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Oct 17 - 03:48 PM
AUD/USD - Longs Take A Breather Ahead Of A Key Fibo
First appeared on eFXplus on Oct 17 - 01:30 PM
  • NY consolidates gains induced by better Australian jobs report

  • US econ data ups nL2N2720LU probability of Fed cuts FEDWATCH, US$ sinks

  • EM ccys gain while USD/CNH holds below 7.0800, AUD/USD consolidates

  • Rising RSIs, break of 0.6810 res say 76.4% Fib of 0.6895-0.6670 to be tested

  • Break of that Fib likely to encourage longs open door to September's high

  • China GDP, retail sales, industrial output are data risks in Asia

chart: Click here

Refinitiv IFR Research/Market Commentary
Oct 17 - 02:36 PM
GBP/USD - COMMENT-GBP/USD Bulls May Tire Ahead Of Brexit Resolution
First appeared on eFXplus on Oct 17 - 12:45 PM

Though off its five-month low by 1.2988, GBP/USD remains bid, holding at 1.2860 +0.31% Thursday, on the heels of today's Brexit deal announcementnL2N2720BU.
Cable's meteoric rise, up 5.5% from its Oct. 8 low by 1.2196 nB5N26T00M, has run into resistance ahead of 1.3000.
No doubt some backing and filling is in order as recent longs take profit, awaiting parliament's vote.
GBP short positioning, on the IMM, had been diminishing after the passage of the Benn Act, which took no-deal Brexit off the table.
As of the most recent IMM spec data release GBP shorts held 73,210 contracts -- consisting of 102,701 contracts short and 29,482 long.
This Friday's IMM data release of the net position change in the Oct. 9-15 period should show a significant reduction in shorts, as the bulk of the 5.5% GBP/USD rally occurred within that reporting period.
Options market activity FXVV hints that the upbeat Brexit tones has led to a rise in GBP/USD volatility and a drop in short-term 25d RR volatility, as parliament's intentions on Brexit are far from certain, hinting at lower GBP/USD levels in the front end of the curve nL2N27208Y.
Remember parliament rejected PM May's Brexit deal repeatedly.
With significant Brexit and UK political uncertainty remaining and a severely reduced GBP/USD short-position, GBP/USD bullish momentum will likely slow as Brexit eyes the finish line nL2N272122.

GBP Chart: Click here

Refinitiv IFR Research/Market Commentary
Oct 17 - 01:24 PM
USD: Sentiment analysis: Lack Clear Direction Ahead Of Next Risk-On Phase By Nov-5 - Nomura
First appeared on eFXplus on Oct 17 - 12:00 PM

Nomura Research discusses the sentiment outlook over the next few weeks going into year-end.

"Global equity achieved a risk rally as expected on 10-15 October. We expect little clear direction in sentiment until around 5 November, but we see this as a period in which the market will be laying the foundation for the next risk-on phase (which we expect to begin on or around 5 November).

Zooming out to a longer-term perspective, US equity sentiment seems to have formed a double bottom with troughs in August and October, and this may be a positive sign. This pattern suggests that US equity supply and demand is likely to take a turn for the better toward the end of the year," Nomura notes. 

"On the other hand, uncertainty still abounds in areas such as the global economy and US-China trade issues, but if sentiment follows its usual distinctive rhythm, the risk of a predictable selloff in US equity may have retreated somewhat," Nomura adds. 

Nomura Research/Market Commentary
Oct 17 - 12:12 PM
EUR/USD - COMMENT-EUR/USD Shorts Jittery In The Face Of Brexit Optimism
First appeared on eFXplus on Oct 17 - 10:55 AM

EUR/USD shorts face the prospect of a harder squeeze after a rally of nearly 2.4% since bottoming on Oct.1 as optimism that the UK will avoid a chaotic Brexit grows nL5N27251O.
That optimism sharply rallied German Bund yields, which helped lift EUR/USD above the daily cloud to a 38-day high.
Possible progress on U.S.-Sino trade talks nW1N24J00R bolster EUR/USD upside risks as eased tensions could bode well for U.S.-EU trade relations while also easing concerns about global economic growth.
Further upside risks come from lowered market expectations of additional ECB stimulus ECBWATCH as some Governing Council members expressed public disagreement with last month's policy moves nL2N27129S.
The likelihood of Fed cuts, although reduced, add to upside risks FEDWATCH.
Large net-short euro positions, which have recently grown, is another risk to shorts should covering intensify.
EUR/USD price action drove technicals deeper into the bullish camp.
Monthly RSI is ascending after diverging on October's low, while daily RSI has room before becoming overbought.
The rise through the daily cloud top and September high enhance bullish techs.
A monthly close above 1.1109 will result in a monthly bullish engulfing candle, which is a powerful signal.
EUR/USD shorts might soon be faced with tests of 1.1250 and 1.1410/20 resistance.

chart: Click here

Refinitiv IFR Research/Market Commentary
Oct 17 - 11:00 AM
USD/JPY: Turns Tactically Bullish Ahead Of 110 - MUFG
First appeared on eFXplus on Oct 17 - 09:27 AM

MUFG Research discusses USD/JPY outlook and turns tactically bullish, expecting the cross to trade with an upside bias in 107-110 range in the near-term.

"USD/JPY has risen on positive market sentiment stoked by a partial US-China trade agreement and an uptick in JPY selling resulting from early 2H investment flows. USD/JPY could rise even further from next week, which features not only the IMF annual meetings but also US and Chinese officials releasing more details on the partial US-China trade deal reached. Also, the Fed’s decision to buy more Treasuries has been a positive for market sentiment.

"The current mood is likely to continue for some time. The Fed, as well as the BoJ, will meet in two weeks, and enter their blackout periods from next week," MUFG adds. 

BTMU Research/Market Commentary
Oct 17 - 08:36 AM
AUD/USD - Helped To Four-Week Peak By Short-Covering
First appeared on eFXplus on Oct 17 - 06:15 AM
  • AUD/USD hits 0.6830 after shorts cover on the break through 0.6810

  • 0.6830 is a four-week peak. 0.6810 was last Friday's high (Oct 11)

  • Ascent through 0.6810 spurred by lower risk of RBA rate cut on Nov 5

  • See: nL2N27206U. RBA expectations shift followed Aussie jobs data

  • See: nL3N2710VJ. 0.6752 was Asian session low (pre-Aussie jobs data)

AUDUSD: Click here

Refinitiv IFR Research/Market Commentary
Oct 17 - 07:24 AM
EUR/USD - COMMENT-ECB And Fed Are Big Risk Blips On EUR/USD Options Radar
First appeared on eFXplus on Oct 17 - 05:00 AM

One-week option expiry is now 10 a.m.
New York cut on October 24, so it captures next Thursday's European Central Bank rate decision.
Implied vols are higher in EUR-related pairs to highlight the volatility risk.
One-week EUR/USD vol has jumped from 5.25 to 6.75, which is a 20-pip addition to its premium/break-even -- now 83 pips.
It jumped a similar amount when it first captured the Sept.
12 ECB, which proved justified given the subsequent EUR/USD reaction after the central bank decision.
EUR/USD traded a 1.0927-1.1087 range that day and saw one-week vol reach highs around 9.0 before dropping below 5.0.
The two-week EUR/USD implied vol also rose from 5.5 to 6.25 today, with that expiry now capturing the Oct.
30 Federal Reserve rate decision.
Markets are currently pricing an 85% chance the Fed will cut rates another 0.25% after September's cut to 1.75%-2.0%.
EUR/USD is on alert for more gains, but options expect them to remain a grind before the central bank meetings nL2N272069.

EURUSD 1-2-week vols: Click here

Refinitiv IFR Research/Market Commentary
Oct 17 - 06:12 AM
EUR/USD - Gains To Remain A Grind - According To Options
First appeared on eFXplus on Oct 17 - 04:05 AM
  • EUR/USD options have been leaning toward a firmer spot for some time

  • However, they saw a peak by 1.1100, certainly pre ECB/FED nL2N26U05H

  • Risk reversals have edged higher for EUR calls - now 0.25 in 1-month

  • 0.25 is the implied vol premium charged for the right to buy vs sell EUR/USD

  • Clearly shows growing upside risk, but one must look at implied vols too

  • They remain at the low end of long term range and lack any real demand

  • Suggests that any further EUR/USD gains are expected to remain a grind

  • Related comments nL2N26T05SnL2N26Z04K

EURUSD implied vol: Click here

eurusd risk reversals: Click here

Refinitiv IFR Research/Market Commentary
Oct 17 - 05:00 AM
GBP/USD - Acceleration Risk Below 200DMA
First appeared on eFXplus on Oct 17 - 02:40 AM
  • Top in place at 1.2877 and now at best consolidation above 200DMA

  • Weekly cloud twist at 1.30 value Nov 1 likely out of reach today

  • Close above 55WMA, 1.2756 needed to keep the upside alive

  • However, dailies point to a return to the 1.2713 200DMA pivot point

  • Below here and risk of a fresh acceleration to the downside

  • Oct 11 significant up-day high is at 1.2708

GBP/USD Trader:

GBP/USD Daily Chart: Click here

Refinitiv IFR Research/Market Commentary
Oct 17 - 03:48 AM
Massive AUD/USD And USD/JPY Amid FX Option Expiries - Oct. 17
First appeared on eFXplus on Oct 17 - 02:05 AM
  • EUR/USD: 1.1000 (720M), 1.1015-25 (600M), 1.1050 (600M), 1.1090 (1.2BLN)

  • GBP/USD: 1.2650 (400M), 1.2700 (310M), 1.2800 (330M)

  • AUD/USD: 0.6775 (1.3BLN), 0.6800 (1.6BLN), 0.6815 (1BLN), 0.6840-50 (1BLN)

  • USD/CAD: 1.3045-50 (500M), 1.3250 (1BLN)

  • USD/JPY: 107.95-108.05 (3.5BLN), 108.20-30 (1.6BLN)

  • EUR/JPY: 119.40 (710M)

Refinitiv IFR Research/Market Commentary
Oct 17 - 02:36 AM
AUD/USD - Strengthens On Jobs Data, But Perhaps Short Lived
First appeared on eFXplus on Oct 16 - 11:25 PM
  • Up 0.3% in a 0.6751/0.6791 range, with a flurry of activity around jobs data

  • Unemployment dropped from 5.3% to 5.2%, full time strong +26.2 nL3N2710VJ

  • RBAs Debelle, housing downturn drag on economy for another year nS9N23B02F

  • Subdued outlook makes today's AUD bounce potential opportunity [nL2N27201Y

  • OIS priced a Nov RBA cut at 43.5% pre data - currently priced at 21.75%

  • Charts - momentum studies, 5, 10 & 21 DMAs conflict - little short term bias

  • Stalled below 0.6809, which is 61.8% Sep fall - now significant resistance

  • 0.6723 held in NY, 61.8% October bounce - break targets 0.6702 76.4%

aud2 oct 17 Click here

Refinitiv IFR Research/Market Commentary
Oct 17 - 12:12 AM
AUD/USD - COMMENT-AUD/USD Bounce On Sept Jobs Data An Opportunity
First appeared on eFXplus on Oct 16 - 10:25 PM

Full employment is a central plank in the RBA's policy decisions nL3N26M22Z, making today's jobs a significant release.
The data was a touch better than forecast, with the unemployment rate unexpectedly falling 0.1ppt to 5.2%, and full-time jobs exceeding expectations at +26.2k nL3N2710VJ.
The knee-jerk AUD/USD response has been a 0.3% bounce.
OIS pricing for a November RBA rate cut on Eikon RBAWATCH fell to around 24% from 43.5% pre-jobs.
RBA Deputy Governor Debelle said this morning that the property downturn is hitting household consumption, economic growth and inflation, which will last for at least another year nS9N23B02F.
His comments do not bode well for the employment outlook and suggest further RBA cuts will be required.
Westpac, which called the easing cycle early, continues to expect the next cut in February. All this suggests that AUD remains a sell on strength. Charts show conflicting daily momentum studies, 5, 10 and 21 DMAs, which is a neutral setup.
Key levels are on the topside: 0.6809 is 61.8% of the September fall.
Support kicks in at 0.6723, 61.8% of the October bounce, which held in New York Wednesday.
Shorts around 0.6800 with a 0.6850 stop would provide value.

aud oct 17 Click here

Refinitiv IFR Research/Market Commentary
Oct 16 - 11:00 PM
AUD/USD - Strong Full Time Jobs Component Sparks A Bounce
First appeared on eFXplus on Oct 16 - 08:40 PM
  • Employment +14.7 poll 15k, Unemployment 5.2% poll 5.3%, full time +26.2k

  • Flat into data, knee jerk +0.3% on strong full time figure

  • RBA flagged employment as the pivotal driver of monetary policy

  • Charts - momentum studies, 5, 10 & 21 DMAs conflict - little short term bias

  • Stalled below 0.6809, 61.8% Sep fall - now significant resistance

  • 0.6723 held in NY, 61.8% October bounce - break targets 0.6702 76.4%

  • OIS priced a Nov RBA cut at 43.5% pre data - now 21.75%

aud oct 17 Click here

Refinitiv IFR Research/Market Commentary
Oct 16 - 09:48 PM
GBP/USD - Key Resistance Held, Positive Signals Gain Momentum
First appeared on eFXplus on Oct 16 - 07:40 PM
  • Flat after closing up 0.3%, as a viable Brexit deal gains traction

  • EU deal appears likely, uncertain UK parliament response nL5N27144L

  • No deal on October 31st has been taken off the table - UK Min nL5N2712EB

  • Charts, daily momentum studies, 5, 10 & 21 DMAs climb, positive setup

  • 1.2883, 38.2% 2018/2019 fall capped in NY - now major resistance

  • Close above 1.2885 would target 1.3045, 76.4% of the 2019 fall

  • Close below 1.2582 Sep high needed to end the technical topside bias

gbp oct 17 Click here

Refinitiv IFR Research/Market Commentary
Oct 16 - 08:36 PM
EUR/USD - Key Resistance Held, But Shorts Feel The Strain
First appeared on eFXplus on Oct 16 - 07:10 PM
  • Flat after closing up 0.4% amid broad USD weakness and Brexit deal optimism

  • Brexit deal appears viable, UK parliament's response uncertain nL5N27144L

  • ECB will implement September stimulus package in full, Villeroy nF9N23X025

  • 1.1015-25 600M strikes support and 1.1090 1.1BLN cap in Asia without news

  • Charts - daily momentum studies, 5, 10 & 21 MAs climb - bullish setup

  • Bias confirmed by sustained 1.1082 break, 38.2% June/Sep fall, tested in NY

  • Close below the 1.0988 21 DMA needed to end the topside bias

eur oct 17 Click here

Refinitiv IFR Research/Market Commentary
Oct 16 - 05:00 PM
AUD: Marker Rushed Too Hard About Speculating RBA Deploying Unconventional Policy Measures - Citi
First appeared on eFXplus on Oct 16 - 03:45 PM

Citi discusses the RBA policy trajectory in light of the central bank's latest meeting minutes this week.

"RBA monetary policy remains mildly dovish with further cuts dependent largely on the performance of the labor market. Following the three recent rate cuts and no smoking gun for another near-term cut, Citi analysts retain their call for no further policy easing until February 2020 as the RBA appears prepared to give previous rate cuts and tax rebates more time to support activity and given previous commentary from Governor Lowe that the economy has reached a gentle turning point. No discussion of QE in the Minutes - Despite the cut to 75bps in October, the Minutes make no mention of unconventional measures.

"Citi analysts think markets appear to have rushed too hard into speculation about unconventional policy measures being deployed in Australia," Citi adds.

Citi Research/Market Commentary
Oct 16 - 03:48 PM
USD/JPY - Rising China Trade Angst Tempers USD/JPY Rise
First appeared on eFXplus on Oct 16 - 01:30 PM
  • USD/JPY off early NY highs, -0.17% to 108.68; NY range 108.85-56

  • Pair off Tues wkly high by 108.90 despite lingering China trade angst

  • On-again U.S.-China trade angst stalls USD/JPY rise nL2N2710MF

  • USD broadly lower on positive Brexit tones weighs on USD/JPY

  • Move abv key Fib at 108.43 opens way for test of 200-DMA by 109.07

  • Brexit deal talk boosts GBP/JPY, options- 25D RR's rising JPY1MRR=

JPY Chart: Click here

Refinitiv IFR Research/Market Commentary
Oct 16 - 02:36 PM
GBP/USD - COMMENT-Brexit Deal Optimism Pushes GBP/USD To 5-Month High
First appeared on eFXplus on Oct 16 - 11:05 AM

Brief talk of a Brexit deal boosted GBP/USD to a five-month high by 1.2855, exposing risks to shorts even though it was later denied.
With the EU summit beginning tomorrow and the current Brexit deadline of Oct. 31 quickly approaching, GBP/USD shorts have been reducing positions put on after the original March deadline was delayed.
GBP/USD spec positioning moved from +922 contracts on April 16 2019 to -107,844 contracts on Aug 8 2019, with spot moving from 1.3048 to 1.2148 over the same period.
With the recent rise from 2019 lows near 1.2000 to current levels by 1.2800, specifically the rise from 1.2210 on Oct.
10 to current levels, Friday's release of GBP spec IMM position data will be scrutinized to see the degree of spec short-covering in anticipation of a Brexit deal.
Using IMM positioning as a gauge, the most recent time positioning was near flat, April 2019, GBP/USD traded just above 1.3100 so it stands to reason cable may return to those levels should shorts continue to exit if a deal is reached.
With that in mind a Brexit deal may boost GBP/USD to May 6 highs by 1.3190, but expect offers above as the UK growth outlook remains uncertain.

GBP Chart: Click here

Refinitiv IFR Research/Market Commentary
Oct 16 - 01:24 PM
G10: FX Opportunities In Risk-On/Risk-Off (RO/RO) Conditions - BofAML
First appeared on eFXplus on Oct 16 - 11:35 AM

Bank of America Merrill Lynch Global Research discusses the key takes on its latest work to incorporate recent sensitivities to assess potential FX moves in risk-on and risk-off conditions.

"Trade policy uncertainty remains a persistent source of global financial market gyration. Ups and downs in US-China and Brexit negotiations have buffeted FX markets and caused loss of conviction among investors. Of late, markets have rallied sharply on prospects for a reduction in global policy uncertainty. While the rally may continue, it could also reverse quickly. That is just the reality investors face these days," BofAML notes.

"Overall, we find USD/JPY is most sensitive to RO/RO conditions, but this is driven more by the interest-rate differential effect than specific risk appetite and ToT effectsIn risk-on, the pair is a preferred long as positive carry also works in the investor's favor. But in risk-off, negative carry can be punitive over longer holding periods," BofAML adds.

"Overall RO/RO sensitivities of USD/NOK and AUD/USD are about half that of USD/JPY despite their direct risk appetite-related effects being larger. But long USD/NOK and short AUD/USD offer staying power in risk-off as they are positive carry. This may explain why these pairs have trended so strongly this year amid a persistently uncertain policy backdrop," BofAML concludes.


BofA Merrill Lynch Research/Market Commentary
Oct 16 - 12:12 PM
EUR/USD - COMMENT-EUR/USD Breaks Above Fib But Gains Limited Before Fed
First appeared on eFXplus on Oct 16 - 10:55 AM

EUR/USD longs are in control after U.S. retail sales declined for the first time in seven months nLNSGLEFC6nLLAGLEF3V, but caution ahead of the Fed's meeting later this month will keep them on a short leash.
The downside miss resulted in broad dollar weakness as U.S. Treasury yields dipped while Eurodollar and fed funds futures prices rallied.
The data also increased the probability of a 25bps Fed cut on October 30 to nearly 85% FEDWATCH.
EUR/USD rallied above the daily cloud base, 55-DMA and briefly pierced the 76.4% Fib of 1.1109-1.0879.
Hope for a Brexit deal nL2N2710NE also helped EUR/USD and a deal would spur more gains EUR/USD.
Technicals support the rally.
RSIs are rising, a bull hammer formed on Oct. 15 after the topside of the 10-DMA held and the bull trend off October's low remains intact. However, options markets point to limits on gains.
Risk reversals show vol premiums for EUR calls, suggesting investors are hedging for gains nL2N27109R.
Options also suggest the 1.1100 area could be the limit until risks from the ECB and Fed pass.
Daily highs from Sept. 13 and Aug. 27 sit at 1.1109 and 1.1116 respectively and those daily highs might be the furthest longs are able to push EUR/USD for now.

chart: Click here

Refinitiv IFR Research/Market Commentary
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