimism of UK Finance minister Rishi Sunak's "whatever it takes" budget nL5N2L12U4 as markets also looked ahead at the promise of a corporate tax hike in 2023.

Sterling's recent rally has run into headwinds above 1.4200 and its strength could even act to slow future growth.
GBP/USD has been leading major currency pairs higher, with 5% gains over the past six months, compared to 1.75% gains for the euro and 0.76% gains for the yen.

While Sunak pledged to extend emergency aid programs for a further five months to help growth return to pre-pandemic levels by mid-2022, his even-handed approach to UK stimulus, balancing the current largesse with the counterbalancing tax hike in two years to shore up public finances, may help temper further GBP/USD gains.

GBP/USD finds resistance at 1.4007, its 10-day moving average, and 1.4012, its Feb 26 high.
That is followed by 1.4125, the upper 30-day Bolli and 1.4240, Feb.
24's 2021 high.

For more click on FXBUZ

GBP Chart: Click here

Refinitiv IFR Research/Market Commentary
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