JP Morgan Research discuses its AUD and NZD outlook and targets.

"AUD: Keep bullish bias as carry remains supportive, though the RBA’s front-footed hiking cycle has weakened growth & housing such that market pricing for two further hikes looks overdone. Background supports (super fund FX hedging & unhedged capital inflows) should underpin a higher AUD floor than in recent years. AUD/USD 2Q 0.73, 4Q 0.69," JPM notes.

"NZD: Stay neutral amid cross-currents as ongoing cyclical recovery sets the stage for a fulsome RBNZ hiking cycle beginning in 3Q, but current carry deficit is weighing on performance while energy-importer status remains a clear downside growth risk. NZD/USD 2Q 0.62, 4Q 0.61," JPM adds.

By Justin McQueen

May 22 (Reuters) - Cable drifting sideways to close out the week, remaining pinned between the 200-day moving average cluster at 1.3410-24. Tone stays heavy for now. UK retail sales wrapped up a hat-trick of soft prints – UK jobs, CPI, now this – and spot is struggling as a result, thus risks remain lower for now. Remarks by Federal Reserve Governor, Christopher Waller were the key event risk today. On balance he was hawkish, by opening the door towards a rate hike, albeit in the far distance. He did push back against near-term tightening, which does restrain the hawkish rhetoric. That said, the direction of travel has shifted materially from where we were a few months back. If the data keeps pointing towards tightening and the Strait of Hormuz stays shut, the argument against a Fed hike gets harder to make, meaning the USD bid becomes more durable, paving the way for a deeper retracement in cable.

Offsetting that however, is the pickup in geopolitical noise. Chatter around a U.S.-Iran deal is getting louder, and the lean in the market is that we get something done rather than not. Nothing confirmed, it is still headline-driven but the rumour mill is seemingly heading in one direction. Should a deal get done, cable is likely to receive a lift, but with domestic risks stacking up, both economically and politically, upside looks capped.
Fed waller post


Justin McQueen is a Reuters market analyst. (The views expressed are his own) ((Email: ))

ANZ Research discusses AUD outlook for the coming week.

"We view the recent pullback in the AUD/USD as more of a healthy correction rather than a sustained downward trend. The pair is overvalued against where front end rates are, which implies that last week’s rally to a weekly high of 0.7272 (13 May) was primarily driven from risk sentiment. Ultimately, we think risk sentiment will be at the forefront of a near-term AUD/USD recovery," ANZ notes.

"In the week ahead, the AUD/USD should hold the 0.71–0.72 level, absent major geopolitical shocks developments. That said, we see scope for upside on positive geopolitical headlines given risk sentiment has somewhat normalised of late.

Looking ahead, April CPI due on Wednesday will be the main domestic event where we expect trimmed mean to have risen 0.3% m/m and 3.4% y/y. We see scope for a mild intraday pullback in the AUD/USD on an in-line or below consensus print. We would likely need a clear miss from expectations to see any sustained moves in the AUD/USD," ANZ adds.

(Updates)

• U.S.-listed shares of silver miners fall, tracking prices of the white metal [GOL/]

• Spot silver down 1% at $75.8 per ounce

• Prices fall due to firmer dollar and rising oil prices that kept inflation concerns in focus and increased bets for U.S. interest rate hike

• Shares of miners Hecla Mining down ~2% and Coeur Mining falls 2.5%

• Canadian miners: Endeavour Silver Corp and Silvercorp Metals dip 2.5% and 4.1%, respectively

• Abrdn Physical Silver Shares ETF and iShares Silver Trust each slides 1.2%

(Reporting by Dharna Bafna in Bengaluru)

Bank of America Global Research flags a bearish technical pattern in EUR/USD.

"Based on our view that the weekly chart of EURUSD is forming a H&S top pattern, we recommended positioning for euro weakness into summer via a EURUSD 1.15/1.13 3m put spread,"BofA notes.

"A May 22 weekly close below 1.1625 would support this setup and downside toward the 1.1411 / 1.1392 neckline. A break below the neckline can lead to 1.11 / 1.0958 (200wk SMA). A recovery rally above Q2 highs at 1.1797-1.1849 would cancel this pattern," BofA adds.

Credit Agricole CIB Research discusses the USD 'smile' and the USD outlook for the coming week.

'We continue to believe that the USD smile – the analytical construct that links the USD outlook to the resilience of risk sentiment and the level of US rates – should remain a dominant template for the FX markets. The ‘USD smile’ would suggest that the USD need not lose ground even if we see risk sentiment rebounding on the back of growing market hopes for a US-Iran peace deal. This is because the USD should benefit from returning demand for FX carry trades and unhedged inflows into the US stock markets, fuelled by growing market risk appetite," CACIB notes.

"Looking ahead into next week, focus will be on the Core PCE deflator for April, which is still the Fed’s preferred measure of inflation. In addition, FX investors will focus on Conference Board consumer confidence index for May and the durable goods orders for April. We will also hear from the Fed’s John Williams. While the USD could suffer from any sustained improvement of market risk sentiment, we doubt that the currency would embark on a downtrend. Indeed, easing market fears and fading geopolitical risks could help investors focus on the incoming US data releases and their (positive) impact on US rates and thus the USD," CACIB adds.

(Repeat with no changes)

• FX options expire at 10am New York/15:00 GMT on Friday May 22

• EUR/USD: 1.1545-50 (947M), 1.1575-80 (1.3BLN), 1.1590-1.1600 (1.5BLN), 1.1610-20 (2.3BLN)

• 1.1625-35 (3BLN), 1.1640-50 (1.4BLN), 1.1660 (518M), 1.1700 (1.8BLN)

• EUR/GBP: 0.8575 (400M), 0.8700 (335M), 0.8720 (446M).

GBP/USD: 1.3300 (341M)

• AUD/USD: 0.7150-60 (1.7BLN). NZD/USD: 0.5750 (758M)

• AUD/NZD: 1.2100 (257M), 1.2185-1.2200 (416M)

• USD/CAD: 1.3750-55 (1BLN), 1.3765-75 (531M), 1.3800 (477M), 1.3850 (370M)

• USD/JPY: 1.5845-50 (2.9BLN), 158.65-70 (1.5BLN),158.85-90 (1.2BLN), 159.00 (1.4BLN), 160.00 (828M)

• AUD/JPY: 1.1340 (374M), 113.65-75 (247M)

• FX options wrap - EUR caution, JPY warning, AUD hedge, INR trade (Richard Pace is a Reuters market analyst. The views expressed are his own)

(Adds headline)

• AUD/USD hit 0.7152 overnight, sellers emerged, the pair turned lower on the session

• Doubts about progress being made on US-Iran deal rallied oil and the USD

• Gold and silver dropped on the doubts to help weigh on AUD/USD

• AUD/USD hit 0.7121 in early NY, the pair traded down -0.38% in early action

• Techs lean bearish; RSIs indicate downward momentum, pair is below 10- & 21-DMAs

• Monthly inverted hammer candle, consolidation of drop from May 13 high are bear signs

• US May U of Michigan sentiment is a data risk in NY's morning
audusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

• U.S. exceptionalism holds firm as data continues to outperform relative to the RoW

• Thursday's Flash PMIs reinforced this view as EU data came in soft while U.S. held steady

• For EUR/USD, this keeps risks leaning lower underscored by the fact that rebounds remain shallow

• Meanwhile, sticky oil prices adds a headwind that is hard for EUR to shake

• Technically, spot is trading below the 200DMA (1.1683), which keeps bear bias intact

• Reclaiming the 200DMA would be needed to alleviate the bearish pressure

• Looking ahead, all eyes on Fed Governor Waller's speech (1500BST)

• Any hawkish tilt opens the door for EUR to test 1.15
EURUSD vs eco spread


Justin McQueen is a Reuters market analyst. (The views expressed are his own). ((Email: ))

• EUR/USD heavy, well within Thursday's 1.1576-1.1636 range as huge option expiries shackle spot price

• Wednesday's peak and 55-DMA stack resistance at 1.1646 — a close above would relieve selling pressure

• Reclaiming the 200-DMA at 1.1682 would be a better signal that bulls are back in control

• US-Iran negotiation hopes keeping oil and USD off highs, offering EUR/USD some underlying support

• €8bn of option strikes between 1.1575-1.1635 expire at 10am New York/14:00 GMT Friday, pinning spot

• Forward-looking FX options recognises EUR/USD downside risks but pricing shows no real alarm bells
EUR=EBS


(Richard Pace is a Reuters market analyst. The views expressed are his own)

• USD/JPY benchmark 1-month expiry FX option implied volatility sits just above late April/4-year lows at 6.6

• Those 4-year lows preceded the Apr 30 BOJ intervention that hit USD/JPY from 160.00 to the 155s

• Low implied volatility recognises the recent lack of actual/realised volatility upon which FX options thrive

• Butterfly spreads show the wings (low delta calls/puts) holding a premium over the body (ATM straddles)

• 1-month 10-delta butterfly spreads have doubled to 1.2 vols since last week; sub-1-month expiries even wider

• The JPY call wing is stubbornly bid — nobody wants to be short a JPY call when BOJ intervention hits

• The vol surface looks low in the body but quietly prices fear in the wings — recognising the BoJ threat

• Related comment - The intervention butterfly in the USD/JPY coal mine
USD/JPY spot and 1-month 10 delta butterfly spread


(Richard Pace is a Reuters market analyst. The views expressed are his own)

• Cable dips to 1.3418 intra-day low after disappointing UK data

• UK April retail sales down 1.3% MM vs minus 0.6% expected

• UK borrows bigger-than-expected £24.3 billion in April

• 1.3394 was Thursday low, as safe-haven USD rose on higher oil prices

• Ensuing rally from 1.3394 topped out just shy of 1.3450. Asia high was 1.3433

• US, Iran still at odds on key issues but both sides report signs of progress

GBPUSD


(Robert Howard is a Reuters market analyst. The views expressed are his own)

• FX options expire at 10am New York/15:00 GMT on Friday May 22

• EUR/USD: 1.1545-50 (947M), 1.1575-80 (1.3BLN), 1.1590-1.1600 (1.5BLN), 1.1610-20 (2.3BLN)

• 1.1625-35 (3BLN), 1.1640-50 (1.4BLN), 1.1660 (518M), 1.1700 (1.8BLN)

• EUR/GBP: 0.8575 (400M), 0.8700 (335M), 0.8720 (446M).

GBP/USD: 1.3300 (341M)

• AUD/USD: 0.7150-60 (1.7BLN). NZD/USD: 0.5750 (758M)

• AUD/NZD: 1.2100 (257M), 1.2185-1.2200 (416M)

• USD/CAD: 1.3750-55 (1BLN), 1.3765-75 (531M), 1.3800 (477M), 1.3850 (370M)

• USD/JPY: 1.5845-50 (2.9BLN), 158.65-70 (1.5BLN),158.85-90 (1.2BLN), 159.00 (1.4BLN), 160.00 (828M)

• AUD/JPY: 1.1340 (374M), 113.65-75 (247M)

• FX options wrap - EUR caution, JPY warning, AUD hedge, INR trade (Richard Pace is a Reuters market analyst. The views expressed are his own)

• AUD/USD -0.2% wtd, but downside potential is increasing

• Fed FFR hike expectations rising while RBA looks to be on hold for now

• Spike in AU unemployment compounds building pressure on AUD/USD

• AUD targeting break below 0.7096 55-DMA, extension towards 0.6834 possible

• U.S. & Iran remain far apart on key issues despite reports of progress

• AU Apr monthly CPI update due Wed, Q1 capital expenditure data Thur

• Range Asia 0.7135-52, support 0.7080 0.6834, resistance 0.7283 0.7661
AUD Weekly 52-WMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• EUR/USD 1.1610-20 EBS in Asia, back on 1.16 handle but still looking heavy

• Consolidating below 1.1668-71 wafer thin daily Ichimoku cloud

• Also below 1.1620-22 hourly cloud but holding above 1.1577 low yesterday

• Massive option expiries in area again today, between 1.1545-95 E2.6 bln

• Between 1.1600-75 total E9.3 bln too and E2.1 bln between 1.1700-05

• All look to help contain spot action during global trading day

• EUR/GBP also heavy between 0.8649-52, holding above 0.8640 low yesterday

• Some option expiries today below at 0.8575, above E816 mln 0.8700-25

• EUR/CHF 0.9138-40 EBS, on hold above 0.9133 recent low Monday

• Holding still for now in 0.9123-87 daily Ichimoku cloud, 100-DMA 0.9174

• EUR/JPY in stasis still, 184.70-80 EBS, in 184.37-185.53 daily cloud

• Action likely to be limited on US and European holidays Monday

• Related comments , , , also
EUR/USD:


EUR/GBP:


EUR/JPY:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• AUD/USD -0.1% Fri in subdued trading, markets seeking clarity in Middle East

• U.S. and Iran remain far apart on key issues despite reports of progress

• Rising Fed rate hike expectations will drive downside AUD/USD bias for now

• AUD targeting break below 0.7096 55-DMA, bigger move towards 0.6834 possible

• Futures pricing implies 88.7% probability RBA will keep OCR unchanged in Jun

• AU Apr monthly CPI update due Wed, Q1 capital expenditure data Thur

• Range Asia 0.7136-52, support 0.7080 0.6834, resistance 0.7283 0.7661
AUD Weekly 52-WMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• USD/JPY saw a mini-rally to 159.40 yesterday but still very much rangebound

• Asia so far today 158.96-04 EBS, off high yesterday and again around 159.00

• USD/JPY on hold in area all week with demand on dips, offers on rallies

• Seems MOF FX intervention threat helping to cap upside

• Japanese importer busy at Tokyo fixes, speculator demand on dips too

• Rise in Nikkei, foreign buys and hedging of currency risk also supportive

• Daily Ichimoku cloud top working as pivot again, cloud 156.37-158.90 today

• Hourly cloud also pivot of sorts, currently below between 158.83-92

• Massive option expiries in area today, 157.50-158.00 total $3.9 bln

• Between 158.35-97 total $7.2 bln, between 159.00-10 $1.8 bln

• Expiries more supportive than not, possible barriers at 160.00, 161.00

• JGB-US Treasury rate differentials tad narrower again, even in 2s

• Related comments , , ,

• And , also , Fed-Speak ,

• US markets , , ,

• On US economy , , for more click on [FXBUZ]

USD/JPY:


USD/JPY nearby option expiries into next week:


Nikkei 225:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• NZD/USD +0.5% from Thur 0.58475 low as markets gyrate on Middle East news

• U.S. claims of Iran peace deal progress preventing rout in risk sentiment

• Sources say Supreme Leader has ordered enriched uranium to stay in Iran

• Fed rate hike expectations continue to grow, will exert pressure on NZD/USD

• NZD trading near upper hourly Bollinger band, spike likely to lose momentum

• NZ Q1 retail sales +0.9% q/q, (prior +0.9%), RBNZ OCR decision due Wed

• Range NZ 0.58569-873, support 0.5815 0.5680, resistance 0.5991 0.6012
NZD Hourly Bollinger Study & DXY Daily 55-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• AUD/USD +0.7% from Thur 0.7100 low as U.S. officials claim peace progress

• Supreme Leader has ordered enriched uranium to stay in Iran, sources say

• Thur's AU Apr jobless spike lets RBA assess war impact before next OCR move

• Futures pricing now implies probability of Jun RBA hike just 10.4%

• Rising Fed rate hike expectations will fuel downside pressure on AUD/USD

• AUD targets break below 0.7096 55-DMA, door opening for move towards 0.6834

• AU Apr monthly CPI update due Wed, Q1 capital expenditure data Thur

• Overnight range 0.7108-68, support 0.7080 0.6834, resistance 0.7283 0.7661
AUD Daily 55-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

Barclays Research maintains a neutral bias on CAD over the medium-term.

"We remain neutral on the CAD for the foreseeable future. Ongoing trade frictions with the US continue to weigh on the economy, per the string of recent data releases. There has so far been limited progress in the USMCA renegotiation process and ever-present escalation risks ahead of a potential deal. The first mandatory six-year joint review of the treaty is on July 1, which is the main short-term marker on the timeline," Barclays notes.

"Somewhat encouragingly, surveyed firms signaled they were beginning to adjust to trade frictions in the Q1 Business Outlook survey (albeit this was conducted for the most part before the Middle East escalation). In addition, persistently high energy prices should afford some support too, particularly versus importers. Overall, however, there is limited scope for the BoC to embark on an FX-supportive hiking cycle for the time being, which was also the message of last week's Summary of Deliberations from the BoC's last meeting," Barclays adds.

• GBP$ near flat at 1.3432 on the day in NY afternoon, NorAm range 1.3437-1.3394

• Pair dipped early Thursday after Iran leader's comments on enriched uranium

• Talk of US-Iran agreement, yet to be confirmed, lifts risk heading into NorAm close

• UST yields slipped, on Iran deal talk sapping USD strength, risk recovered slightly

• GBP$ res 1.3455 Thursday high, 1.3381 50% Fib of 1.3658-1.3304, 1.3511 the 30-DMA

• Supt 1.3425 the 200-DMA, 1.3374 lower 30-d Bolli, 1.3304 daily low May 18

Sterling Chart:


(Paul.Spirgel is a Reuters market analyst. The views expressed are his own)

• NY opened near 1.1610 after 1.1636 traded overnight, pair fell in early NY

• Rising USD, US yields , oil & USD/CNH weighed on the pair

• Fresh 1-1/2-month low of 1.1577 traded, trend line off March 16 low neared

• USD buying abated however and then risk sentiment shifted upward

• USD selling took hold; USD/CNH, oil turned lower & yields moved downward

• Equities turned positive as did gold , silver

and copper

• EUR/USD hit 1.1630 in NY's afternoon, the pair traded near flat late in the day

• A long legged doji formed which gives bulls some comfort

• Falling monthly RSI, pair's hold below 10-, 21-, 55- & 200-DMAs concerns bulls
eurusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

• NY opened near 0.7130 after 0.7100 traded overnight, pair fell in early NY

• Firm USD, US yields , USD/CNH & oil weighed on the pair

• 0.71156 was neared but bears ran out of gas as USD, US yield rallies halted

• Risk-on took hold; USD, yields, USD/CNH moved downward & oil turned lower

• Gold, silver, copper & equities erased losses and turned positive on the session

• AUD/USD turned positive, hit 0.7168, traded up +0.14% late in the day

• Pair is below the 10- & 21-DMAs, monthly RSI falling, may be worries for bulls

• AUD/USD's hold above the 55-DMA, rising daily RSI gives bulls some hope
audusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

Deutsche Bank Research adopts a bearish bias on NZD and CAD over the medium-term.

"We are bearish on NZD. While a US-Iran resolution may help the currency, recent domestic data has surprised to the downside, postponing the economic recovery. Despite this, the market continues to price hikes from the RBNZ. We expect this pricing to unwind, adding to NZD weakness. We prefer to sell NZD against GBP," DB notes.

"We are bearish CAD. The domestic economy remains lacklustre and may continue to lag peers until investment in capex and diversification of export markets take full effect. Risks to this view include a further move higher in oil prices, which is currently acting as a positive terms-of-trade shock for CAD and improving the trade balance. We prefer to express this short CAD against the USD and AUD," DB adds.