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CIBC Research discusses BoC rate call and CAD outlook. CIBC targets USD/CAD at 1.33 by year-end.

"We’re sticking with our call for a lone quarter point cut from the Bank of Canada, and while we merely nudged that a month earlier (to December), market expectations have swung more wildly, initially having bet heavily on an October cut, but subsequently dropping odds for a cut at all this year.

The Bank’s statement and a follow-up speech didn’t hint at imminent action, arguing it had anticipated a slowing global climate in ending its rate hikes at lower levels than the US. In response to the BoC and strong jobs data, the C$ caught a bid as the probability of an October move was reduced. But a rate cut either delivered or strongly hinted at in December should see the dollar-Canada hovering near 1.33 at year end and into H1 2020," CIBC notes. 

"Canada’s current account deficit narrowed by more than expected in Q2, helped in part by a surplus for investment income. But over the medium-term, we see enough disappointments on trade to keep the current account in the red, and a negative for the C$. Look for a depreciation in the C$ over the course of 2020 and into 2021, reaching 1.38 by Q4 2020," CIBC adds. 

• Pair slides from 0.6795 area on RBA view shifts in early NY

• Global bonds, US$, JPY & CHF bought while EM & high beta ccys get sold

• Bears break 50% Fib of 0.6678-0.6895 & 0.6670/80 support, no bounce seen

• Added bear pressure as hopes of eased US-Sino trade tensions diminish

• Trump says China ag buys are not enough, wants a complete deal nW1N24J00T

• China ag delegation scraps Montana farm visit & go home early

• USD/CNH spikes above 7.1150, stocks turn negative, AUD/USD touches 0.6760

• Techs lean bearish, long upper wick on monthly candle, daily RSI falling

Once again the rarefied air above 1.2500 proved too much for GBP/USD , proving the need for tangible Brexit progress.
Recent GBP/USD gains appear to be more reduction of short positions than renewed enthusiasm for going long.
Sterling's rally on Brexit deal comments by EU president Juncker stalled at 1.2582 overnight and the pound has dipped back to 1.2480, just above Friday's NY low at 1.2463 .
Juncker's comments Thursday nL5N26A68Xsuggested the mere possibility of making a Brexit deal if an acceptable replacement to the Irish backstop could be found -- a big "if." As of the last Friday's IMM spec data release GBP/USD spec positioning stood at -92,233 contracts just below the recent trend high -102,702 in early August.
Though there has been little credible momentum toward a Brexit agreement, parliament's removal the no-deal Brexit option and the reduced likelihood of UK elections before Oct.
31 diminish the chances of Britain crashing out of the EU alleviated bearish GBP/USD sentiment and should keep it relatively well bid, just not above 1.2500.
Despite today's weakness, with GBP/USD holding above the 10-DMA at 1.2426 and the daily cloud at 1.2399 bulls continue to exert control, but a rise above 1.2670, the 50% Fib of 1.3380-1.1959 and the 200-DMA by 1.2737, will be needed to shift momentum firmly to the bulls.

Credit Suisse discusses its tactical view on EUR/USD and EUR/CHF.

"Range-bound within clear 1.0926/1.1109 parameters. With EUR confirmed as the funder of choice and the FOMC as expected (dots tad hawkish) we prefer to sell rallies with a 1.1120 stop. Not high conviction," CS notes. 

"USDCHF still capped below 1.0000. Consolidation likely , patience and flexibility important, overall still range trading 0.9850-1.0000. EURCHF more inclined to buy dips and play from the long side, key levels 1.0890/1.1020. EURCHF to stabilize /rise around 1.0930-50," CS adds. 

AUD/USD's rally from the 2019 low is in jeopardy after falling to a 12-day trough, with concerns growing among longs as the 21-DMA caps gains.
The latest RBA minutes raised concerns that tax cuts along with two rate cuts have not had the desired effect of stimulating the economy.
The August Australian jobs report showed a rising unemployment rate while full-time employment dropped significantly.
Those factors have led bank analysts in Australia to move up expectations for rate cuts.
After the minutes CBA moved their call for a cut up to October from November.
Overnight, NAB and Citi altered their calls for cuts by moving them from November to October as well nL3N26B05P.
Australian rates markets highlight the increased chance of a cut, with the probability now standing near 80% RBAWATCH.
The altered expectations drove AUD/USD below the 50% Fib of 0.6678-0.6895 and allowed a long upper wick to form on the monthly candle -- both of which give technicals a bearish tint.
Bears may proceed cautiously, though, as U.S.-Sino trade talks begin next week . If talks progress positively risk will rally and AUD/USD should follow.
If trade tensions intensify, safe-haven flows should ensue, which would drive down EM currencies, China's yuan and the aussie.
For now AUD/USD seems set to test 2019's low on RBA expectations.

TD Research discusses its latest take on the preferred G10 tactical strategies.

"The most logical response lies in the fact that supply shocks generally don't end well for the global economy. The hawkish cut from the Fed was, too, a notable driver, especially as our tracking of global central banks show 30% easing rates in the past six months. We still prefer fading EURUSD, mainly as it trades close to HFFV. It should make a fresh break below 1.10," TD notes. 

"Another major theme to consider is whether to follow short-term momentum or value strategies. Our HFFV signal shows that the likes of NZD (and to a lesser degree CHF, CAD, and AUD) trade at discounts. NZD has been the weakest performer over the past month while GBP has rallied 3%. Ahead of the RBNZ and into next week, the fade trade is to sell GBPNZD, and the value trade is to buy CHFJPY,' TD adds. 

MUFG Research discusses EUR/USD outlook and maintains a tactical neutral bias, expecting the pair to trade in 1.0900-1.1200 range in the near-term.

"The euro has been largely unmoved by the recent ECB and Fed policy meetings, although over time it should remain under downward pressure against the US dollar. The Fed is not following the script for more aggressive easing, and has signalled that the current rate cut cycle could be close to an end. It will make it even harder to see a reversal of US dollar strength while the ECB has just announced a comprehensive package of easing measures.

Loose monetary policy will remain in place for longer than expected in the euro-zone. However, the recent easing of Brexit risks and building optimism over a mini US-China trade deal are helping to ease downside risks for the euro in the near-term," MUFG notes. 

"The recent spike in USD funding rates is also creating additional uncertainty as well.  It is encouraging speculation that the Fed will resume balance sheet expansion which could be putting a dampener on upside potential for the US dollar," MUFG adds. 

Benchmark EUR/USD option vol is close to its record low.
The lower volatility goes, the greater the chance that EUR/USD will extend its downtrend.
Quiet markets amplify the importance of interest rates .
The gap between U.S. and euro zone rates has narrowedm but it remains large (one-year swap 280pips).
That's a big interest rate gap for a very liquid currency pair.
Traders are short EUR/USD but not very short IMM/FX.
Given vol and rates, they're not short enough.
Traders betting on a drop will get paid to be short even if the pair remains stationary.
EUR/USD is close to the middle of the range that is widely forecast for the pair in the next few months.
That reflects uncertainty, and a reluctance to trade stemming from that uncertainty will limit betting, which will strength the trend.
Make no mistake, non-speculative traders will sell.
Shorts are a no-brainer for those considering what rates may do for the pair.

• EUR/USD is trading dead centre of the expected 1.09-1.12 range

• Most EUR/USD has deviated from that range is Aug 6 1.1250, 1.0926 Sep 3

• 1.1287-1.0926 widest since July 5

• EUR 1-month volatility has dropped to 4.6, record low is 4.0

• Ultra low volatility amplifies the influence of interest rates

• Despite Fed cuts the rate gap weighing EUR/USD is still substantial

• Still near 3% pre annum. Rates will eventually push EUR/USD to test 1.09

Sterling marches higher after the European Union took a softer stance on Brexit.
Those who look for technical trend-reversal signals will point to a candle pattern.
A textbook hammer candlestick (bullish) signal from Sept.
3 and 4 warned that the 1.1959 low could be a base and bear-trend low point .
The short squeeze that ensued removed major resistance levels including weekly trend resistance line, 10- and 21-WMA, a daily cloud and, last session, the 100-DMA.
There have been some modest adjustments en route to today's 1.2582 high, and the pound's 5.2% appreciation could argue for a deeper correction.
But if the Brexit headlines continue to soften hard- or no-deal concerns, sterling bulls will target the 200-DMA at 1.2737 and a weekly cloud twist out to Oct.
25 at 1.3005-13.
For retracement points, the 38.2% and 50% Fibonacci levels off the 1.4377 April high and 1.1959 September low are at 1.2883 and 1.3168 respectively.
Related content .

• EU Junker softer stance on Brexit Backstop helps GBP nL5N26A68X

• Market short GBP, being squeezed now with this news seen as positive

• However, UK yet to produce concrete proposals, clock ticking toward Oct. 31

• EU summit Oct 17-18 is when UK PM Johnson hopes to strike Brexit deal

• 1-month expiry GBP options captured summit yesterday and spiked

• Continued demand for option vols today, 1-3 month see biggest gains

• Markets don't like uncertainty - options love volatility - good hedge

  
  

• Options expire at 10-am New York cut

• EUR/USD: 1.0950 (1BLN), 1.1000 (2.6BLN), 1.1020-25 (1BLN)

• 1.1050 (1.1BLN), 1.1100 (1.8BLN)

• USD/CHF: 0.9800 (460M), 0.9925 (850M), 1.00 (222M)

• GBP/USD: 1.2400 (573M), 1.2450 (275M). EUR/GBP: 0.9000 (850M)

• USD/CAD: 1.3100 (500M), 1.3335 (390M), 1.3395-1.3400 (1.1BLN)

• USD/JPY: 107.25 (1.1BLN), 107.50-60 (1.21BLN), 108.00 (1.1BLN)

• EUR/NOK: 9.8500 (2.1BLN), 9.9500 (1.4BLN)

• AUD/USD eased to 0.6779 in early Asia when AUD/JPY selling flows weighed

• AUD/JPY was down around 0.30% at one stage after Tokyo arrived

• AUD/USD bids tipped between 0.6770/80 and absorbing the selling for now

• AUD/USD likely to remain pressured due to dovish shift in RBA expectations

• Growing number of economists tipping a 25 BP cut when RBA meets Oct 1 nL3N26B05P

• AUD/USD support at 61.8 of 0.6687/0.6895 move at 0.6766

• Resistance at 21-day MA at 0.6804 and 10-day MA at 0.6848

Nomura Research discusses the latest market conditions and flags a scope for the recent risk to fizzle out in the near-term.

"In the US stock market, neither sentiment nor major market indices registered anything like a forceful rebuke of the Fed by market participants, but it does seem that the willingness to take on risk took a slight hit, as factor performance revealed that investors reacted by selling value and high beta while buying momentum and quality," Nomura notes. 

"Going by the pattern traced by our gauge of US stock market sentiment, we have argued that the risk rally that has been under way since the beginning of the month is likely to fizzle out in the absence of fresh fuel in the form of some new good news for the market during the week of 16-23 September,"Nomura out. 

• +0.1% in a slow morning so for FX Asia, risk on - E-mini S&P +0.2%

• Inside day yesterday, tight 1.0990/1.1095 range this week, strikes contained

• 1.1000 2.6BLN, 1.1020-25 1BLN, 1.1050 1.1BLN, 1.1100 1.8BLN strikes today

• Charts are bearish longer term, weekly and Monthly 5, 10 & 21 MAs head south

• Daily charts show coiling MAs, reflecting the choppy consolidation this week

• Well tested trend line from June high is pivotal resistance at 1.1082

• September double bottom at 1.0925 key support - bias is lower

• AUD/USD slide likely to continue on Fri closing below 0.6798

• Weekly Bollinger downtrend channel will then be confirmed

• Persistently dovish RBA may skew AUD toward 0.6500 psych barrier

• Breach of daily Ichimoku Cloud base accelerated past 20 DMA on Thurs

• Another bearish sign triggered if AUD/USD breaks 0.6752 Fri

• Daily Bollinger downtrend channel would also be confirmed

• EUR/USD is trending lower, but selling into weakness is proving to be costly

• Since trend started June 26 - tendency is for price reversion to 21-day MA

• Both the 10 & 21-day MAs come in at 1.1043 today - where it is trading

• The top of the trend-line lower is at 1.1082 and break would end the trend

• Sellers are tipped between 1.1080/1.1100 than should contain upside

• Option strikes at 1.1050 will likely limit range in Asia at least

• AUD fell against every Ccy yesterday after dovish shift in RBA expectations

• Market pricing in close to a 75% chance the RBA will ease on October 1

• AUD/USD came under pressure even before Aus jobs from Tokyo AUD/JPY selling

• AUD/JPY opens 0.90% lower and Tokyo flows will be key today

• AUD/USD support at 61.8 of 0.6687/0.6895 move at 0.6766

• Resistance at 21-day MAS at 0.6804 and 10-day MA at 0.6848

CIBC Research discusses GBP outlook and  maintains a cautious bias on the currency into the year-end. CIBC targets GBP/USD at 1.20 by year-end before rebounding to 1.28 in Q1 of 2020.

"The UK political atmosphere remains febrile ahead of the current October 31st Brexit deadline. Currently, the UK parliament is suspended until October 14th, albeit the legality of the process is due to be tested in the Supreme Court. Additionally, the government has lost is majority after 21 lawmakers were ejected from the Conservative party. Should the Parliament remain closed until October 14th, until a new Queen’s speech, Sterling’s near-term fortunes will remain determined by the market’s assumption of the probability of the government being able to agree a ‘new’ Withdrawal Agreement at the upcoming EU Council meeting on October 17/18," CIBC notes. 

"But deal or no deal, the economic backdrop in the UK will continue to weigh on Sterling in the very near term. Recession risks are elevated as consumer confidence remains compromised and business investment constrained. Signs of a slowdown in the labour market are starting to materialize, as vacancies have retreated to a two-year low and hours worked, often a precursor to job losses, fell. Add to that the risks of an election that markets fear could install an extreme left government, and there are reasons to stay cautious on the GBP through year end even if the PM gets his deal with Europe," CIBC adds. 

• GBP firm into close ending NY 1.2540, NorAm range 1.2537-1.2438

• Pair rose from just below 1.25 on Juncker Brexit deal comments

• Sterling's BoE boost fleeting without Brexit progress

• GBP bulls need more than just delay to rally beyond recent highs

• Close abv 1.2500 sets stage for 1.2670 50% Fib of 1.3380-1.1959 (2019 range)

• EUR/GBP -0.32% at 0.8817, Thurs range 0.8894-0.8816; soft-Brexit=firm GBP