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By Paul Spirgel  —  Sep 23 - 04:18 PM
  • USD spec net long fell in Sep 14-20 IMM period, $IDX +0.01% nL1N30U1ZS

  • Data somewhat stale considering Friday's outsized rise, GBP -3.5%, EUR -1.5%

  • Next weeks data taking into account recent moves likely more instructive

  • EUR specs +45,286 contracts flip position to +33,449; EUR flat in period

  • $JPY -0.62% in period, yen specs -558 contracts now short 81,280

  • GBP$ -0.95% in period, specs +13,243 contracts short reduced to 54,843

  • CAD specs -10,369 contracts now +2,056; Fed rate path moves higher than BoC

  • AUD specs +17.294 contracts, short reduced to 40,556; AUD -0.51% in period

  • BTC specs +451 contracts, long rises to 577 contracts; BTC -6.23% in period




Refinitiv IFR Research/Market Commentary
By Randolph Donney  —  Sep 23 - 02:35 PM

The dollar vaulted higher on Friday as sterling wilted 3% on UK fiscal fears and dismal euro zone PMI data heightened worries about the withering global economy after the Fed piled on another aggressive rate hike this week and signaled more to come.

Unfunded UK fiscal stimulus plans nL8N30T5LM suggested the BoE's underwhelming 50bps hike this week left it further behind the suddenly steeper inflation curve.

EUR/USD's fell to fresh 20-year lows after euro zone September composite PMI from S&P global slid to a more contractionary 48.2 from 48.9, while the U.S. composite improved to 49.3 from 44.6.

The data coupled with the hawkish Fed and yield-seeking safe-haven flows propelled the dollar index 1.65% higher to 20-year highs, while EUR/USD tumbled 1.52%.

USD/JPY rallied 0.6%, extending its recovery from Thursday's dive on Japanese intervention to support the yen nL1N30U17T, with fears of further forex forays by the MOF likely to slow rather than reverse the dollar's uptrend in the absence of BoJ tightening.

With another 75bp Fed rate hike nL1N30R1F1 almost fully priced in for the November meeting, charts show scope for the dollar index to rise 7% before running into crucial long-term resistance nL1N30U1EH.

At that point, global unease about dollar gains worsening the global inflation and growth outlooks might provide resistance as well.

Highlighting macro risks, 2-year gilt yields surged more than 40bps to 4.005%, its highest since 2008, as sterling hit its lowest since 1985, prompting talk of a new Plaza Accord to weaken the dollar following Japan's intervention to support the beleaguered yen on Thursday.

The threat of hard landing sent stocks and riskier assets sharply lower, and a the 2-10-year Treasury yield curve inverting a further 10bps to -50.7bps.

Illustrating European concerns was the 15bps widening of 2-year bund-BTP yields spreads ahead of Saturday's Italian election.

The S&P 500's slide now threatens June's 2022 lows, with the DJIA already below it's June lows Friday.

Global recession fears crushed commodity prices.
Crude fell about 5% to 8-month lows and metals prices, including gold, were down sharply as well.
Oil's drop comes amid Russia's attempts to annex four regions within Ukraine nL1N30T2UN.

Bitcoin losses kept it close to June's nadir, while ether still has a bit of room before reaching its summer trough.

Next week's data calendar is pretty light on top-tier releases until Friday's inflation updates from the euro zone and U.S.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Christopher Romano  —  Sep 23 - 01:40 PM
  • Global rates up sharply US2YT=RRAU3YT=RRDE2YT=RR, stoke risk-off

  • Equities ESv1, commodities HGv1 fall on prospect of slower growth

  • EM ccys sold vs US$ other safe-havens on a flight to safety trade

  • AUD/JPY fell toward 93.50, USD/CNH rallied above 7.1460 before dipping

  • After an early lift near 0.6590 AUD/USD fell sharply, hit 0.6530

  • Techs are bearish; daily, monthly RSI falling, June 2020 low breaks

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Sep 23 - 01:30 PM

Danske Research sees a scope for USD/CAD to extend its gains into year-end.

"The upward pressure on USD/CAD has resumed over the last month. Looking ahead, we continue to pencil in more topside driven by both broad based USD strength, shaky global asset markets, tighter global financial conditions and a Bank of Canada delivering less tightening than the Fed.  A much improved global growth outlook and/or more dovish central banks mark the biggest downside risk factor to our forecast," Danske notes.

"On the other hand, a sharp global recession could send USD/CAD considerably higher than in our base case," Danske adds. 

Danske Research/Market Commentary
By Paul Spirgel  —  Sep 23 - 01:30 PM
  • GBP/USD drops 3.25% to 1.09 into NY close, Friday range 1.1274-1.0864

  • UK mini-budget rife with tax cuts and subsidies will deepen UK C/A deficit

  • Gilt, front-end yields soar as UK to raise borrowing by 45% to GBP 234bn

  • Rising yields no solace for sterling as budget worries mount nL1N30U0ZB

  • UK 5-yr credit default swap +3.5 bps to 34.5bp, highest since early COVID

  • GBP$ supt at 1.0864 Fri low, 1.0805 Mar 14 '85 low, 1.064 Mar 8 '85 low

  • Res 1.0912 lwr 30-h Bolli, 1.1008 10-HMA, 1.1111 lower 30-d Bolli

  • GBP broadly sold vs majors; -2% vs EUR, and -1.4% vs low-yielding JPY

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Sep 23 - 11:20 AM

Bank of America Global Research summarizes its G10 tactical bias into year-end.

"The forces that support the USD keep getting stronger. It is not that any of the other currencies look any attractive. The risks are for a stronger USD before it weakens towards its long-term equilibrium. Nrespite for EM currencies as the Fed hawks high five and geopolitical risks escalate," BofA notes. 

"Stay bearish GBP, CAD, KRW, CNY into year-end," BofA adds. 

BofA Global Research
By Christopher Romano  —  Sep 23 - 10:15 AM

EUR/USD struck a fresh 20-year low Friday and lower levels seem likely as investors seem to be ignoring data that would weaken the dollar and are instead focused solely on the Fed.

September U.S. S&P Global PMI indicated subdued economic activitynZON006ER3.
The prices charged component hit its lowest since January 2021 while the employment index dropped to levels not seen since December 2021.

The data would normally lead investors to sell the dollar on the prospect the Fed would have to take a less hawkish stance.
A counter-intuitive reaction ensued however as the dollar rallied and rates EDH3, US2YT=RR lifted after the data.

EUR/USD's post-data price action should concern those looking for a rally.
Most investors still flock to the dollar as the Fed's hiking path seems cemented and risk continues to sour drastically.

Technicals highlight downside risks.
Daily and monthly RSIs are oversold but are not diverging, which indicates downside momentum remains.

EUR/USD bears have the confidence to push the pair to structural support in the 0.9600 area.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Sep 23 - 09:30 AM


Credit Agricole CIB Research discusses its reaction to yesterday's BoJ intervention.

"Our short-term FAST FX model points to USD/JPY’s fair value currently being close to 147 due to the divergence between the Fed and the BoJ; a divergence that has been dramatically confirmed in the past 24 hours," CACIB notes.

"We do not expect the MoF’s intervention to have a medium-term impact, and in the coming week it will be up to the US economic data to weaken and lower the USD/JPY to justify the MoF’s intervention, because without a change in tack by the Fed or the BoJ, the JPY’s predicament will not change," CACIB adds. 

Crédit Agricole Research/Market Commentary
By eFXdata  —  Sep 23 - 08:30 AM

MUFG Research discusses its reaction to yesterdays' BoJ's intervention.

"We would highlight three key points about yesterday’s action. Firstly, while the MoF cited the need to “resist excessively abrupt moves” and denied there was a line in the sand that was being protected, market participants will likely conclude that the authorities do not wish to see USD/JPY break above the August 1998 high of 147.66," MUFG notes. 

"Secondly, the denial of there being a line in the sand and the US Treasury statement yesterday also stating that it was their understanding the action was “aimed at volatility” mean there is every reason to believe USD/JPY will drift back higher again. We suspect Japan are “reluctant interveners” understanding the fundamental backdrop and were compelled to act to give credence to the warnings already given.

Finally, Vice Finance Minister Kanda stated today that the size of the intervention yesterday was “too big to hide” and hence the MoF confirmed the action," MUFG adds. 

MUFG Research/Market Commentary
By Peter Stoneham  —  Sep 23 - 06:45 AM
  • Thursday Doji warned of a direction change and the cross has bounced

  • Early drop to 0.8712 but then a strong rebound to 0.8835

  • We have raised our 0.8745 long stop to entry and maintain an 0.8865 target

  • Still see bearish risk from an early October 0.8509-13 cloud twist

  • Daily bullish momentum readings are strong but some are over bought

    For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Rob Howard  —  Sep 23 - 05:50 AM

Sept 23 (Reuters) - The chance of cable dropping to 1.00 for the first time will rise if King Dollar continues to reign supreme and confidence in British assets deteriorates under the new government led by Liz Truss.

GBP/USD has never traded at parity, but got very close to that level in 1985, with 1.0075 mooted as the record low.

Cable slumped to 1.1075 on Friday, its lowest level since 1985, after Truss's finance minister Kwasi Kwarteng announced he was slashing taxes to try to drive economic growth. nL8N30T5LM

Earlier this week, the IFS think tank said "setting plans underpinned by the idea that tax cuts will deliver a sustained boost to growth is a gamble, at best".
UK minister Simon Clarke responded Friday, saying "this isn't a gamble, the weight of history and evidence is with us". nL8N30S5I8nL8N30U17Z

Friday also saw September's flash UK PMI readings come in sub-50, marking a contraction in activity, including in the services sector - the dominant segment of the UK economy. nZRN0057JP

Related comments: nL1N30C0IOnL1N2Z00HJnL1N30U0ES

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  Sep 23 - 04:50 AM
  • Below 1.12 and both daily and weekly RSIs are showing over sold

  • No sign of divergence but bears probably need to tread carefully under 1.12

  • Our long stop tripped at 1.1205, 1.1157 the new trend low

  • Long-term bear trend in place since June 2021

  • Weekly action contained by the 10WMA, currently 1.1765

  • No close above the line since Feb. 2022

  • We stand aside for now but will be looking for stronger reversal signals

    For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Jeremy Boulton  —  Sep 23 - 03:40 AM
  • EUR/USD has exceeded tech targets around 0.9800 reaching 0.9770 EBS

  • Next targets are 0.9575 (daily) 0.9485 (weekly) and 0.9499 (monthly)

  • While EUR/USD has plummeted due Fed policy traders reluctant to sell

  • Short positions have never been large and were slashed after ECB hiked

  • Traders ill-prepared for the decline that has subsequently extended

  • Without the restraint of a large short EUR/USD could fall far

  • Targets between 0.8500-0.9000 could be met before Fed stops hiking

  • Emerging market currencies reach decisive point nL1N30U09B

Refinitiv IFR Research/Market Commentary
By Martin Miller  —  Sep 23 - 02:40 AM
  • EUR/USD, on Wednesday, saw the second biggest daily drop of September

  • That highlights the overall bearish market structure

  • Fourteen-day momentum remains negative, reinforcing negative outlook

  • Daily kijun and tenkan lines are negatively aligned, another bearish sign

  • Thursday's upper candlestick line points to a rejection of the upside

  • Looking to get short at 0.9875, well ahead of Thursday's 0.9908 (EBS) high

  • EUR/USD Trader TGM2334. Previous update nL1N30T0C4

Refinitiv IFR Research/Market Commentary
By Rob Howard  —  Sep 23 - 02:35 AM
  • Cable is quarter-cent above Thursday's 37-year low of 1.1213 pre-UK events

  • UK finmin Kwarteng to make fiscal statement to MPs at 0830 GMT nL8N30T5LM

  • UK Sept flash PMIs also due at 0830 GMT; service PMI f/c 50, mfg f/c 47.5

  • Thursday's low preceded Japan's FX intervention, which lifted GBP/USD

  • 1.1365 was intra-day high, just before BoE's 50 bps rate hike nL1N30T0XI

  • More: nL8N30T3XX. Safe-haven USD supported by stock losses nL1N30U06H

Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  Sep 23 - 01:45 AM
  • Remains heavy and our 1.1328 long play left high and dry

  • Still see scope for a decent correction but the weekly close now key

  • A close on the week below 1.1351 keeps the longer-term trend alive

  • Below last week's low and bears target levels under 1.1000

  • Daily RSI is below the 30 line and negative momentum not extending

  • Our stop will remain tight below the 1.1213 trend low

    For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Sep 22 - 11:55 PM
  • EUR/USD opened unchanged at 0.9837 after a whippy post-Fed trading day

  • It moved higher early Asia when a fall in USD/JPY led USD broadly lower

  • The gains faded when E-minis went from +0.27% to -0.10%

  • The AXJ equity index fell over 1.0% and the gloomy mood supported USD

  • EUR/USD eased to 0.9825 where it is trading into the afternoon

  • Bids are tipped ahead of 0.9800 with yesterday's low at 0.9807

  • Resistance is at yesterday's 0.9909 high with offers 0.9900/20

  • EUR/USD trending lower with the 5, 10 & 21-day MAs in a bearish alignment

  • Only a break above the 10-day MA at 0.9956 would ease downward pressure

  • EZ flash PMIs may provide some action in Europe today

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Sep 22 - 09:35 PM
  • USD trading with a softer tone - led by a 0.40% fall in the USD/JPY

  • AUD/USD traded to a session high at 0.6655 after opening 0.6641

  • Resistance at former support at 0.6670/80 - as 0.6670 was Thursday top

  • AUD/USD trending lower with the 5, 10 & 21-day MAs in a bearish alignment

  • Only a break above the 10-day MA at 0.6713 would suggest bottom is forming

  • Hourly support has formed at 0.6610/15 where buyers are eyed

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Ewen Chew  —  Sep 22 - 08:55 PM
  • USD/SGD dribbles lower to 1.4177 from Thurs close 1.4185

  • Cautiously follows USD/JPY as it ebbs from firm open

  • Traders disinclined to bet against JPY intervention

  • But broader positive-USD sentiment won't fade so soon

  • Bullish USD/SGD bets hit record high nL4N30T1EN

  • Base of Bollinger uptrend channel at 1.4120 attracts bids

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Sep 22 - 07:55 PM

  • -0.05% early after closing -0.1% in a choppy session, as BoE hiked 50pt

  • Fin Min Kwarteng to announce expensive policies to spur growth nL8N30T5LM

  • Impact of these policies to drive inflationary expectations and yields

  • UK consumer mood sinks to new depths despite energy bills help nL8N30T287

  • Techs: daily momentum studies flat line, 21 day Bollinger bands head lower

  • 5, 10 & 21 day, week and month moving averages track south - negative setup

  • Close above falling 1.1507 21 DMA needed to undermine the downside bias

  • Thursday's 1.1213 trend low then psychological 1.1000 level next support

    For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Krishna K  —  Sep 22 - 07:15 PM
  • USD/JPY in a cautious start after a wild and wide range of 145.90-140.31 Thu

  • Traders on intervention watch after Japan's 1st FX intervention since 1998

  • USD rallies back from the day's low as UST yields rise to multi-year highs

  • Higher US yields support; 10-yr yield up 18 bps to 11-yr high on hawkish Fed

  • BOJ sticks to ultra-low rates, defying global rate hike rush, undermines JPY

  • Traders doubt if Japan intervention will work as it is not coordinated

  • But significant unilateral intervention over period of time can be effective

  • Race to rein in strong dollar is on after Japan intervenes nL8N30T4WV

  • Support 141.90-142.00, 141.40-50, resistance 143.10, 143.40-50

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Sep 22 - 06:50 PM
  • AUD/USD opens +0.12% after getting whipsawed by hawkish Fed and intervening MOF/BOJ nL1N30T18H

  • AUD/USD rally from low capped at former support at 0.6670/80

  • Market sceptical BOJ intervention can reverse strong USD trend

  • AUD/USD still vulnerable as risk assets fragile and growth fears persist nL1N30T2PE

  • AUD/USD trending lower with the 5, 10 &21-day MAs in a bearish alignment

  • only a break above the 10-day MA at 0.6712 would suggest bottom forming

  • Support formed at yesterday's 0.6574 low and 61.8 of pandemic move at 0.6463

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Sep 22 - 03:00 PM

MUFG Research sees a scope for GBP/USD to drop towards 1.10 over the coming weeks.

"With the energy price cap included, the fiscal impact could be up to GBP 250bn which will have a notable impact on the GDP growth profile over the coming two years. The energy cap does diminish that concern somewhat but the cap is still rising in October and for an average household, the energy bill increase is close to 100% YoY," MUFG notes. 

"So recession is still coming just milder than assumed. The BoE hiked by 50bps today the combined total reaches 215bps, which leaves the BoE lagging by 10bps the RBA, RBNZ and Norges bank and by 85bps the Fed and the BoC. It would certainly prompt some further GBP/USD selling toward the 1.1000 level." MUFG adds. 

MUFG Research/Market Commentary
By Christopher Romano  —  Sep 22 - 01:50 PM
  • EUR/USD rallied from 0.9807 to 0.9908 after BOJ intervened to weaken yen

  • NY opened near 0.9880, pair slide in early trade as US$ buyers emerged

  • 0.9811 hit on EBS, dip was bout & pair neared 0.9850 late in the day

  • Lift aided by US rates EDH3US2YT=RR giving up some earlier gains

  • US$ sales & EUR/JPY rally above 140.00 also help underpin EUR/USD

  • Pair traded up near +0.10% on the session which lead to warnings for shorts

  • Daily doji candle formed & daily RSI diverged; imply short squeeze risk

  • BOJ intervention shows how much help EUR/USD needs to rally nL1N30T1A1

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
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