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By Randolph Donney  —  Aug 12 - 02:45 PM
  • USD/JPY eyeing close above 106.65, 61.8% Fibo of July's slide

  • July's high and 200-DMA at 108.16/15 targets after a 106.65+ close

  • 107.015 EBS high came after U.S. upside CPI surprise nL1N2FE0N6

  • Quiet range trading since then as 10-Tsy yields slip post-auction

  • BOJ's YCC leaves USD/JPY mostly at mercy of Treasury yield shifts

  • Mid-July range top, ABC at 107.57/58 are interim targets nL1N2FE15X

  • Big 106.70-7.35 expiries Thursday, claims and retail sales may tether

  • But eventual run up into the cloud & July highs looks likely

For more click on FXBUZ

Chart Click here

Refinitiv IFR Research/Market Commentary
By Paul Spirgel  —  Aug 12 - 01:35 PM
  • GBP/USD ending NorAm -0.05% at 1.3036, NY range 1.3166-1.3106

  • Pair under pressure o/n on UK data misses, rallied on USD weakness post-CPI

  • UK econ faces long climb back to health after historic 20% crashnL8N2FE1EL

  • US inflation, fiscal clouds keep sterling off lows nL1N2FE0XA

  • Minor Fib supt by 1.3019 probed, holds; below 10-DMA bears gain momentum

  • Recent failures above 1.3100, ahead of Mar highs by 1.3200 aids bearish view

  • Shallow dip from highs hint bulls may not be ready to cede control

  • EUR/GBP +0.53% at 0.9041, Wed range 0.9053-0.8991; UK econ woes favor EUR

GBP Chart: Click here

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Aug 12 - 12:45 PM

Credit Agricole CIB Research discusses the latest readings from its risk sentiment indicator (Risk Index), which stands at neutral level this week.

"At 0.22 (vs 0.64 last week), our Risk Index moved back into neutral territory. Better sentiment was well reflected in falling credit spreads, lower safe haven assets such as gold and underperforming defensive stock market sectors such as utilities. In G10 FX, risk sensitive currencies such as the NOK and SEK should stay a buy on dips with our year-end outlook staying in favour of strength," CACIB notes. 

"Elsewhere, gold has been under pressure this week. We do not exclude additional corrective downside risk in gold (USD/oz) in the short term. Our long-term view, however, stays constructive," CACIB adds. 

Crédit Agricole Research/Market Commentary
By Paul Spirgel  —  Aug 12 - 01:20 PM
  • AUD/USD firm into close +0.41% at 0.7174; Wed range 0.7176-09

  • Pair rallied off weak data-related Asia low 0.7109, on renewed USD weakness

  • US CPI beat, market eyes weak employment, low U.S. rates nL1N2FE0MV

  • Aussie regains 10-DMA relieves bearish view, bulls need close abv 0.7190

  • Triple top 0.7240 caps, further res 0.7289 the 55-MMA, 0.7394 Dec '18 high

  • Supt 0.7075 the 30-DMA and 0.7010, the 50% Fib of 0.6777-0.7242

  • Bears in control below the 50% Fib with 100/200-DMA by 0.6700 in focus

  • For more click on FXBUZ

AUD Chart: Click here

Refinitiv IFR Research/Market Commentary
Aug 12 - 12:55 PM

USD: How Far Can USD Fall? - BofA

By eFXdata  —  Aug 12 - 11:15 AM

Bank of America Global Research discusses the USD outlook and flags a scope for stabilization over the next 2-3 months.

"Attention has rightly focused on the sharp USD selloff that has gathered momentum throughout July. We quantify the recent move as a -2 standard deviation event and explore prospects for stabilization over the next 2-3 months based on history.

We think a sizable reduction in FX risk premium has likely taken place this year. This explains the meaningful USD depreciation seen on most G10 pairs despite core risk assets (namely the US equity market) merely retesting prior highs," BofA notes. 

"Looking forward, we are skeptical that low FX risk premium can persist given high global economic uncertainty, though continued robust official sector response admittedly could cause USD to undershoot. Still, a persistently wide US growth advantage suggests that medium to longer-term monetary policy risks are skewed toward tighter US policy on a relative basis despite a presently dovish Fed," BofA adds. 

BofA Global Research
By Randolph Donney  —  Aug 12 - 10:25 AM

EUR/USD rebounded after holding above last week's 1.1695 low during an earlier test as doubts about a U.S. pandemic relief bill nW1N2D300Y and unexpectedly strong U.S. inflation nAPN0GPLF4 weakened real Treasury yields and could put the Fed, and dollar, in a bind.

Lingering spec longs eager to pare positions obstructed EUR/USD's rebound near the 10-day moving average and tenkan either side of 1.1800.

Clearing that resistance may depend on market perceptions, particularly the S&P 500, of strengthening core U.S. inflation as either indicative of recovering demand or threatening low-cost funding of spiraling U.S. debt, which could force the Fed to increase QE, harden forward guidance or undertake yield curve control.

The worst-case scenario for the dollar would be the Fed fighting rising inflation, COVID-19 economic weakness and waning fiscal support.
With the core CPI year-on-year rate at 1.6%, the Fed can still wait, particularly if they pursue average-inflation targeting.

EUR/USD's Wednesday outlook depends on S&Ps' response to CPI and whether it can close above 1.1800 and renew its quest to test 1.20.

For more click on FXBUZ

Chart Click here

Chart Click here

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Aug 12 - 10:00 AM

Credit Suisse discusses USD/CHF technical outlook and highlights the importance of the 0.9047 level for near-term directional bias.

"Whilst our core outlook stays bearish following the completion of a major top, there remains the risk of a more prolonged consolidation prior to the downtrend resuming. Whilst resistance at .9184/89 caps the immediate risk is seen lower in the range with support seen at .9091, beneath which would see a fresh challenge of .9056/47. Beneath here should curtail thoughts of a consolidation phase for a direct resumption of the downtrend with support seen next at a major psychological inflection point at .9000, where we would expect to see fresh buyers at first," Cs notes. 

"Resistance is seen initially at .9168, then .9184/89, removal of which would ease the immediate downside with resistance thereafter at .9216 and then at the more important at .9241/52. Only above this latter area though would warn of a more significant base," CS adds. 

Credit Suisse Research/Market Commentary
By eFXdata  —  Aug 12 - 09:10 AM

Citi discusses NZD outlook in light of this week's RBNZ policy meeting.

"While rates were left unchanged as expected, the RBNZ increased its Large Scale Asset Purchase program to as much as NZD100bn from NZD60bn and extended it until June 2022. This was dovish for two reasons (1) it was not wholly expected today and (2) the NZD40bn increase is sizeable. Additional guidance made it clear that the policymakers were aiming to actively push bond yields lower and address recent NZD appreciation," C ti notes. 

"NZDUSD has dragged AUDUSD lower (which was not helped by poor consumer sentiment data overnight). CitiFX Strategy had expected Further downside for NZD, eyeing the mid-July low around 0.65," Citi adds. 

Citi Research/Market Commentary
By Richard Pace  —  Aug 12 - 06:00 AM
  • USD/JPY filled offers by 3 Aug 106.47 peak Tues, reaches 106.82 Wed's

  • Dealers say little sign of local supply in Asia - worrying for shorts

  • Options post small panic spurt of topside/gamma demand and raise prices

  • Gold helped broader USD, potentially upset JPY's haven status

  • However, Gold recovering, USD weaker, but stocks up to keep USD/JPY support

  • Next resistance 24 July 106.87 peak and 55-dma 107.01

  • 3-billion option expiries Thursday 106.70-107.30 add resistance nL1N2FE061

JPY=EBS Click here

Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  Aug 12 - 05:50 AM
  • Plenty of conflicting signals while GBP remains contained

  • Price holds towards 1.2982 range base following Friday's reversal signal

  • However, long lower and upper candle shadows highlight indecision

  • Disappointment that Frid's engulfing line has not brought a range break

  • On balance a bear call but need a 1.2982 break soon

  • Weekly action suggests a top is in place at 1.3185

GBP/USD Trader:

GBP/USD daily candle chart: Click here

Refinitiv IFR Research/Market Commentary
By Richard Pace  —  Aug 12 - 05:10 AM
  • AUD/USD has now breached it's rising 21-daily moving average at 0.7123

  • A close below on Wednesday opens potential for a deeper decline

  • Huge 1.2bln 0.7100 option expiry Thursday can draw nL1N2FE061

  • 3 Aug/24 July lows 0.7077/64 next support before 21 July low 0.7016

  • However, broader weak USD should help to limit overall losses

  • Resistance triple daily top 0.7242, 200-weekly moving average 0.7256

  • Option implied volatility heavy - consistent with AUD range trade

AUD=D3 Click here

Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  Aug 12 - 02:35 AM
  • UK economic output collapses in Q2: economy enters recession nL8N2FE1EL

  • Recession brought on by the virus led to biggest quarterly fall on record

  • However, the bulk of the early data barrage was better than expected

  • Some improvement in June also helping to limit sterling damage

  • GBP/USD trades flat to small down on the day after Tues 1.3132 failure

  • Supports at 1.2982, Aug 4 low, and 1.2965, 23.6% Fibo off 1.2252-1.3185

  • Market lacks depth and initial support might stall if not hold a weak fall

GBP/USD daily candle chart: Click here

Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  Aug 12 - 02:05 AM
  • Failed to hold a rebound Tues and bears back in control

  • Fading 10DMA call, 1.1799, playing out nicely so far nL1N2FD05J

  • Long upper shadow Tues highlights demand fade

  • Aug 3 1.1695 low remains pivotal and now initial support

  • 21DMA provides next key support at 1.1676

  • 14-day positive momentum slipping and confirming price weakness

  • Minimum retrace off 1.1169-1.1916 move met at 1.1740, next 38.2% at 1.1631

EUR/USD Trader

EUR/USD daily candle chart: Click here

Refinitiv IFR Research/Market Commentary
By Ewen Chew  —  Aug 12 - 01:40 AM
  • EUR/USD sputtered in Asia Wednesday after failed rally Tues

  • Long-tailed doji imposes bleak outlook in near-term

  • But 20 DMA support at 1.1689 on EBS could provide a floor

  • If that gives way, slide to Bollinger band 1.1545 may be due

  • USD propped up by higher US yields before huge Treasury auction Wed

  • Another tumble in gold prices fanned USD updraft in majors

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Aug 11 - 11:50 PM
  • AUD/USD opened unchanged @ 0.7147 despite higher US yields and gold collapse

  • After trading at 0.7151 it started to track lower when gold fell below 1,900

  • More pressure came on the pair when NZD/USD fell in response to RBNZ nW9N2DG001

  • AUD/USD fell as low as 0.7111 before settling around 0.7120/25

  • AUD/USD short-term trend higher is over based on the moving averages

  • The 5-day crossed below the 10-day MA & price fell below 21-day MA @ 0.7123

  • Support is at the Aug 3 low at 0.7077 and resistance at 10-day MA at 0.7162

  • For more click on FXBUZ

aud/usd Click here

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Aug 11 - 10:10 PM
  • NZD/USD fell from 0.6566 to 0.6524 after RBNZ left rates on hold at 0.25%

  • Move lower due to increase of LSAP from NZ$60 bln to NZ$100 bln nAZN00NF9E

  • Market was expecting an increase to NZ$80 bln

  • NZD/USD support @ 55-day MA @ 0.6523 holding and it is back above 0.6550

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Aug 11 - 09:45 PM

Cable has been in a holding pattern after last month's gains that were driven by a weaker dollar as risk appetite recovered, reducing safe-haven dollar flows, but this may be about to reverse.

In the U.S., the Federal Reserve's still cautious outlook on the economic recovery seems valid nL1N2F71NI, coronavirus cases appear to be plateauing at elevated levels nL1N2FC19Z, and a viable coronavirus stimulus plan is no certainty nL1N2FD1TR. All this suggests that a risk correction is possible, which would revive the dollar's safe-haven appeal.

The UK saw dire employment data Tuesday, with economists predicting worse to come nL8N2FD1DP, COVID-19 cases are climbing again nL8N2FD5XE, and finance minister Sunak is contemplating delaying the autumn budget on fears of a second COVID-19 wave nFWN2FD1BK- all of which offerslittle reason for sterling strength.

Technically, the July GBP/USD uptrend has stalled in August, providing a fresh 5- and 10-day moving average negative cross Tuesday, while daily momentum studies crest or head lower.
These are the first negative signals in a month.
A break of last week's 1.2982 low and the rising 1.2904 21-day moving average(DMA), a base in July, would suggest a deeper correction to the 1.2712 200 DMA is viable.

For more click on FXBUZ

gbp 2 aug 12 Click here

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Aug 11 - 06:50 PM
  • The RBNZ is widely expected to keep the OCR at 0.25% when they decide today

  • Most expect RBNZ to expand the QE programme from NZ$60 bln to NZ$80 bln

  • Statement expected to be dovish and promise more easing action if needed

  • NZD/USD may ease if the LSAP is expanded and tone is extremely dovish

  • Due to dovish expectations baked in, the move lower may be short-lived

  • If RBNZ leaves LSAP unchanged, as WestPac believes, the NZD likely to firm

  • Support is at the 55-day MA at 0.6523, which has held since May 18

  • Resistance is found around 0.6625 where the 10 and 21-day MAs converge

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Krishna K  —  Aug 11 - 06:35 PM
  • USD/JPY opens +0.5% as U.S yields jump to 1-month highs; U.S.10Y yield +6bps

  • U.S. economic recovery hopes, virus vaccine optimism boosts nL8N2FD38Q

  • JPY falls broadly, undermined by sharp drop in safe havens gold and silver

  • EUR/JPY rallies 0.5%, AUD/JPY rises 0.8% before paring gains

  • U.S. fiscal stalemate nL1N2FD1TR, Sino-U.S. tensions limit JPY losses

  • Resistance 106.64-68, 107.00-05, support 106.40-45, 106.20, 105.95-106.00

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Aug 11 - 06:15 PM
  • AUD/USD opens unchanged 0.7140/45 despite 5% fall in gold, soaring US yields nL1N2FD1WCnL4N2FD3IT

  • Short-term trend higher exhausted as 5 and 10-day MAs now tilting lower

  • Support is at the 21-day MA at 0.7124 and break would signal more weakness

  • Resistance @ the 10-day MA @ 0.7165 and close above eases downward pressure

  • RBNZ meeting today could impact AUD/NZD flows nL4N2F861I

  • For more click on FXBUZ

aud/usd Click here

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Aug 11 - 01:45 PM

UOB Research discusses AUD/USD technical outlook and adopts a neutral bias in the near-term.

"AUD has moved into a consolidation phase and is likely to trade between 0.7050 and 0.7250. In our latest narrative for AUD from last Thursday (06 Aug, spot at 0.7105), we held the view that “the outlook for AUD is mildly positive and that the major resistance at 0.7300 is likely out of reach”,' UOB notes. 

"AUD subsequently eked out a fresh high of 0.7242 on Friday before dropping sharply. The mild upward pressure has more or less dissipated and from here, AUD is deemed to have moved into a consolidation phase. For the next couple of weeks, AUD is expected to trade between 0.7050 and 0.7250," UOB adds. 

UOB Research/Market Commentary
By Randolph Donney  —  Aug 11 - 03:10 PM

The dollar recouped some losses it suffered during London trade as yields surged before the record Treasury refunding, with an extra lift coming from above-forecast U.S. PPI nAPN0GPHVC and coronavirus vaccine news from Russia nL8N2FD38Q.

Lingering hopes that political pressures will force the U.S. government to agree more pandemic relief than U.S. President Donald Trump’s executive actions can muster nL1N2FC1Y2 also lent the dollar a hand.

Gold's precipitous slide from record highs and plummeting silver, both hurt by surging risk-free Treasury and Bund yields, spilled over into safe-haven yen selling and buying of emerging market currencies.

EUR/USD initially rallied to its high of 1.1809 on EBS after forecast-beating German ZEW sentiment nL1N2FD1EJ, but its current-conditions miss -- remaining near pandemic lows -- and falling Bund-Treasury yield spreads scotched the London rally.

EUR/USD likely remains historically net spec long on the IMM and is still working off overbought pressures from July.
Offers by the tankan line at 1.1805 also tipped that longs were probably still paring positions nL1N2FD0WG.

Early signs the pandemic’s pace has slowed in the U.S. and more worrisome signs from the Netherlands nA5N28R02F and a warning from France that it may get harder to control the coronavirus spread nL8N2FD591 are other considerations.

The broader dollar index has settled into a range below last week’s high by 94.00, with room to roam up to Fibo and March low resistance at 94.52/63 if the three-day rebound in TIPS yields persists.

The yen’s fall with precious metals pushed USD/JPY to new August highs and by the mid-July range low and the 61.8% Fibo of the July slide at 106.64, a close above which could see a run at the flat daily cloud top at 107.92 that’s close to July’s 108.16 swing high nL1N2FD1GC.

Erosion of Japan’s current account surplus nL4N2FD0EI and the highest 10-year Treasury-JGB yield spreads in over a month underpinned prices.
EUR/JPY returned to its highest since Friday’s 125.58 post-pandemic peak after tankan support held on Monday and Tuesday.

Sterling’s quest to retest its March pre-pandemic peak at 1.3200 faltered after poor UK employment data nL8N2FD1DP and the dollar’s Treasury-yield-supported rebound.

The Australian dollar struggled in the face of gold's tumble and a drop in business confidence tied to pandemic lockdowns nS9N2EK01D.

Rotation out of momentum and some tech stocks and into value and more industrial stocks, as well as vaccine hopes, lifted most emerging market currencies, helped by hopes this weekend’s U.S.-China trade talks won’t end poorly.

The data focus Wednesday will be on U.S. July CPI.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Randolph Donney  —  Aug 11 - 02:50 PM
  • USD/JPY's probing key 61.8% Fibo of July's drop at 106.645 EBS

  • Rises on surging Treasury-JGB yield spreads, haven yen dumping

  • Tumbles in silver and gold part of exodus from havens like the yen

  • A 106.645+ close would target the flat daily cloud top at 107.92 next

  • Down TL from March, 200-DMA & 30-day Bolli all by July's 108.16 high

  • 10-year Treasury-JGB yield spreads at highest in over a month

  • For more click on FXBUZ

Chart Click here

Refinitiv IFR Research/Market Commentary
By Paul Spirgel  —  Aug 11 - 01:45 PM
  • GBP/USD clings to 0.1% gain at 1.3085 into close; Noram range 1.3132-1.3074

  • EU, German ZEW beat, stalled US fiscal aid, rising virus cases hit USD

  • Eyes on 1.32 highs for sterling, but failure raises risks nL1N2FD0QW

  • Pair straddles 10-DMA by 1.3079, fails 9th straight session above 1.3100

  • Break below 10-DMA puts minor fib at 1.3019, then 21-DMA at 1.2882 in focus

  • EUR/GBP ends NorAm +0.11% at 0.8985, Tues range 0.9008-0.8969; cross moves muted as moves largely USD-based

GBP Chart: Click here

Refinitiv IFR Research/Market Commentary
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