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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 Paul Spirgel  —  May 29 - 01:40 PM
  • GBP/USD soft in NorAm afternoon, -0.42% at 1.2708; Wednesday range 1.2772-06

  • USD broadly firm as UST yields rise, despite larger UK rate rises

  • Sterling slips from Tuesday's high, awaiting inflation, rate clues

  • Recent GBP gains tempered ahead of key euro zone, U.S. inflation data Friday

  • US, UK 2024 policy paths similar; near 50% odds for first cut, -30bp by YE

  • Momentum with GBP bulls above 1.2596, the 50% Fib of 1.2894-1.2299

  • Supt at 1.2706 Wed low, 1.2676 daily low May 24, 1.2635 100-DMA

  • Res 1.2754 50% of 1.2801-1.2706, 1.2772 Wed high, 1.2812 upper 30-d Bolli

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  May 29 - 01:30 PM

Synopsis:

Goldman Sachs examines the dynamics influencing the Australian Dollar (AUD) and New Zealand Dollar (NZD), identifying potential triggers that could lead to a sustained downward movement in the AUD/NZD exchange rate. The analysis focuses on the role of commodity prices, especially dairy, and the divergent monetary policy paths of Australia and New Zealand.

Key Points:

  • NZD Performance: NZD has outperformed AUD recently, driven by a less direct correlation with China's economic expectations and a significant correlation with dairy prices, New Zealand's major export.
  • Commodity Price Support: The increase in dairy prices, with a notable rise of nearly 10% this month, has bolstered the NZD.
  • Policy Divergence: The Reserve Bank of New Zealand's (RBNZ) unexpectedly hawkish stance in its May meeting has been a key factor in the recent AUD/NZD divergence.
  • Future Triggers: Key upcoming events that could influence AUD/NZD include the Reserve Bank of Australia's (RBA) meeting on June 18 and New Zealand's Q2 inflation data on July 17. Additionally, New Zealand's government budget announcement on May 30, which may include significant stimulus measures, could further impact rate cut expectations and AUD/NZD dynamics.

Conclusion:

While recent trends and economic indicators have supported NZD strength relative to AUD, Goldman Sachs suggests that a significant and sustained move lower in AUD/NZD would likely require greater policy divergence than currently anticipated. Near-term events, such as the upcoming RBA meeting and New Zealand's budget, will be critical in shaping the exchange rate's direction.

Source:
Goldman Sachs Research/Market Commentary
By Paul Spirgel  —  May 29 - 11:35 AM
  • $CAD firm into Europe close, +0.44% at 1.3706; Wednesday range 1.3714-1.3644

  • UST yield rise boosts USD, 5-30 year treasuries +5-8bp; CA bond rise lags

  • Commodities soft, oil -0.50%; copper -0.1% no help for CAD longs

  • IRPR indicates BoC -15bp in June, -26bp by July, -50bp by Dec 11 BoC meeting

  • Fed cuts seen slower, -13bp by Sept, -19bp by Nov, -33bp by Dec 18 Fed meet

  • Friday's US inflation data in focus for clues to near-term Fed policy path

  • Res 1.3714 Wed high, 1.3718 50% of 1.3847-1.3590, 1.3747 upper 21-d Bolli

  • Supt 1.3658 rising 10-DMA, 1.3644 Wednesday low, 1.3574 100/200-DMAs

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  May 29 - 10:45 AM

Synopsis:

MUFG predicts a positive trajectory for the GBP, bolstered by renewed interest in carry trades amidst persistently low FX volatility and a stabilizing political environment in the UK. The lack of expected election-related volatility and recent economic data have adjusted rate cut expectations, potentially prolonging GBP's upward momentum.

Key Points:

  • Low FX Volatility and Carry Interest: With FX volatility remaining low, GBP becomes an attractive option for carry trades, benefiting from the yield differential without facing significant exchange rate volatility.
  • Political Stability: The upcoming UK general election is not anticipated to introduce significant uncertainty or disrupt market stability, which traditionally could deter carry interest.
  • Monetary Policy Expectations: Initial forecasts for a June rate cut by the Bank of England (BoE) have been shelved in light of stronger-than-expected April CPI data and the timing of the general election. The expectation now shifts to a likely rate cut in August.
  • Currency Strength Indicators: Recent movements in the BoE Trade Weighted Index and GBP/JPY levels, which have surged to their highest since before the Global Financial Crisis, signal robust carry demand for GBP.

Conclusion:

MUFG maintains a bullish outlook on GBP, driven by the potential for increased carry trade activity underpinned by low FX volatility and a lack of significant political or economic disruptions in the UK. This scenario presents a conducive environment for GBP to continue its ascent, especially against currencies with lower yields.

Source:
MUFG Research/Market Commentary
By Paul Spirgel  —  May 29 - 09:55 AM

GBP/USD backed away from Tuesday's nine-week high of 1.2801, but the outlook remained upbeat for the pound as it held within striking distance of the 1.2894 high it struck on March 8 as symmetrical BoE-Fed rate expectations rob the dollar of any yield advantage.

Longer-term daily moving averages put sterling's rate-related rise in perspective as the distance between spot and the 100-DMA at 1.2635, and 200-DMA at 1.2541 remains wide given diminishing dovish Fed and BoE outlooks.

Sterling's recent rise following above-forecast UK CPI may be tested on Friday after U.S. April PCE index data, which will provide an update on the Fed's progress in bringing U.S. inflation down to target.

Should the data come in steady, as forecast, markets are likely to push Fed rate cut expectations further out the curve, which should keep GBP/USD anchored near current levels.

A rise in the data could spur Fed rate hike expectations higher which would weigh on GBP/USD, while a softer than forecast print might revive bets on quicker U.S. cuts, boosting the pound toward the 2024 high at 1.2894.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  May 29 - 09:30 AM

Synopsis:

Credit Agricole outlines their expectation for EUR/USD to decline to 1.07 by the end of June, influenced by anticipated European Central Bank (ECB) rate cuts and the potential repricing of the Federal Reserve's outlook.

Key Points:

  • ECB Rate Cuts: An ECB rate cut in June is widely anticipated, with additional cuts expected later in the year. These actions are likely to impact EUR-USD rate spreads significantly.
  • Fed Outlook Repricing: The trajectory of EUR/USD will be heavily influenced by any changes in the market's expectations regarding the Fed's monetary policy. Without adjustments toward tighter conditions seen earlier in the year, EUR/USD may struggle to sustain levels above 1.09.
  • Market Dynamics: Current market dynamics suggest a potential retracement of EUR/USD to Credit Agricole's long-standing forecast of 1.07 by the end of June, reflecting broader monetary policy expectations and their effects on currency valuations.

Conclusion:

Credit Agricole maintains a bearish outlook on EUR/USD, targeting a move down to 1.07 by the end of June, driven by expected ECB rate cuts and the absence of a significant shift in Fed policy expectations. This forecast hinges on how currency markets react to evolving monetary policy signals from major central banks.

Source:
Crédit Agricole Research/Market Commentary
By eFXdata  —  May 29 - 08:33 AM

Synopsis:

Bank of America (BofA) expresses caution regarding the selling of the USD based on improved sentiment towards China's economic policy stimulus. While recent Chinese policy actions have sparked optimism and contributed to USD weakness, BofA advises against hasty financial moves influenced by these developments.

Key Points:

  • Policy Stimulus in China: Recent measures discussed at the April Politburo meeting and subsequent signals of monetary and property easing have led to a more positive outlook for China, influencing global markets and contributing to USD depreciation.
  • Lag in Impact: The effect of China’s import demand on the global economy typically trails its domestic credit impulse by about three-quarters. Although there was initial enthusiasm for a recovery in imports, April’s credit data underperformed expectations, suggesting potential delays in the anticipated uplift.
  • Uncertainty in Property Sector: While there is a push from the central government to stabilize the property market, the focus is currently on destocking rather than new investments and construction, which are more significant drivers of commodity imports.

Conclusion:

Despite the positive signals from China, BofA recommends a cautious approach to selling USD. The impact of Chinese economic policies on global markets, particularly the USD, is likely to be delayed. Moreover, the effectiveness of these policies in stimulating significant new economic activity remains uncertain. Investors are advised to watch for more definitive signs of sustained recovery in China's credit and property sectors before making major currency moves.

Source:
BofA Global Research
By Rob Howard  —  May 29 - 07:15 AM
  • Cable dips to 1.2740 as Anglo rejects BHP attempt to continue takeover talks

  • 1.2740 is lowest level since Tuesday's nine-and-a-half week high of 1.2801

  • BHP has until 1600 GMT to submit binding offer for London-listed Anglo

  • News of BHP's initial offer for Anglo lifted the pound last month (April 25)

  • GBP/USD support levels include 1.2734 (Monday's low), 1.2700 and 1.2675

  • 1.2675 was last week's low (1.2683 is 23.6% Fibo of 1.2299-1.2801)

Source:
Refinitiv IFR Research/Market Commentary
By Richard Pace  —  May 29 - 05:45 AM
  • USD/JPY 156.92-157.41 range Wed - new post intervention high

  • FX since drawn back toward another huge 157.00 FX option strike expiry

  • Prior alleged intervention levels were 160.24/157.58 on Apr 29 and May 1

  • FX option pricing doesn't yet seem concerned about more FX intervention

  • Carry trades maintain pressure on JPY and attract USD/JPY dip buyers

  • Bids below 157, some option related hedges. Support Tues 156.58 setback low

  • JPY underperformance lifts GBP/JPY to new highs since 2008 above 200.00

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Jeremy Boulton  —  May 29 - 05:05 AM
  • Eurozone M3 rises to 1.3% in April - highest since May last year

  • Several German State CPIs rose on yy basis, only one fell

  • German consumer confidence improved to a two-year high in June

  • EUR/USD drops 1.0862-1.0830 EBS on May 29 - May 28 high was 1.0889

  • ECB is expected to cut deposit rate by 25bps on June 6

  • A further 25bps is priced in this year, some see 2 more cuts after June

  • One FX bet stands out amongst all the others nL8N3HW1G8

Source:
Refinitiv IFR Research/Market Commentary
By Richard Pace  —  May 29 - 05:05 AM
  • USD/JPY reached a new post intervention recovery high at 157.41 Wednesday

  • However, FX options doesn't seem concerned about more intervention, yet

  • Implied volatility gauges realised volatility risk - its under pressure

  • However, the main intervention risk bellwethers are option risk reversals

  • Those contracts will reward holders of JPY calls over puts if USD/JPY drops

  • Saw increased vol premium for JPY calls over puts before prior intervention

  • Benchmark 1-month 25 delta risk reversal 2.0 before Apr 29 USD/JPY drop

  • Hit lows at 0.7 after alleged intervention and meets supply at 1.25 since.

  • USD/JPY drawn back to another large 157.00 FX option expiry on Wednesday

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Richard Pace  —  May 29 - 03:55 AM
  • FX options suggest AUD/USD hold to 0.6600-0.6700 range could continue

  • FX option implied volatility/premiums have been easing of late

  • That's consistent with low realised volatility and familiar ranges

  • Traders have been selling options with strikes within 0.6600-0.6700 range

  • Leaves many to expire n-term - related hedging adds support/resistance

  • A$1-bln 0.6600-25 Wed, Same Thurs, A$800-million 0.6600 Fri, more next week

  • A$1-billion 0.6700 Thurs, A$500-million Fri

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Rob Howard  —  May 29 - 02:45 AM
  • Cable hugs 1.2761 after retreat from Tuesday's nine-week peak of 1.2801

  • That peak was scaled before unexpected improvement in US consumer confidence

  • US data beat has helped inflate UST yields, to the benefit of the dollar

  • 1.2761 was GBP/USD high last week (after hotter than expected UK CPI data)

  • M&A news: BHP seeks more time over GBP 38.6 billion offer for Anglo American

  • UK election news: First Sunak-Starmer debate scheduled for ITV next Tuesday

Source:
Refinitiv IFR Research/Market Commentary
By Richard Pace  —  May 29 - 01:40 AM
  • FX option strikes expire at 10-am New York/3-pm London - Wednesday May 29

  • EUR/USD: 1.0800 (1.5BLN), 1.0835-40 (1.5BLN), 1.0850-55 (842M)

  • 1.0875-80 (2.3BLN), 1.0885-90 (1.6BLN), 1.0900 (1BLN)

  • GBP/USD: 1.2650 (844M)

  • AUD/USD: 0.6600 (517M), 0.6625 (500M)

  • USD/CAD: 1.3550 (1BLN), 1.3800 (895M)

  • USD/JPY: 156.50 (628M), 157.50 (1.2BLN), 157.95-158.05 (1.5BLN)

  • EUR/JPY: 168.85 (441M). CHF/JPY: 169.00 (340M), 170.50 (240M)

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  May 28 - 11:35 PM
  • Off 0.1% at the base of a 1.0846-1.0862 range with the U.S. dollar up 0.1%

  • Modest risk-off, with regional stocks, and e-minis lower, UST yields firmer

  • German inflation and consumer sentiment will gauge it's economic health

  • Charts - momentum studies flat-line, as 21-day Bollinger bands contract

  • Mixed 5, 10, & 21-day moving averages - signals show a neutral setup

  • A close below the 1.0810 21-day moving average would be a bearish signal

  • 1.0810 21-DMA and Tuesday's 1.0889 top are initial support/resistance

  • 1.0835/40 1.518 BLN and 1.0875/80 2.327 BLN close strikes for May 29th

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  May 28 - 04:30 PM

Synopsis:

Goldman Sachs anticipates that substantial depreciation of the US Dollar may be unlikely prior to the upcoming US elections, based on patterns observed in 2016 and the current economic outlook.

Key Points:

  • Historical Pattern: Reflecting on the 2016 elections, portfolio flows did not heavily favor markets with improving growth, suggesting a similar trend may occur this election cycle.
  • Economic Outlook: The strong performance of the US economy is expected to continue supporting the Dollar.
  • Election Risks: Upcoming election risks are likely to influence market sentiment and currency stability.
  • Inflationary Catalysts: Potential new inflationary triggers, such as tariffs or increased fiscal spending, could drive the Dollar stronger.

Conclusion:

Goldman Sachs forecasts that the Dollar will maintain or even enhance its strength relative to other currencies in the months leading up to the US elections. This stability is attributed to solid economic fundamentals and heightened market cautiousness due to electoral uncertainties.

Source:
Goldman Sachs Research/Market Commentary
By Krishna K  —  May 28 - 10:05 PM
  • AUD/USD races to 0.6665 day high on higher-than-expected April CPI

  • AU April CPI rises to 5-month high of 3.6% vs.3.4% expected

  • RBA rate expectations pushed back as inflation remains sticky

  • First easing now not fully priced in until Sep 2025; was July earlier

  • AUD fails to hold gains but downside limited; support 0.6625-30, 0.6600-05

  • Resistance 0.6680-85, 0.6710-15; Asia range 0.6636-0.6665

  • A broad 0.6550-0.6750 range forms as Fed, RBA maintain status quo on rates

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Krishna K  —  May 28 - 09:00 PM
  • AUD/USD under pressure as USD stays broadly bid; JPY at lowest since May 1

  • Undermined by firm U.S. yields which hover near multi-week peaks

  • Persistent U.S. inflation concerns, improved consumer confidence weigh

  • Fed officials reiteration of higher-for-longer rate stance underpins USD

  • Australia CPI Wednesday key for RBA rate expectations

  • AU monthly consumer prices expected to dip to 3.4% from 3.5% in March

  • Support 0.6625-30, 0.6600-05, resistance 0.6680-85, 0.6710-15

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  May 28 - 08:20 PM
  • -0.05` after closing off 0.1% with the U.S. dollar up 0.05%

  • Sterling jumped to 1.2801 in London after strong retail sales

  • Then fell back as the USD climbed with rising Treasury yields

  • There are no major UK data or BoE events, so the USD and risk lead GBP

  • Charts; neutral daily momentum studies - 5, 10 & 21 DMAs climb

  • 21-day Bollinger bands move higher - a strong positive trending setup

  • Tuesday's 1.2801 top and the 1.2893 2024 high are the major resistances

  • Close below the 1.2723 10-day moving average would be a warning to longs

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  May 28 - 07:45 PM
  • -0.05% after closing flat with the U.S. dollar closing up 0.05%

  • Spiked to 1.0889 in Europe, then retreated as UST yields climbed

  • Yield spreads widened, 10yr bund +4bp 2.589%, 10yr UST +7bp 4.542%

  • Inflation expectations eased in Europe, supporting a June ECB cut

  • Charts - momentum studies flat-line, as 21-day Bollinger bands contract

  • Mixed 5, 10, & 21-day moving averages - topside failure left a neutral setup

  • A close below the 1.0810 21-day moving average would be a bearish signal

  • 1.0810 21-DMA and Tuesday's 1.0889 top are initial support/resistance

  • 1.0835/40 1.518 BLN and 1.0875/80 2.327 BLN close strikes for May 29th

    For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Krishna K  —  May 28 - 06:35 PM

Changes day of fireside chat in last bullet

  • AUD/USD opens 0.1% lower as U.S. yields jump on weak bond sales

  • Persistent U.S. inflation concerns, improved consumer confidence weigh

  • Fed's Kashkari wants significant progress on inflation before rate cuts

  • Australia CPI Wed, U.S. core PCE price index Fri key for rate expectations

  • AU monthly consumer prices expected to dip to 3.4% from 3.5% in March

  • RBA higher-for-longer rate stance to stay unless inflation cools markedly

  • A broad 0.6550-0.6750 range forms as Fed, RBA reiterate status quo on rates

  • Support 0.6625-30, 0.6600-05, resistance 0.6680-85, 0.6710-15

  • Tue range 0.6679-0.6643; RBA Assistant Governor Hunter fireside chat Thu

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  May 28 - 03:00 PM

Synopsis:

ING discusses the potential for a rise in EUR/GBP from current levels, emphasizing the influence of monetary policy divergence between the European Central Bank (ECB) and the Bank of England (BoE). Despite recent dovish comments from the ECB and upbeat risk sentiment, ING sees a favorable setup for EUR/GBP due to shifts in monetary policy expectations.

Key Points:

  • Monetary Policy Divergence: The primary driver for EUR/GBP remains the monetary policy divergence between the ECB and the BoE. ING anticipates this divergence may soon favor the euro, supporting a potential rally in EUR/GBP.
  • Current Market Dynamics: After touching lows below 0.8500, EUR/GBP showed resilience, suggesting the market is hesitant to drive the pair lower amid a split BoE MPC and volatile inflation and wages data.
  • Political Influence: The upcoming UK political developments, particularly any campaign statements from Labour Party leader Keir Starmer, are monitored but have yet to impact the market significantly.

Conclusion:

With a relatively quiet UK economic calendar this week, EUR/GBP's movements are likely to be influenced more by shifts in policy expectations rather than immediate economic data or political comments. ING maintains a view that upcoming economic indicators will bolster the case for a BoE rate cut in August, potentially driving EUR/GBP higher in the near term.

Source:
ING Research/Market Commentary
May 28 - 05:55 PM

EUR/USD - Bulls Cling To Gains

By Christopher Romano  —  May 28 - 01:50 PM
  • NY opened near 1.0875 after 1.08555 traded on EBS overnight, rally extended

  • Lower US yields, equity ESv1 & gold XAU= gains helped drive EUR/USD up

  • 1.0889 hit, sellers emerged as US$ buying ensued, yields US10YT=RR rallied

  • EUR/USD dropped to 1.0858 then neared 1.0870 late, traded up +0.12%

  • Techs are bullish; RSIs imply upward momentum in place, 10-DMA lends support

  • German June GfK consumer sentiment, French May consumer confidence due Wed.

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Christopher Romano  —  May 28 - 01:40 PM
  • AUD/USD's overnight rally extended in NY's morning, pair opened near 0.6660

  • Lower US yields US2YT=RR, commodity HGv1XAU= gains helped buoy AUD/USD

  • A 4-session high of 0.667959 traded but sellers emerged & gains eroded

  • Yields, US$ turned upward while stocks ESv1 slid & USD/CNH rallied

  • AUD/USD fell back below the 10-DMA & turned slightly negative on the session

  • Pair sat near 0.6654, traded down -0.001% late in the session

  • Daily gravestone doji formed, is a concern for AUD/USD longs

  • Australia April CPI is a data risk in the Asia session

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
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