eFXplus DATA

TD Research discusses EUR/USD outlook around next week's ECB meeting.

"With ECB policy largely set for the next year or so and the macro picture little changed, we don't look for any big revelations from President Draghi. However, he will need to clarify the ECB's forward guidance on rates, especially given the recent questions around the translation of the June statement. 

We expect a fairly muted FX market reaction this month and think the threshold to break out of recent ranges is rather high.

Draghi may indeed provide some clarity over what precisely the summer of 2019 means, but we struggle to think the FX market will get overly excited one way or the other," TD argues. 

A reversal in yuan losses, combined with dollar trepidation in the wake of Trump's currency remarks, is providing rays of hope for AUD/USD.
The Aussie dollar remains a proxy for China so a lasting yuan rebound could signal a recovery in AUD/USD, where price action already suggests a short-term bottom might be near.
AUD/USD's slide toward 0.7300/10 earlier today was repelled, increasing bears' frustration with that support.
A sharp rally took hold after USD/CNH's rally stalled short of 6.8500 and reversed.
USD/CNH is down on the day and technicals suggest a correction is due.
President Trump's displeasure with the greenback's strength and rising interest rates bolstered AUD/USD's gains as the U.S. dollar is offered across the board.
Bounces in equity and copper prices have buoyed risk sentiment, further boosting AUD/USD.
Daily RSI is biased up after diverging on today's low while 10 and 21-DMAs were pierced.
Should USD/CNH's correction deepen, risk continue to rally and Trump's recent rhetoric persist AUD/USD could break July's high.
A break there confirms a short-term double bottom and eyes 200-DMA and 0.7670/00 resistances.
A break of the latter is unlikely, though, as Fed and RBA rate hike paths diverge, yield spreads favor the greenback and long-term techs are bearish.

Bank of America Merrill Lynch Research discusses GBP outlook and stays sidelined in the near-term and thinks the current conditions with the the sizeable move in GBP implied vol as markets focus on the one major definitive Brexit deadline (29 March 2019) looks like a re-run of late 2015.

"We have been flagging in recent months that the political risk premium in GBP has been increasingly priced out since the Lancaster House speech in January 2017 as markets have become comfortable with the view that the UK is heading for a soft Brexit and that there would be a transition agreement. This remains our base case scenario and one we think opens up opportunities for sustained GBP upside over the medium-term.

However, we are not convinced by the market’s interpretation that this week events in the UK Parliament have radically increased the chances of a hard Brexit. If so, we would have expected a larger decline in GBP TWI than the 1% that has occurred since the middle of the week," BofAMAL adds. 

• Trump again expresses displeasure with rising US$ and interest rates
• Also suggests EU & China manipulating their currencies and interest rates
• U.S. dollar hit broadly, AUD/USD pierces 10 and 21-DMAs while RSIs rise
• Resistance near 0.7500 is key in the short-term, stops likely above
• If resistance is cleared a short-term double bottom is confirmed
• Double bottom scenario suggests 200-DMA and 0.7670/00 tests possible

CIBC discusses he reaction to today's Canadian retail sales report for the month of May.

"Headline retail sales hit a home run in May. A 2.0% advance doubled the consensus estimate for 1.0%, with the ex-auto figure blowing by expectations with a 1.4% rise (vs. 0.5% expected). The prior month also saw three-ticks worth of positive revisions for both the headline and ex-auto figures. Following a month in which tough weather conditions kept shoppers away, autos showed a strong advance, so did building materials and gasoline sales," CIBC notes.

"These readings will boost expectations for a follow-up hike from the Bank of Canada in the near-term, but the fact that the core-common measure of inflation remained at 1.9% suggests that central bankers still have the ability to be patient. Indeed, they will likely want to see how much growth tails off after the second quarter rebound," CIBC adds.

Deutsche Bank discusses USD/JPY outlook from the positioning front and notes that the latest data on JPY positioning suggests that it is not a constraint for USD/JPY upside yet. 

"Domestic speculators have been reducing USD longs in this latest USD/JPY rally, as they traditionally do.

This flow may have helped dampen the move higher in USD/JPY as of late, but with net onshore margin positioning near the lows, the bullk of this contrarian flows has likely run its course," DB adds. 

• USD/JPY has seen a 112.20-112.62 range so far this session according to EBS
• Good bids/support eyed ahead of 112.00 and Thursday's 112.05 low
• Gotobi/pre-weekend Tokyo fix demand, Japan dip-buy interest too seen in Asia
• Found support ahead of key Fibo, but break below likely nL1N1UG05D
• Heightened USD/JPY downside concerns - options show nL1N1UG060
• Trump's Fed view likely to hurt the dollar nL1N1UG068

• Relapsed on Thurs, but found support at 112.05 which is ahead of 111.99 Fibo
• 111.99 Fibo -- 23.6% retrace of the 108.12 to 113.18 (May to July) up-leg
• Tenkan and kijun lines are positively aligned, reinforcing the upside bias
• S-term pressure remains on the downside, so we have placed our bid at 111.40
• Huge Fibo and 200-WMA weigh nL1N1UF04E

• Cable topped out just shy of 1.3050 after Trump spurred USD selling Thursday
• Trump criticizes Fed rate policy nL1N1UF1A3. 1.3050 was June's low
• 1.2958 was 10-month low pre-Trump, after UK retail sales miss nL8N1UF2CO
• 1.2995-1.3037 = Friday's range-to-date. EUR/GBP up to 0.8957 early Europe
• 0.8957 = fractionally fresh four-month high. 0.8955 was Thursday's high
• GBP weakness vs EUR influenced by Brexit concerns nL8N1UF5OP nL8N1UG17I

• USD/JPY pushing lower again, back below ascending 200-HMA at 112.26.
• From 112.61 around time of Tokyo fix, to 112.19.
• Despite push through 200-HMA, downside still seen limited.
• Good bids/support eyed from ahead of 112.00, 112.05 low yesterday.
• Some option expiries at 112.00 strike too, USD327 mln.
• Heavy from around 112.50, USD786 mln option expiries 112.50-60 too.

• USD/JPY up to 112.61 post-Tokyo fix on good Gotobi/pre-weekend demand.
• To 112.26 low thereafter but downside limited, good bids again pre-112.00.
• Spike low yesterday post-Trump Fed scolding on interest rates 112.05.
• Ascending 200-HMA pierced then but above since, now at 112.24.
• Resistance/offers from @100-HMA at 112.64, US yields/Nikkei soggy.
• Option expiries to help cap, total USD786 mln 112.50-60 today.

BNP Paribas discusses GBP outlook and warns from fading GBP weakness around current levels especially as long as the USD strong momentum remains in place for now.

"The UK data calendar is quieter next week, leaving split screen focus on Brexit developments in the UK and in Europe. UK Prime Minister May’s position remains precarious but she appears poised to avoid a leadership challenge for now, while we expect EU leaders to be careful not to undermine her by rejecting the government’s White Paper outright.

Against this backdrop, EURGBP could lose some momentum, but we would be wary of fading GBPUSD weakness as the USD remains broadly well supported," BNPP argues. 

• -0.1%, but volatile as early gains evaporated on weak CNY fix nL1N1UG019
• Decent 0.7318/0.7375 range so far - low key then hectic around China fix
• AUD/JPY trades -0.2% after a 82.17/98 range & AUD/NZD flat - 1.0887/1.0919
• Negative momentum studies, 5, 10 & 21 DMAs edge lower - modest bearish setup
• 0.7327,61.8% 2016/2018 rise survived another test today - pivotal support
• Close below would open the door to 0.7160 Dec/Jan 2016/17 range low

• EUR/JPY to daily Ichi tenkan, thru 200-HMA, bouncing, Asia 130.87-131.13.
• Low yesterday 130.71 on USD/JPY fall, tenkan 130.77 yesterday, today 130.94.
• Ascending 200-HMA currently 131.09, cross attempting break higher.
• Descending 55-HMA above at 131.28, hourly Ichi cloud 131.34-42 - resistance.
• Upside may be limited but both USD/JPY, EUR/JPY being bought back.
• Gotobi demand into Tokyo fix, also JPY sales by Japanese on rallies.

• Fraction firmer early - USD led after closing -0.4% with EUR/GBP +0.5%
• Retail sales miss & continued Brexit uncertainty weighed on GBP
• Momentum studies, 5, 10 & 21 DMAs head lower - negative setup
• 5 DMA leads 10 day then 21 day, which suggests a trend is now in place
• First significant support comes in at 1.2898, 61.8% 2017/18 rise
• NY 1.2958/1.3049 range is initial support/resistance

• Flat early after closing -0.3% with the return of risk off JPY strength
• JPY v's AUD, NZD & CAD all fell 1% with softer stocks & UST yields
• CPI leads Japanese data - core nationwide y/y poll +0.8%, after 0.7% in May
• Bearish outside day becomes a key day reversal on close below 112.05 NY low
• Stalled twice above 113.00; 113.26/27, 200 Week MA & 61.8% 2016/18 fall caps
• 112.50 660M strikes - 111.97 Tenkan line & 112.00 225M strikes support

NAB Research discusses USD/JPY outlook and notes that from a technical perspective USD/JPY has room to trade toward ¥114.50 before it finds some serious resistance.

"The speculative community has modestly increased it short JPY positioning, but ahistory would suggest there is plenty of room for further increases.

Our USD/JPY fair value model also suggests the currency  is not yet looking expensive and similar to the technical picture, a move to nearer ¥114.50 is needed for the pair to look rich (all else equal).

Our bias would be for USD/JPY to head above ¥114 as long as trade tension worries do not turn into a DM equity rout," NAB argues. 

• USD/JPY, Tsy ylds dn on Trump grumble re rates, USD-CNBCnFWN1UF0XV
• Odd for POTUS to comment directly on rates, USD, but there it is
• Rising rates & USD can negate intended impact of trade tariffs
• Support by 10-DMA at 111.96 last (EBS) and 112; stops below
• Independent Fed insulated somewhat, but markets taking cover first
• Worst-case scenario is retreat to 55-DMA (110.35)' Offers 113+

AUD/USD bulls didn't have long to celebrate the large upside surprise to June Australian jobs data and are now fretting over a break below 0.7300 as the fall in China's yuan deepens.
USD/CNH hit a new trend high and gave the greenback a broad based bid.
U.S.-China trade tensions, slower China economic growth and expected Fed rate hikes are driving the rally.
The U.S. dollar's bid has combined with Aussie dollar's proxy for China's economy and currency to drive AUD/USD toward key 0.7300/30 support.
The 61.8 percent Fib of 0.6827-0.8136, June's low and 0.7300 barriers sit there.
Today's price action heightens bearish chart signals.
RSIs are biased down, a long upper wick is forming on the monthly candle and AUD/USD is back below the 10 and 21-DMAs.
Options markets are gearing up for a 0.7300 break nL1N1UF0KV as demand for AUD vol and AUD puts increases.
A break below 0.7300 is likely to ignite the next leg of the longer-term bear market.
Bears would then target 0.7110/60.

discusses the current Summery conditions of the FX market with most of the near-term price action patterns are in line with a firmer USD across the board.

All in all, until the yuan stabilises and while US/Chinese trade relations are the biggest global concern, USD/JPY is unlikely to fall much, EUR/USD is unlikely to break out of the top side of its 1.15-1.1850 mini-range, and the dollar is likely to be the main G10 winner.

There's not a lot else going on," SocGen argues.