eFXplus DATA

ANZ Research discusses NZD/USD and adopts a neutral bias in the near-term, while maintains a bearish bias in the medium-term, expecting prices to hit 0.61 by year-end.

"Like the AUD, the NZD is expected to trade in line with risk sentiment. There is little in the domestic story to justify recent strength.

With a challenging global story over the medium term, we still think conditions are in place for the NZD to fall below fair value of 0.62 in 2019," ANZ notes. 
 

• 10-day low hit, 1.1070 pierced in early NY as bund yields sink
• DE-US spreads widen to help pressure EUR/USD lower but sharp bounce ensues
• Spiegel reports say Germany ready to ditch balanced budget
• Quick spike up, lift stalls short of 1.1110, gains erode, near 1.1095 late
• Techs are bearish, daily RSI falls & gravestone doji forming for August
• Investors reluctant to buy euro on compounding downside risks

• Spiegel reports DE gov't would be prepared to ditch balance budget rule
• Report says new debt to counter a possible recession nL8N25C3I1
• German 10-yr bund yield spikes up, DE-US spreads tighten a bit
• EUR/USD spikes up near 1.1100 but still remains down on the day
• Falling daily RSI & monthly gravestone doji have techs leaning bearish

Danske Research discusses USD/JPY and EUR/USD tactical outlook and expects a move towards 105 and 1.10 respectively.

USD/JPY is still trading with a heavy tone as global bond yields are making new lows and commodity prices remain under pressure; another test of 105 should be on the cards," Danske notes. 

"Yesterday, dovish comments from ECB’s Rehn regarding September’s easing move took EUR/USD lower towards 1.11 after the pair had otherwise been surprisingly steady this week. A move to 1.10 is likely for EUR/USD short term. On a 6-12M horizon we do stress, however, that EUR/USD is likely to edge higher yet again as we are likely to see a Fed that moves more aggressively on easing than its recent hesitant approach points to," Danske adds. 

GBP/USD is finishing the week firm, rising from Monday's 2019 low 1.2015 to Friday's eight-day high 1.2175 .
But, sterling bulls should enjoy the week's 1.27% gain because they'll be lucky to get another like this one.
The pound has gained on competing opposition plans to prevent the UK from crashing out of the EU and expectations of extreme accommodation from the ECB , which hurt the euro broadly, pushing EUR/GBP off recent highs by 0.9325 to current levels by 0.9100 .
With IMM spec GBP short positioning nearing 29-month highs , -102,702 contracts, from near flat at the end of April, GBP/USD was ripe for a run higher.
But, where to from here? Options FXVV pricing shows GBP/USD vol elevated around Brexit's Oct 31 deadline, though 25RR is positive from 1-month to 1-year, hinting at potential for gains.
However, the threat of no-deal Brexit remains despite recent political machinations to avoid such an event.
With global growth waning the BoE is also expected to cut rates around year-end 2019, adding to bearish overtones.
Multiple DMA's from the 21-DMA at 1.2219 to 55-DMA at 1.2464 provide significant hurdles for bulls, who do not regain significant momentum until a break of 1.2698, the 50% Fib of 1.3380-1.2015 dip.

MUFG Research discusses USD/JPY tactical outlook and maintains a bearish bias, expecting a move towards 104.50 in the near-term.

"Traders could take a wait-and-see stance ahead of the Kansas City Fed’s economic forum in Jackson Hole, Wyoming, next week. But falling US yields are keeping USD from gaining strength, and yen-buying driven by risk aversion also means big downside risk for USDJPY. USDJPY did dip to 105.05 at one point.

Exporters and foreign bond holders (redeeming bonds) will be repatriating funds, and yen-buying flows could lead to USDJPY testing below the 105 level," MUFG notes. 

"All eyes at Jackson Hole will be on whether Fed Chair Jerome Powell changes his stance. He had indicated after the July FOMC meeting that an easing phase has not begun, and further rate cuts are not likely. If he takes on a more dovish tone in August, US yields could decline and USD weaken. Headline risks surrounding the US-China trade war will also bear watching. Market liquidity is thin in August, and an unexpected big movement like the ‘Flash Crash’ over the New Year holidays, is a possibility," MUFG adds. 

NAB Research discusses AUD outlook in light of revising lower its year-end target to 0.65.

"The USD is proving impervious to the narrowing of its interest rate advantage over other major currencies. In large part this is because it doesn’t reflect a deterioration in the US growth outlook relative to the rest of the world and markets are sceptical further monetary easing outside the US will do much good when slowing global trade is a prime cause of economic weakness.  This means the USD is seen staying ‘stronger for longer’," NAB notes. 

"Our recently updated forecasts assume that the proposed 10% tariffs on most of the $300bn of currently untariffed Chinese imports is implemented (albeit in many cases not now until December) and that China, having permitted USD/CNY to rise above 7.00, will allow a rise to the 7.35-40 area to partially offset this.  The latter is consistent with AUD/USD near 0.65 given the very strong correlation in recent years," NAB adds. 

• EUR/USD slide has seen a close below the key 1.1112 Fibo and 1.1079 Fibo brk
• 1.1112/1.1079 are 61.8%/76.4% retraces of the 1.1027 to 1.1249 rise
• Bears seem to be gearing up for a deeper dive to test the 2019 1.1027 low
• We remain short at 1.1215, our trailing stop is now at 1.1120
• Our stop is above Friday's 1.1112 high, while our target remains at 1.1050
• Dollar has had a great week -- next week may be good, too

• EUR/GBP hits 0.9126 after extending south from 0.9194 (early Asia high)
• 0.9126 is the lowest level since Aug 1 (0.9096 was the low that day)
• Expected easing package from ECB on Sept 12 is helping weigh on the euro
• See: . BoE is likely to keep its powder dry pre-Brexit
• 0.9155 (Thursday's low, after dovish Rehn steer) is now a resistance level
• Anti-Brexit LibDems reveal candidates for emergency UK govt nL8N25C19N

• EUR/USD weighed by expectations for substantial ECB easing in September
• However large it's hard to envisage ECB will equal coming Fed easing
• If markets are correct Fed will cut at least 50bps this year 75 by Feb 2020
• Forecasters eye a rebound, median 1.1200, 1.1300 and 1.1500 3//6/12 months
• Interest rates have been steadily turning against the trend
• Traders are short and will get much shorter if they try and take out 1.1000
• May 2017 low 1.0839, 76.4% 2017-18 rise @ 1.0863 key for dip buying strategy

• Recent slide has managed to register a daily close below the key 1.1112 Fibo
• 1.112 Fibonacci level is a 61.8% retrace of the 1.1027 to 1.1249 rise
• That could well have sealed spot's fate to a deeper fall to 2019 1.1027 low
• We remain short at 1.1215, our trailing stop is at 1.1160
• Our stop is being guarded by Thu's 1.1158 high, target remains at 1.1050
• EUR/USD had eyed the key 1.1112 Fibo

• USD/JPY's failures above key 106.68 Fibo, Thu's large upper shadow, weigh
• 106.68 is a 38.2% retrace of the 109.32 to 105.05 down-leg
• Upside rejected, scope for an eventual dive below the 105.05 August low
• A daily close below would unmask the 2019 104.10 low
• We remain short at 106.50 in anticipation for our 105.10 target
• EUR/JPY range has been 117.72-117.93. Previous USD/JPY

• The EUR/USD traded in a 1.1095/1.1112 range in quiet Asian trading
• EUR & JPY edged lower vs risk currencies as S&P futures moved 0.55% higher
• Move up in S&P futures likely related to Trump optimism on trade talks nL4N25B2NR
• Heading into the afternoon session the EUR/USD was around 1.1100
• EUR/USD poised to move lower as ECB ready to launch large QE
• Target of current move is the Aug 1 low at 1.1027
• Resistance at 21-day MA at 1.1168 and break would ease downward pressure

MUFG Research discusses GBP outlook in light of yesterday' UK inflation data for the month of July.

"The pound was carried only briefly yesterday on the back of UK inflation data that surprised on the upside. Core CPI data surprised on the upside, coming in at 1.9% over an expected 1.8%. Headline CPI was similarly higher at 2.1%, over expectations of 1.9%. This was enough to drive the pound higher against the dollar, testing a ceiling around the 1.2100 level for the third day in a row on a data surprise," MUFG notes. 

"However it will likely prove insufficient to support the pound much above the 1.2050 level. This data further muddies the water for the BoE when it comes to the domestic economy in the UK," MUFG adds. 

• S&P futures up over 0.55% and US Treasury yields edging higher
• Upbeat mood likely related to Trump optimism on China talks nL4N25B2NR
• AUD/USD trading with firm tone, while AUD/JPY up 0.15% since NY close
• AUD/USD resistance @ yesterday's 0.6791 high & strong resistance @ 0.6820/35

• Off 0.1%, extending the offshore 0.2% loss, which reset the negative bias
• Yesterday's sharp dovish turn in ECB expectations weighs
• Charts are bearish - 5, 10 & 21 daily weekly and monthly MAs track south
• Initial longer term target would be 1.0862, 76.4% of the 2017/2018 rise
• First supports come in at the NY 1.1091 low then 1.1079, 76.4% of Aug bounce
• Close above TL from the June high, today at 1.1206 would undermine bias

• +0.1% early, after closing +0.3 after strong retail sales nL9N1WP01O
• No deal Brexit opponents remain far from a consensus on a plan nL8N25A7HD
• Meanwhile Boris and Cummings have the government well organised nL8N2521PS
• Without a real breakthrough, the government looks to have a winning hand
• Charts - daily momentum studies base with the 5 DMA - downtrend stalled
• 5, 10 & 21 weekly and monthly MAs track south - primary trend is lower
• Close above the very close 1.2099 falling 10 DMA, would undermine the bias

• AUD/USD remained steady through an otherwise choppy trading day
• AUD best performing major currency as better Aus jobs data underpinned
• Despite global growth fears, AUD proving resilient as global yields skid
• Increasingly dovish Fed and ECB expectations giving AUD relative support
• AUD/USD support at 0.6730/50 and 0.6630 break targets 0.6677
• Resistance at 0.6820/35 where daily tops and a 38.2 fibo converge

Societe Generale Research flags a limited scope for further AUD downside, while maintains its structural bullish JPY bias. 

"On the data front, pride of overnight place went to Australia, where employment rose by 41,100, with full-time jobs accounting for 34,500 of that, while August inflation expectations rose from 3.2% to 3.5%. The Australian labour market data are erratic, so one month's decent data shouldn't be afforded too much importance," SocGen notes. 

"We still think the AUD fall is overdone, but it's not a hill losing too much sleep on, let alone anything worse. We won't get an AUD bounce until the Chinese economy turns a corner...In the meantime, long yen is a constant theme for us," SocGen adds. 

• GBP/USD ending NY 1.2115 +0.46%, NorAm range 1.2150-1.2094
• Pair boosted by ret sales beat nL8N25B2CP, softer Brexit tone nL8N25A7HD
• Brexit delay gambits give quixotic lift to sterling
• Global recession fears, Brexit to limit upside, res 1.2209 Aug 6 high
• Then 21-DMA 1.2240, 55-DMA 1.2473, 50% Fib of 1.338-1.2015 at 1.2698
• Support at 1.2016 the Aug 13 low, 1.1983 Jan 2017 low
• EUR/GBP -0.76% to 0.9167, Thurs range 0.9250-0.9155; ECB seen uber-dovish