eFXplus DATA

Nomura Research discusses a quant insight on the cyclicality of global equity sentiment to make its forecasts for cases of risk-off moves.

"We found that global equity sentiment tends to revert to the mean in roughly 22 trading days on average, while US equity sentiment tends to take around 20 trading days. 

For example, if global sentiment were to fall below the one-year average today (14 November), we would expect risk-off moves to accelerate through 29 November, followed by a reversal of this pessimism through 16 December (this assumes that the deterioration and recovery processes take 11 trading days each). If conditions were to change, these cyclicality forecast results would also change, of course," Nomura notes. 

"But the pattern of sentiment swings thus far shows that 2019 was typified by a repeated cycle of risk-on and risk-off phases lasting about a month," Nomura adds. 

• AUD/USD traded to 0.6798 earlier on headlines quoting WH advisor Kudlow nL2N27U28F

• WSJ report on full speech less optimistic as stumbling blocks remain

• Kudlow said talks constructive, but Trump not ready to sign off yet

• AUD/USD trading around 0.6790/95 after closing NY at 0.6785

• Support at 61.8 of 0.6670/0.6929 at validated by bounce from 0.6770

• Break below 0.6765 would renew downward pressure

• Resistance @ former support around 0.6810 and 38.2 of 0.6729/0.6670 @ 0.6830

• AUD/USD bounced on positive comments from WH adviser Kudlow trade talks nL2N27U28F

• Market getting whiplash from contradictory comments from US & China

• Move higher led by AUD/JPY, which rose 0.35%, as equities rallied

• AUD/USD resistance at former support around 0.6810 where sellers tipped

• More resistance at 38.2 of 0.6929/0.6770 move at 0.6830

• AUD/USD descent stalled at Ichimoku Cloud 0.6782 on US-China news

• China lifts US poultry ban, Kudlow optimistic nL4N27U30InL2N27U28F

• AUD bulls have a chance to mount counter-attack against shorts

• Strong rally off daily Cloud would cue more short-covering ahead

• Closing above 0.6822 would nullify Bollinger downtrend channel

• But trendline resistnace above at 0.6843 will cap further gains

• Early bounce on US data gives some relief to longs nL2N27U0JI

• Pair heavy on safe haven flows but holds above 61.8 Fib of 1.0879-1.1180

• EUR/JPY & EUR/CNH sales help keep pair pinned just above day's low

• USD/JPY & US equities sell-off sharply, EUR/USD spikes up near 1.1020

• Daily RSI diverges & bull hammer forms, daily techs warn shorts

• Monthly RSI still falling, says downside momentum could resume

• Global growth concerns, soured risk could sink EUR/USD nL2N27U0TQ

Citi discusses its reaction to this week's weak patch of Australian employment data. 

"Australia’s unemployment rate rose back to 5.3% and the employment change number came in at 19k with most of the change being seen in full time employment (-10.3k)," Citi notes.

"Despite the poor data, our economists note that the RBA is unlikely to be spooked. - “We don’t believe today’s data will result in an RBA interest rate cut next month. Rather, we believe the RBA will give more time for the cuts to date and tax rebates to influence activity data, particularly as the RBA believes the economy is at a gentle turning point. Today’s data will however guarantee that the RBA maintains the dovish policy bias.” - Note that the RBA Board meeting will be on 3 December and this was the last major data release before then -

"The economic outlook is that “we continue to expect the next live RBA meeting to be in February 2020, by which time we expect the RBA Board to conclude that further policy stimulus is required and where we forecast the final 25bp rate cut of this cycle.” Citi adds. 

• Downbeat AU, CN data, trade talk concerns keep pair heavy in NY nL2N27U0F4

• Daily cloud top pierced as drop in AU yields & soured risk weigh on AUD/USD

• Slide stalls near 61.% Fib of 0.6670-0.6929, meager bounce, near 0.6785 late

• Pair below 55-DMA & cloud top, RSIs fall, techs say downside risks remain

• Shift in market's central bank views is a concern for longs nL2N27U12H

• Key US data in focus, if upbeat AUD/USD slide is likely to extend

• Yen broadly bid on global trade, growth risks woes nL2N27U0PO

• US-China trade deal peril rises on Hong Kong woes nL8N27S7TTnH9N27R01F

• USD/JPY's breaks key props at 108.50 nL2N27U0PO, close is key

• Daily kijun at 108.26 also in play. Nov low, weekly tenkan @ 107.89/99

• IMM USD/JPY specs long largely above 108 are at risk on 107.89/99 break

• Treasury yields sliding faster than JGBs, '20 Fed cuts pricing back in

• USD/JPY's topping formation reinforced by AUD/JPY's reversal nL2N27U0VM

• Fed speakers stick to econ's in "good place" meme, but traders dubious

• Risk flows could change on a dime if trade deal gets completed, signed

• Without that, data, such as U.S. retail sales Friday, will guide rates, risk

• Record VIX shorts, 1-mo USD/JPY vols basing by July lows, RR favor shorts

• Nomura this week asked 60 clients about GBP in the week after UK election

• Those clients expect GBP/USD to rise 3.8% if the Tories win a majority

• A 3.8% rise would take cable close to its 2019 high of 1.3380 (March 13)

• Nomura's clients expect GBP/USD to fall 4.4% if Labour wins a majority

• Odds suggest 58% Tory majority chance/Labour majority risk low nL2N27U0AI

• Reuters poll (Nov 7): GBP to rise 3% if Tories win majority nL8N27M73D

Credit Suisse summarizes its tactical bias on EUR/CHF and USD/CHF.

"EURCHF has seen an aggressive sell-off last 48 trading hours with important support seen at 1.0872+1.0835+  1.0812 - 2019 low / 4 sept. staying flexible within the new broad 1.08501.0950 parameters, positioning lighter and still think we don’t break 1.0800-50 next couple weeks," CS notes. 

"USDCHF consolidation likely, patience and flexibility important, more headline driven than ever. We need to break 0.9950 to see fresh buyers," CS adds. 

MUFG Research discusses AUD outlook and flags a scope for further downside on RBA easing expectations.

"The Australian dollar has underperformed during the Asian trading session following the release of the much weaker than expected Australian employment report for October. It has resulted in the AUD/USD rate falling back below 0.6800-level which has largely reversed the relief rally from last month triggered by building optimism over a US-China partial trade deal. The relief rally ran out steam after it failed to break above resistance from the 200-day moving average at 0.6940. It fits with our view that the Aussie remains subject to downside risks as the RBA moves closer to unconventional easing," MUFG notes. 

"The RBA is running out of room for conventional easing having already lowered their key policy rate by 75 basis points this year to 0.75%. The Australian rate market has since moved to more fully price in another 25 basis point cut early next year after today’s weak data. The latest labour market report revealed that the Australian economy shed 19k job in October which was the weakest reading since September 2016. The unemployment rate also resumed its gradual grind higher to 5.3% moving further away from the RBA’s NAIRU estimate of around 4.5%," MUFG adds. 

• EUR/USD -0.12%, USD/JPY -0.17%, GBP/USD -0.02%, AUD/USD -0.72%

• S&P E-minis -0.12%, DAX -0.22%, Nikkei -0.76%, FTSE -0.27%

• EUR/USD creeps down but levels worth buying loom nL8N27U24O

• USD/JPY hurt by U.S.-China 'snag' and close under key Fibo nL2N27U06I

• Pound shrugs off weaker than expected UK retail sales nL2N27U07Q

• AUD/USD falls to 4-week low on weak Aussie and China data nL2N27U07F

• FX option expiries - Nov 14 nL2N27U05U Open nL4N27U386

• Huge 1.6-billion 74.00 AUD/JPY option expiry 10-am New York cut Thursday

• Hedging activity helps contain/draw price ahead, limits deeper decline

• AUD/JPY capped by 200-dma 75.67 last week, now tests 100-dma 73.70

• Morgan Stanley close a recent long AUD/JPY trade recommendation

• See high chance of JPY catching a bid as risk turns sour and poor o/n data

• Beware close below 100/55-dma 73.70/58 and 38.2% Fib 69.97-75.67 at 73.49

• Would open a test of the 72.97-23 daily cloud. Related nL2N27U07E

  
  

• Germany's recession dodge is helping to keep EUR/GBP above 0.8558

• German economy grew 0.1% in Q3 vs -0.1% f/c, after -0.2% in Q2 nL8N27U1VD

• 0.8558 was Tuesday's six-month low, after Tory majority probability rose

• See: nL2N27S0DL. 0.8562 was Asian session low (0.8563 was Wednesday's low)

• 0.8588 (Wednesday's high) and 0.8604 (Tuesday's high) are resistance levels

• UK ONS Oct retail sales data due 0930GMT, +0.2% MM and +3.7% YY f/c

• EUR/USD's scope is for further losses to test the daily cloud base at 1.0967

• However the key 1.0994 Fibo is proving difficult for bears to overcome

• 1.0994 Fibo is a 61.8% of the 1.0879 to 1.1180 October rise

• A failure to break and close below 1.0994 Fibo soon would encourage bulls

• The risk would grow for recovery to the daily cloud top, now at 1.1064

• Offer is at 1.1035. Previous nL2N27T05Z

• Wed's daily close below 108.88 Fibo, 38.2% of 107.89-109.49 rise, bearish

• Looking to get short at 109.10 on recovery attempts. Previous nL2N27T06G

• A "bull trap" has been setup due to a upside failure

• Last Thursday and Friday USD/JPY broke, but failed above the 109.37 Fibo,

• 109.37 Fibo is 61.8% of the 112.40 to 104.46 (April to August) drop

• EUR/JPY sees a 119.52-119.81 range, according to prices on the EBS

• EUR/USD spent the Asian morning between 1.0999/1.1011 in quiet trading

• Bids ahead of 1.0994 support (61.8 of 1.0879/1.1180) underpin for now

• EUR/USD unable to bounce as patient bears continue to sell rallies

• German Q3 GDP out today and expected to come in at -0.1% Q/Q

• If it does it would signal Germany is in technical recession

• This may be a catalyst for accelerated EUR/USD weakness

• A break below 1.0990 would be bearish and target eventual test of 1.0880

  
  

  
  

• AUD/USD idled 0.6835/40 before weaker than expected Aus jobs sent it lower nL4N27T4R0

• AUD/USD fell to 0.6800 before buyers returned to steady the decline

• It edged up to 0.6810 when weaker China data sent to below 0.6800 nB9N27M00M

• Heading into the afternoon it is around the session low at 0.6796

• The next level of support is at the 61.8 of the 0.6670/0.6929 move at 0.6769

• AUD/USD capped by AUD/NZD selling as RBA/RBNZ expectations diverge nL2N27U028

• Only positive news on US-China trade will ease the pressure on the AUD/USD

• China monthly activity data weaker than expected nB9N27M00M

• Retail Sales. IP and FAI all weaker than expected

• Impact of trade war with US pressuring China economy

• AUD/USD testing 50% of 0.6670/0.6929 move at 0.6799

• Clear break targets 61.8 of that move at 0.6769