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EUR / USD
GBP / USD
USD / JPY
USD / CAD
AUD / USD
NZD / USD
USD / CHF
AUD / JPY
AUD / NZD
EUR / CHF
EUR / GBP
EUR / JPY
GBP / JPY
By Christopher Romano  —  Jun 14 - 07:10 AM
  • AUD/USD traded 0.66415-0.6603 overnight, NY opened near 0.6615, down -0.30%

  • Drop aided by bid for safer assets; AUD/JPY fell to a 3-session low

  • US yieldUS10YT=RR, equityESv1 drops & USD/CNH rally reinforce safety bid

  • AUD/USD's brief overnight lift was limited with help from 10- & 21-DMAs

  • Falling daily, monthly RSIs, June monthly doji help techs lean bearish

  • May export/import prices, June U. of Michigan are data risks in NY

  • U Mich 1-yr, 5-yr inflation consumer inflation outlooks will be in focus

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  Jun 14 - 05:40 AM
  • Strong bearish developments this week has left large options stranded

  • EUR 13 billion of deals between 1.0795 and 1.0950 for Friday's cut

  • Still over EUR 4 billion of exprires closer to market: 1.0660-1.0755

  • More large expiries close to market:USD/CAD 1.3725 to 1.3815 USD 6.2 bln

  • EUR/GBP 0.8440 EUR 1.13 bln: USD/CHF 0.9000 USD1.8 bln

  • AUD/USD 0.6590-0.6620 AUD 2.4 bln

  • All expiries for today's New York cut

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  Jun 14 - 04:40 AM
  • Long upper candle shadow Wed into steep losses Thurs-Frid

  • A new significant high in place at 1.2859

  • Sterling slipping back into the middle of its previous 1.2676-1.2825 range

  • June 10 1.2689 low initial

  • Fourteen day momentum has flipped to negative and RSI is falling

  • First negative momentum print since May 1

  • Long upper shadow on the weekly and a 200-WMA rejection noted

    For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Rob Howard  —  Jun 14 - 03:50 AM
  • Cable falls to 1.2723 as USD/JPY outperforms GBP/JPY on dovish BoJ

  • 1.2723 is lowest level since Tuesday. GBP/JPY up to 201.60, high since 2008

  • Bids may emerge near 1.2700 if GBP/USD extends south (1.2707 = Tuesday low)

  • 1.2806 was Thursday's high, after dollar fell on soft US PPI, claims data

  • BoE seen on hold next week. Economists expect BoE rate cut on August 1

  • UK election July 4; Labour set for huge parliamentary majority nL8N3I90LD

Source:
Refinitiv IFR Research/Market Commentary
By Martin Miller  —  Jun 14 - 03:35 AM
  • Volatile EUR/USD latest big slump on course to close under the 1.0722 Fibo

  • 1.0722 Fibo is a 61.8% retrace of the 1.0602-1.0916 (April-June) EBS rise

  • If there is a daily close under the 1.0722 Fibo, that would be negative

  • That would increase the risk of a bigger drop to the April 1.0602 low

  • Fourteen-day momentum remains negative, reinforcing the bearish bias

  • EUR/USD Trader TGM2334. Previous update nL1N3IA06M

Source:
Refinitiv IFR Research/Market Commentary
By Rob Howard  —  Jun 14 - 03:20 AM
  • EUR/CHF falls to 0.9578 EBS low as French political crisis weighs on euro

  • 0.9578 is lowest level since April 19 (0.9565 was EBS low that day)

  • 10-year French vs German bond spread balloons to 77 bps, highest since 2017

  • Far-right RN plots path to power; leftwing parties form "Popular Front"

  • Swiss franc is safe-haven (0.9930 was EUR/CHF 13-month EBS high on May 27)

  • Franc gains since May 27 raise probability of another SNB rate cut next week

Source:
Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Jun 13 - 11:50 PM
  • Steady in a 1.0636-1.0645 range supported by EUR/GBP +0.05% bargain hunting

  • Asian stocks/risk are softer with Treasury yields firmer 10yr +2bp 4.263%

  • Political uncertainty in Europe, led by France, continues to cap the Euro

  • Charts - momentum studies slide, as 5, 10, & 21-day moving averages fall

  • 21-day Bollinger bands expand - daily signals maintain a negative setup

  • Thursday's 1.0816 high then this week's 1.0852 top are the first resistance

  • 1.0719/21 0618% of the April/June rise and this week's 1.0719 base supports

  • A close below 1.0700 would be a strong bearish signal for next week

  • 1.0700 987mln and 1.0750 854mln are the close strikes for June 14

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Jun 13 - 11:40 PM
  • Steady in a 1.2750/1.2760 range with moderate flow on D3, capped by EUR/GBP

  • EUR/GBP climbed 0.07% in a 0.8415-0.8421 range on D3 with heavy volume

  • Reform UK overtakes PM Sunak's Conservatives in YouGov opinion poll

  • The Conservative campaign has so far failed to close the gap to Labour

  • There is no tier-one UK data, US consumer sentiment leads event risk

  • Charts; daily momentum studies flat line - 21-day Bollinger bands contract

  • Net positive 5, 10 & 21-day moving averages provide a modest topside bias

  • Wednesday's 1.2732-1.2859 range is initial support and resistance

    For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Jun 13 - 04:30 PM

Synopsis:

Danske Bank provides insights into the EUR/CHF outlook ahead of the Swiss National Bank (SNB) meeting on June 20. The analysis highlights key factors influencing the cross, including recent market movements, political uncertainties, and potential SNB actions.

Key Points:

  1. Recent EUR/CHF Movements:

    • EUR/CHF has fully retraced the move higher following the SNB's cut in March, now trading close to the 0.96 mark.
    • The retracement is attributed to political uncertainty in France and a stronger CHF.
  2. SNB Meeting Expectations:

    • Danske Bank previously argued that the SNB would remain on hold at its upcoming meeting due to stronger growth in Switzerland, persistent global inflation pressures, and recent hawkish remarks from SNB's Jordan.
    • The recent decline in EUR/CHF and the SNB's focus on the currency present the biggest risk to this call.
  3. Potential SNB Actions:

    • If the SNB opts to keep rates unchanged, this would provide immediate support to the CHF, though Danske Bank expects this support to be short-lived.
    • Markets are likely to fully price in a September cut and consider a December cut as well.
    • If the SNB decides to cut rates, this would weaken the CHF.
    • Possible FX intervention by the SNB would also favor a weaker CHF.

Conclusion:

Danske Bank favors a weaker CHF over the next couple of months, despite the current market movements and political uncertainties. The SNB's decision at the upcoming meeting will play a crucial role in determining the near-term direction of EUR/CHF. An unchanged decision may provide temporary support to the CHF, but markets are expected to anticipate future cuts, leading to a weaker CHF. A rate cut or FX intervention by the SNB would further weaken the CHF.

Source:
Danske Research/Market Commentary
By Andrew M Spencer  —  Jun 13 - 08:25 PM
  • 0.05% after closing down 0.25%, resilient v's a 0.5% USD rise, EUR/GBP -0.4%

  • Reform UK overtakes PM Sunak's Conservatives in YouGov opinion poll

  • Six months ago the Conservative's poll result would have been unbelievable

  • There is no tier-one UK data, so risk appetite and the USD lead sterling

  • Charts; daily momentum studies flat line - 21-day Bollinger bands contract

  • Net positive 5, 10 & 21-day moving averages provide a modest topside bias

  • This week's 1.2859 high then 1.2893 March and 2024 high first resistance

  • Wednesday's 1.2732 low and then the 1.2680 May 30 base are first supports

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Jun 13 - 08:05 PM
  • +0.05% early after closing down 0.65% amid political uncertainty - USD +0.5%

  • Modest yield spread change, 10yr bund -4bp 2.491%, 10yr UST -5bp 4.240%

  • Trade conflict with China could have a significant economic impact

  • Charts - momentum studies slide, as 5, 10, & 21-day moving averages fall

  • 21-day Bollinger bands expand - daily signals maintain a negative setup

  • Thursday's 1.0816 high then Wednesday's 1.0852 top are the first resistance

  • 1.0719/21 0618% of the April/June rise and this week's 1.0719 base supports

  • A close below 1.0700 would be a strong bearish signal for next week

  • 1.0700 987mln and 1.0750 854mlnare the close strikes for June 14

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Krishna K  —  Jun 13 - 07:10 PM
  • AUD/USD steady after 0.4% fall Thu; slips back to middle of its recent range

  • Undermined by Fed's hawkish tone Wed; soft U.S. PPI , lower yields ignored

  • Soft U.S. CPI , PPI indicate June 28 PCE will show softening price pressures

  • Weak yuan, lower copper andd gold prices weigh on AUD sentiment

  • Downside limited; robust AU jobs data reinforces higher-for-longer RBA

  • Broad 0.6580-0.6710 range likely as Fed also pushes out start of rate cuts

  • Break of either side extends to 0.6550 & 0.6750 respectively; play the range

  • Interim supports 0.6625, 0.6600-05, resistance 0.6675-80

  • Thu range 0.6675-0.66265

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Jun 13 - 03:00 PM

Synopsis:

JP Morgan outlines its expectations for the upcoming Bank of Japan (BoJ) meeting on Friday. The analysis focuses on anticipated policy changes, particularly regarding the BoJ's balance sheet and future JGB purchase schedules.

Key Points:

  1. Policy Announcement:

    • JP Morgan expects the BoJ to announce a policy of reducing its balance sheet.
    • The focus will be on how the BoJ schedules future JGB purchases, potentially moving towards a more structured Quantitative Tightening (QT) process.
  2. Market Price Setting Function:

    • The BoJ may aim to gradually restore the market's price-setting function in the JGB market, even if the QT process is not on full autopilot.
  3. Policy Rate Expectations:

    • While a policy rate hike is not expected at this meeting, JP Morgan anticipates the BoJ will raise the policy rate to 0.25% in July.
    • The BoJ is unlikely to send a clear message on the timing of this rate hike during this week's meeting.

Conclusion:

JP Morgan forecasts the BoJ to announce a balance sheet reduction policy during this week's meeting, with a structured approach to future JGB purchases to restore market price-setting functions. A policy rate hike is anticipated in July, though no explicit timing is expected to be communicated this week.

Source:
JP Morgan Research/Market Commentary
By Christopher Romano  —  Jun 13 - 01:20 PM
  • NY opened near 0.6640 after a quiet overnight session, rally ensued

  • US yields US10YT=RR, US$ sank after May PPI, weekly claims reports

  • AUD/USD turned positive, 0.6675 traded but gains were not sustained

  • AUD/JPY fell sharply, USD/CNH hit 7.2700 while stocks & gold sank

  • AUD/USD turned lower, fell below the 10- & 21-DMAs & hit 0.66265

  • Pair bounced slightly but still traded down -0.42% late in the day

  • Falling RSIs and June's monthly doji give techs a bearish lean

  • US May export/import prices, June U of Michigan risks loom for Friday

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Justin Mcqueen  —  Jun 13 - 01:20 PM
  • GBP -0.4%, CPI-led rally retraced, pair back below 200-hour MAs (1.2758-65)

  • Traders unlikely chase GBP breakouts with pivotal UK CPI due June 19

  • Thus, the cluster of lows between 1.2675-88 should hold in lead up to CPI

  • Similarly, moves above 1.28 is likely to be fleeting

  • Probability of an August BoE cut stands at 45% 0#BOEWATCH

  • For now, sterling upside is better expressed vs euro nL1N3IB0BS

  • COMMENT-GBP extends post-Fed slide, positioning is a concern nL1N3IB0P9

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Randolph Donney  —  Jun 13 - 01:15 PM
  • USD/JPY modestly higher after dovish US data and hawkish Fed Wed

  • Pullback on PPI and claims limited to 156.57 on EBS

  • Dip buyers persist despite narrowing Tsy-JGB yld spreads

  • Spreads still wide enough to attract buyers, particularly on pullbacks

  • But pattern of lower highs since May 1's intervention day peak eyed

  • A close above that 157.99 w/o triggering intervention might retest 160

  • Bulls eye bolder BoJ normalization Fri and decent US sales data Tues

  • But there is clearly room for disappointment on both accounts

  • Longer term focus is on whether Fed waits too long to begin easing

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Jun 13 - 01:30 PM

Synopsis:

Credit Agricole highlights the potential risk of the Bank of Japan (BoJ) disappointing market expectations at its upcoming June meeting. While the JPY has seen some support from recent events, there is a concern that the BoJ may not meet investor expectations for reducing JGB purchases.

Key Points:

  1. Recent Support for JPY:

    • The JPY has been supported by a softer EUR due to French President Emmanuel Macron's call for a snap election, adding political risk to EUR/JPY.
    • Softer-than-expected US CPI data provided additional support.
    • However, the hawkish stance of the Fed has limited the JPY's gains.
  2. BoJ's Expected Actions:

    • Credit Agricole's Japan economists expect the BoJ to leave its policy rate unchanged.
    • They anticipate a reduction in JGB purchases from JPY6trn to JPY5trn per month.
    • The JGB market appears priced for this reduction, based on modeling of 10Y yields.
  3. Market Expectations:

    • The BoJ has already reduced buying in the 5-10Y part of the curve, providing modest support to the JPY against rising UST yields.
    • Japan’s rates market is pricing in a low probability of a policy rate hike.
    • Reducing JGB purchases is seen as a way for the BoJ to support the JPY without raising the policy rate.
  4. BoJ's Concerns:

    • Board members, including Governor Kazuo Ueda, have expressed concerns about the weak JPY's impact on inflation.
    • This suggests the central bank will likely reduce its JGB purchases.
  5. Risk of Disappointment:

    • With investor expectations already built in for a reduction in JGB purchases, there is a risk that the BoJ might disappoint if it does not meet these expectations.

Conclusion:

Credit Agricole sees a risk that the BoJ may disappoint at this week’s June meeting if it fails to meet market expectations for reducing JGB purchases. While recent events have provided some support to the JPY, the central bank's actions will be crucial in determining the currency's performance.

Source:
Crédit Agricole Research/Market Commentary
By Justin Mcqueen  —  Jun 13 - 12:50 PM
  • Euro (-0.6%) lags across G10 FX as risk aversion picks up

  • German/French 10yr spread continues to widen (71bps)

  • As a result, this paves the way for Euro downside vs CHF, JPY

  • EUR/CHF rests on 0.9600 with 200-day MA just below at 0.9595

  • Break of 200-day MA likely to add to downside momentum. Apr low at 0.9565

  • Heading into French election, Bund-OAT spread should guide EUR

  • Warning signs emerge for large Swiss franc short bet nL1N3I80PF

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Jun 13 - 10:45 AM

Synopsis:

Goldman Sachs suggests that low FX volatility could rise due to potential geopolitical risks, the upcoming US election, or economic concerns, making it a good time for US investors to consider reducing currency exposure in global portfolios. They outline a framework for FX hedging decisions and recommend hedging non-US equity exposure, particularly in Japan.

Key Points:

  1. Potential Increase in FX Volatility:

    • FX volatility could increase if geopolitical risks, the US election, or economic issues materialize.
    • This scenario makes it a prudent time to reduce currency exposure in global portfolios.
  2. Framework for FX Hedging Decisions:

    • Goldman Sachs' framework for FX hedging includes four considerations:
      • Portfolio Asset Composition: Assessing the types of assets in the portfolio.
      • Relative Safety of the Foreign Currency: Evaluating the stability of the foreign currency.
      • Level of Carry: Considering the interest rate differentials.
      • Odds of Recession: Estimating the likelihood of a recession over the investment horizon.
  3. Recommendation for US Investors:

    • In Q4 2023, the framework indicated that US institutions should hedge non-US equity exposure, especially in Japan, due to the elevated level of USD carry and a resilient US economy.
    • The current backdrop remains similar, reinforcing the advice for US investors to reduce FX exposure on a broader basis ahead of the US presidential election.

Conclusion:

Goldman Sachs advises US investors to consider FX hedging, given the potential for increased volatility due to geopolitical risks, the US election, and economic uncertainties. Their framework for FX hedging supports reducing currency exposure, particularly for non-US equity holdings, with a strong emphasis on Japanese assets.

Source:
Goldman Sachs Research/Market Commentary
By Christopher Romano  —  Jun 13 - 10:05 AM

EUR/USD neared flat Thursday, recovering from earlier lows, as unexpectedly soft U.S. data fueled thoughts of potentially easier Fed policy if economic reports start trending in that direction, which could repel those considering to go long.

U.S. weekly jobless claims struck a 10-month high while continuing claims increased sharply to 1.82m versus 1.798m estimates and 1.79m prior.

May producer prices surprised to the downside for both headline and ex-food and energy.
The data reinforced the view that disinflation may be returning, which was rekindled by unexpectedly soft CPI reported in the previous session.

The data left investors doubting the Fed's latest SEP projection for one cut in 2024 as short-term rates markets priced in a total of 50bps of easing for 2024.

Data trending in the direction of disinflation and weaker jobs growth could sink U.S. yields US2YT=RR and tighten German-U.S.
spreads US2DE2=RR, which may rally EUR/USD.

CFTC data indicate investors are net-long the euro but positioning is nowhere near highs achieved in 2020 and 2023.

Investors looking to get long EUR/USD may have to scramble should data weigh on the dollar and the Fed have to shift course towards a more dovish stance.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Jun 13 - 09:30 AM

Synopsis:

SocGen expects the dollar to remain range-bound due to current Fed policy expectations and sees short EUR/JPY as an attractive trade ahead of the BoJ’s June meeting. The recent US CPI data supports the view that the Fed is more likely to cut rates rather than hike, while European political risks and Japanese securities flows add further dimensions to the currency dynamics.

Key Points:

  1. Dollar and Fed Policy Expectations:

    • The dollar is closely tracking Fed policy expectations, with current market pricing indicating an 80bp cut in rates over the next year.
    • Recent CPI data has aligned rate expectations back to early June levels, reducing the likelihood of further rate hikes.
  2. CPI Data Impact:

    • The CPI data has diminished the chances of the Fed hiking rates, reinforcing the likelihood of rate cuts.
    • This has left the dollar strong but without significant domestic drivers for further appreciation.
  3. Focus on European Politics and BoJ Meeting:

    • European political risks are contributing to the dollar's current strength, with about a 0.5% risk premium priced into the Dollar Index.
    • The upcoming BoJ meeting is also a focal point, with potential policy changes impacting currency flows.
  4. Japanese Securities Flows:

    • Japan's recent securities flow data showed a record weekly net sale of foreign assets, including a significant sale of foreign bonds.
    • If the BoJ announces a reduction in bond purchases, this could further influence currency movements.
  5. Short EUR/JPY Trade:

    • Given the current market conditions, SocGen sees short EUR/JPY as an attractive trade ahead of the BoJ meeting.
    • The potential for reduced bond purchases by the BoJ could lead to further JPY strength against the EUR.

Conclusion:

SocGen anticipates the dollar will remain range-bound due to Fed policy expectations, with no significant domestic reasons for further strength. The recent US CPI data has reinforced the likelihood of rate cuts, while European political risks and the upcoming BoJ meeting add to the market dynamics. In this context, short EUR/JPY is seen as an attractive trade, particularly if the BoJ announces a reduction in bond purchases.

Source:
Société Générale Research/Market Commentary
By eFXdata  —  Jun 13 - 08:30 AM

Synopsis:

MUFG outlines their expectations for the Bank of Japan’s (BoJ) June policy meeting and its implications for USD/JPY. Increased confidence in the "virtuous cycle" between wages and prices, coupled with anticipated changes in the BoJ’s approach to JGB purchases, suggest a shifting landscape for Japanese monetary policy and its impact on currency markets.

Key Points:

  1. BoJ's Confidence in Economic Cycle:

    • Recent BoJ speeches indicate growing confidence in a strengthening "virtuous cycle" between wages and prices, driven by changes in the labor market.
    • This suggests a more optimistic outlook on Japan’s economic recovery and inflation dynamics.
  2. Expected Changes in JGB Purchases:

    • MUFG anticipates the BoJ will announce a slowdown in the pace of JGB purchases, currently close to JPY 6 trillion, at the June meeting.
    • This move would align with the BoJ’s evolving stance on monetary policy and economic conditions.
  3. Rate Hike Expectations:

    • MUFG continues to expect a 15bp rate hike at the BoJ’s July meeting, reflecting the central bank’s confidence in economic improvements.
    • This anticipated rate hike is part of a broader shift towards normalizing monetary policy.
  4. Impact on JGB Yields and USD/JPY:

    • The JGB 10-year yield appears to be priced for an upcoming change, with expectations of narrowing the US-JP 10-year spread.
    • This narrowing spread is projected to lead to a decline in USD/JPY, as higher yields in Japan could prompt increased repatriation flows.
  5. Favorable Yen Flows:

    • The flows for the yen are turning more favorable, supported by higher yields in Japan.
    • Expectations of increased repatriation flows are likely to bolster the yen further.

Conclusion:

MUFG expects the BoJ to announce a slowdown in JGB purchases at the June meeting, with a 15bp rate hike anticipated in July. These changes, coupled with higher JGB yields and favorable yen flows, point to a narrowing US-JP 10-year spread and an eventual decline in USD/JPY.

Source:
MUFG Research/Market Commentary
By Rob Howard  —  Jun 13 - 06:35 AM
  • Cable holds above 1.2767 ahead of US PPI, jobless claims data at 1230 GMT

  • 1.2767 was Wednesday's pre-US CPI data high (1.2859 was post-CPI data high)

  • Retreat towards 1.2767 spurred by Fed's relatively hawkish hold nL1N3IA1EV

  • UBS now expects Fed to start cutting rates in December rather than September

  • 1.2751 (Tuesday's high) and 1.2700 are GBP/USD support points below 1.2767

  • US PPI f/c 0.1% MM, 2.5% YY. Below-forecast PPI data could weigh on dollar

Source:
Refinitiv IFR Research/Market Commentary
By Rob Howard  —  Jun 13 - 06:00 AM
  • Large 0.8440 option expiry for Friday's NY cut helps to anchor EUR/GBP

  • The size of the strike is 1.1 billion euros (big expiries can be magnetic)

  • 0.8419 was Wednesday's low: half-a-pip shy of Tuesday's 22-month low

  • Tuesday's low was plumbed as French political jitters weighed on the euro

  • French election outcome is far from certain - unlike UK election on July 4

  • 0.8475 and 0.8500 are EUR/GBP resistance levels. 0.8475 = GBP/EUR 1.18

Source:
Refinitiv IFR Research/Market Commentary
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