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By John Noonan  —  Aug 11 - 10:10 PM
  • NZD/USD fell from 0.6566 to 0.6524 after RBNZ left rates on hold at 0.25%

  • Move lower due to increase of LSAP from NZ$60 bln to NZ$100 bln nAZN00NF9E

  • Market was expecting an increase to NZ$80 bln

  • NZD/USD support @ 55-day MA @ 0.6523 holding and it is back above 0.6550

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Aug 11 - 09:45 PM

Cable has been in a holding pattern after last month's gains that were driven by a weaker dollar as risk appetite recovered, reducing safe-haven dollar flows, but this may be about to reverse.

In the U.S., the Federal Reserve's still cautious outlook on the economic recovery seems valid nL1N2F71NI, coronavirus cases appear to be plateauing at elevated levels nL1N2FC19Z, and a viable coronavirus stimulus plan is no certainty nL1N2FD1TR. All this suggests that a risk correction is possible, which would revive the dollar's safe-haven appeal.

The UK saw dire employment data Tuesday, with economists predicting worse to come nL8N2FD1DP, COVID-19 cases are climbing again nL8N2FD5XE, and finance minister Sunak is contemplating delaying the autumn budget on fears of a second COVID-19 wave nFWN2FD1BK- all of which offerslittle reason for sterling strength.

Technically, the July GBP/USD uptrend has stalled in August, providing a fresh 5- and 10-day moving average negative cross Tuesday, while daily momentum studies crest or head lower.
These are the first negative signals in a month.
A break of last week's 1.2982 low and the rising 1.2904 21-day moving average(DMA), a base in July, would suggest a deeper correction to the 1.2712 200 DMA is viable.

For more click on FXBUZ

gbp 2 aug 12 Click here

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Aug 11 - 06:50 PM
  • The RBNZ is widely expected to keep the OCR at 0.25% when they decide today

  • Most expect RBNZ to expand the QE programme from NZ$60 bln to NZ$80 bln

  • Statement expected to be dovish and promise more easing action if needed

  • NZD/USD may ease if the LSAP is expanded and tone is extremely dovish

  • Due to dovish expectations baked in, the move lower may be short-lived

  • If RBNZ leaves LSAP unchanged, as WestPac believes, the NZD likely to firm

  • Support is at the 55-day MA at 0.6523, which has held since May 18

  • Resistance is found around 0.6625 where the 10 and 21-day MAs converge

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Krishna K  —  Aug 11 - 06:35 PM
  • USD/JPY opens +0.5% as U.S yields jump to 1-month highs; U.S.10Y yield +6bps

  • U.S. economic recovery hopes, virus vaccine optimism boosts nL8N2FD38Q

  • JPY falls broadly, undermined by sharp drop in safe havens gold and silver

  • EUR/JPY rallies 0.5%, AUD/JPY rises 0.8% before paring gains

  • U.S. fiscal stalemate nL1N2FD1TR, Sino-U.S. tensions limit JPY losses

  • Resistance 106.64-68, 107.00-05, support 106.40-45, 106.20, 105.95-106.00

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Aug 11 - 06:15 PM
  • AUD/USD opens unchanged 0.7140/45 despite 5% fall in gold, soaring US yields nL1N2FD1WCnL4N2FD3IT

  • Short-term trend higher exhausted as 5 and 10-day MAs now tilting lower

  • Support is at the 21-day MA at 0.7124 and break would signal more weakness

  • Resistance @ the 10-day MA @ 0.7165 and close above eases downward pressure

  • RBNZ meeting today could impact AUD/NZD flows nL4N2F861I

  • For more click on FXBUZ

aud/usd Click here

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Aug 11 - 01:45 PM

UOB Research discusses AUD/USD technical outlook and adopts a neutral bias in the near-term.

"AUD has moved into a consolidation phase and is likely to trade between 0.7050 and 0.7250. In our latest narrative for AUD from last Thursday (06 Aug, spot at 0.7105), we held the view that “the outlook for AUD is mildly positive and that the major resistance at 0.7300 is likely out of reach”,' UOB notes. 

"AUD subsequently eked out a fresh high of 0.7242 on Friday before dropping sharply. The mild upward pressure has more or less dissipated and from here, AUD is deemed to have moved into a consolidation phase. For the next couple of weeks, AUD is expected to trade between 0.7050 and 0.7250," UOB adds. 

UOB Research/Market Commentary
By Randolph Donney  —  Aug 11 - 03:10 PM

The dollar recouped some losses it suffered during London trade as yields surged before the record Treasury refunding, with an extra lift coming from above-forecast U.S. PPI nAPN0GPHVC and coronavirus vaccine news from Russia nL8N2FD38Q.

Lingering hopes that political pressures will force the U.S. government to agree more pandemic relief than U.S. President Donald Trump’s executive actions can muster nL1N2FC1Y2 also lent the dollar a hand.

Gold's precipitous slide from record highs and plummeting silver, both hurt by surging risk-free Treasury and Bund yields, spilled over into safe-haven yen selling and buying of emerging market currencies.

EUR/USD initially rallied to its high of 1.1809 on EBS after forecast-beating German ZEW sentiment nL1N2FD1EJ, but its current-conditions miss -- remaining near pandemic lows -- and falling Bund-Treasury yield spreads scotched the London rally.

EUR/USD likely remains historically net spec long on the IMM and is still working off overbought pressures from July.
Offers by the tankan line at 1.1805 also tipped that longs were probably still paring positions nL1N2FD0WG.

Early signs the pandemic’s pace has slowed in the U.S. and more worrisome signs from the Netherlands nA5N28R02F and a warning from France that it may get harder to control the coronavirus spread nL8N2FD591 are other considerations.

The broader dollar index has settled into a range below last week’s high by 94.00, with room to roam up to Fibo and March low resistance at 94.52/63 if the three-day rebound in TIPS yields persists.

The yen’s fall with precious metals pushed USD/JPY to new August highs and by the mid-July range low and the 61.8% Fibo of the July slide at 106.64, a close above which could see a run at the flat daily cloud top at 107.92 that’s close to July’s 108.16 swing high nL1N2FD1GC.

Erosion of Japan’s current account surplus nL4N2FD0EI and the highest 10-year Treasury-JGB yield spreads in over a month underpinned prices.
EUR/JPY returned to its highest since Friday’s 125.58 post-pandemic peak after tankan support held on Monday and Tuesday.

Sterling’s quest to retest its March pre-pandemic peak at 1.3200 faltered after poor UK employment data nL8N2FD1DP and the dollar’s Treasury-yield-supported rebound.

The Australian dollar struggled in the face of gold's tumble and a drop in business confidence tied to pandemic lockdowns nS9N2EK01D.

Rotation out of momentum and some tech stocks and into value and more industrial stocks, as well as vaccine hopes, lifted most emerging market currencies, helped by hopes this weekend’s U.S.-China trade talks won’t end poorly.

The data focus Wednesday will be on U.S. July CPI.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Randolph Donney  —  Aug 11 - 02:50 PM
  • USD/JPY's probing key 61.8% Fibo of July's drop at 106.645 EBS

  • Rises on surging Treasury-JGB yield spreads, haven yen dumping

  • Tumbles in silver and gold part of exodus from havens like the yen

  • A 106.645+ close would target the flat daily cloud top at 107.92 next

  • Down TL from March, 200-DMA & 30-day Bolli all by July's 108.16 high

  • 10-year Treasury-JGB yield spreads at highest in over a month

  • For more click on FXBUZ

Chart Click here

Refinitiv IFR Research/Market Commentary
By Paul Spirgel  —  Aug 11 - 01:45 PM
  • GBP/USD clings to 0.1% gain at 1.3085 into close; Noram range 1.3132-1.3074

  • EU, German ZEW beat, stalled US fiscal aid, rising virus cases hit USD

  • Eyes on 1.32 highs for sterling, but failure raises risks nL1N2FD0QW

  • Pair straddles 10-DMA by 1.3079, fails 9th straight session above 1.3100

  • Break below 10-DMA puts minor fib at 1.3019, then 21-DMA at 1.2882 in focus

  • EUR/GBP ends NorAm +0.11% at 0.8985, Tues range 0.9008-0.8969; cross moves muted as moves largely USD-based

GBP Chart: Click here

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Aug 11 - 12:45 PM

Bank of America Global Research discusses Gold and Silver outlook and forecasts over the coming year. BofA's official end-2021 forecast for Gold is $2,213/oz and for silver is $31.25/oz. 

"Gold has rallied over falling real rates. Continued fiscal spending as governments are mending the damage from COVID-19, backstopped by central banks means that interest rates will likely remain low, at the same time as the economy reflates. Financial repression may be with us for a while, so we reinforce our $3,000/oz forecast,"BofA notes. 

"Silver benefits from this macro backdrop too, but demand should also strengthen on the back of the green stimulus; we see $35/oz feasible next year, but highlight that the white metal could rally to $50/oz in the medium-term,"BofA adds. 

BofA Global Research
By Paul Spirgel  —  Aug 11 - 01:30 PM
  • AUD/USD soft into NY close ending NorAm +0.17% at 0.7162, NY range 0.7190-53

  • China-US political, trade angst slows AUD/USD rise despite USD weakness

  • UST yields rise ahead of large UST refunding, gold slips 4.4% aids AUD dip

  • Dollar's counterattack weakens aussie momentum nL1N2FD0WL

  • AUD aught between this week's low by 0.7141 and last week's high by 0.7240

  • Close below 0.7140 eyes series of DMA's down to 200/100-DMA by 0.6700

  • Further dawdling over US recovery aid exposes trend highs by 0.7240

  • For more click on FXBUZ

AUD Chart: Click here

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Aug 11 - 11:15 AM

ING Research discusses USD/CAD outlook and targets the pair at 1.30 in 3-months.

"CAD has been the key laggard in the weak-USD story in G10. The pre-existing downside risks to the economic recovery in Canada (the sovereign downgrade was a case in point) paired with a high exposure to the US virus emergency/fresh lockdown measures.

In order to catch up with the gains displayed by its pro-cyclical peers, CAD will likely have to rely on an improvement in the US virus situation and signs of improved robustness in the oil market," ING notes. 

"On the domestic side, the large fiscal stimulus paired with the BoC support (which should not be scaled back soon) may offer room for a more supportive data flow. We continue to see USD/CAD slowly drifting to 1.30 in 3Q/4Q," ING adds. 

ING Research/Market Commentary
By Jeremy Boulton  —  Aug 11 - 09:45 AM

EUR/USD traders are still intent on reaching higher levels, regardless of the massive bets on a rise.
But this bullying style of trading could get them into trouble.

Every time EUR/USD bets have climbed as high, the pair has reversed dramatically and bets have been unwound nL1N2FD095.
Probabilities are high that pattern will be repeated.
The current drive to buy dips and push the pair up, regardless of a rise in risk appetite that ill suits long positions, is likely to exacerbate the scale of a reverse nL1N2FD07G].

Profit-taking is already underway elsewhere.
Gold has dropped over 3% today and is 5.2% below its record peak.
Gold traders are similarly positioned to EUR/USD traders and, like EUR, many gold traders are long because it an asset that offers safety nL1N2FD06C.

In fact, neither gold nor euro are safe when many traders are invested as deeply as they are today.
In contrast, U.S. stocks suggest the dollar, which has been sold aggressively, is cheap.

For more click on FXBUZ

EUR/USD and betting Click here

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Aug 11 - 10:00 AM

MUFG Research discusses its expectations for this week's RBNZ policy meeting. 

"The New Zealand dollar has underperformed other G10 commodity-related currencies at the start of this week ahead of tomorrow’s RBNZ policy meeting. Market participants are expecting a dovish outcome from the RBNZ policy meeting. It follows recent communication from the RBNZ stating that they will review current policy options at their upcoming meeting," MUFG notes. 

"The market is anticipating that the current asset purchase limit will be increased beyond NZD60 billion. Any further comments on negative rates or FX intervention will have more impact at weakening the New Zealand dollar. On the other hand, it is not a done deal that the RBNZ will provide more stimulus as soon as this week.

The RBNZ will be aware as well that the New Zealand dollar will strengthen if they disappoint expectations for further easing, and have already expressed concern over recent strength," MUFG adds. 

MUFG Research/Market Commentary
By eFXdata  —  Aug 11 - 09:06 AM

Credit Suisse discusses EUR/USD technical outlook and flags a scope for a lengthier consolidation phase in the near-term.

"Although our medium-term outlook stays bullish, we continue to look for a lengthier consolidation phase before the core uptrend resumes, and we may be potentially even seeing the formation of a “double top”.

Resistance is seen at 1.1818 initially, with a break above 1.1851 needed to clear the way for a retest of 1.1916/26. Above here can reassert the uptrend with resistance seen next at 1.1997 then what should be tougher initial resistance at 1.2145/55," CS notes. 

"Near-term support moves to 1.1755, then the 13-day average and price support at 1.1738/21 which we look to try and hold to define the lower end of a high-level range. Below 1.1699/97 though would see a “double top” established to warn of a more concerted setback with support then seen next at 1.1630/22 – the 38.2% retracement of the rally from late June," CS adds. 

Credit Suisse Research/Market Commentary
By Richard Pace  —  Aug 11 - 07:15 AM

In a note to clients last week, JP Morgan saw a good chance of EUR/USD reaching 1.25 this year and north of 1.3000 next year nL1N2F80AA, and said the recent sell-off has done little to alter its view; a setback was anticipated as part of the process to further gains.

The bank does recognise the record-long IMM positioning poses some problems, especially in the current illiquid holiday markets, but JPM remains firmly bullish and advocate a core long, while leaving room to add on dips to 1.1700 initially, and more so at 1.1650.

Tuesday's better-than-expected German ZEW data has helped the recovery from early 1.1722 lows to 1.1809, but further gains are proving hard fought.

The FX options market has significantly reduced premiums for implied volatility and EUR calls, from last week's new highs -- consistent with profit- taking and a view that the recent EUR/USD rally is over for now, and that a period of consolidation is expected nL1N2FD06K

For more click on FXBUZ

EUR=EBS Click here

EUR/USD benchmark 1-month option implied volatility Click here

1-3-12-month EUR/USD risk reversals Click here

Refinitiv IFR Research/Market Commentary
By Jeremy Boulton  —  Aug 11 - 05:40 AM
  • Germany's ZEW rises to 71.5 in August from 59.3. Beats 58.0 f/c

  • Current conditions -81.3 from -80.9. F/c was -69.8

  • ZEW seems a surprise welcome for EUR/USD traders sitting heavily long

  • However, few traders bought EUR thinking about a positive economic outlook

  • Most were covering U.S. risk and buying into a presumed safer asset

  • Strong German recovery will aid euro zone and that should help U.S.

  • Good news is not what many EUR/USD longs are probably hoping for

  • Huge EUR/USD bets always lead to big reversals nL1N2FD095

Refinitiv IFR Research/Market Commentary
By Jeremy Boulton  —  Aug 11 - 05:20 AM

When EUR/USD bets reach the level they've reached today, they've had big reversals nL1N2FD07G.

EUR/USD longs have reached a record 22.6 billion euros.
One larger bet has been made; shorts in 2015 reached EUR 25.6 billion.
Two other bets reached 20 billion: shorts reached 20.8 billion at the end of 2015 and longs reached 20 billion in 2018.
All those bets led to big corrections, most of them swiftly.

The record short was reached in April 2015.
EUR/USD rallied 1.0496-1.1450 between March and May 2015.

EUR/USD based at 1.0593 in November 2015 and reached 1.1455 by late April 2016.
When traders bet big on a rally in 2018, the longs peaked in April but reached almost 20 billion by February.
EUR/USD peaked in February at 1.2556, falling to 1.1652 by the end of May.

Current bets have also been made fast, flipping from a 13.2 billion-euro short position in February.
The net switch of 35.8 billion is the fastest and biggest change in betting recorded.

For more click on FXBUZ

EUR/USD and betting Click here

Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  Aug 11 - 04:05 AM
  • Cracks still appearing in the Jun to Aug bull trend

  • Still need to respect the doji warnings given on Jul 31 and Aug 3-4

  • Frid bear engulfing line not confirmed Monday but still rings alarm bells

  • Major tipping point, 1.2982 Aug 4 low, close to market

  • While below 1.3200 risk remains for run to 1.2719, 50% Fibo 1.2252-1.3185

  • Hope for bulls if 1.2982-1.3185 range becomes entrenched

GBP/USD Trader:

GBP/USD daily candle chart: Click here

Refinitiv IFR Research/Market Commentary
By Jeremy Boulton  —  Aug 11 - 02:40 AM
  • EUR/USD dips to 1.1722 EBS in Asia, lower in Europe from the open

  • Europe 1.1756 (Asia peak) to 1.1730 swiftly after the open

  • Traders are extremely long EUR, weight of bets is now telling

  • Aug 3 low 1.1695, 21-DMA 1.1661 are key points for longs to consider exit

  • EUR/USD traders should hedge their bets nL1N2FC05R

  • CNH leap is a worry for those long EUR/USD nL1N2FD05X

EUR/USD Click here

Refinitiv IFR Research/Market Commentary
By Richard Pace  —  Aug 11 - 02:20 AM
  • FX options thrive on volatility - pricing expects big post RBNZ reaction

  • Overnight NZD options now capture RBNZ - expiry Wednesday 10-am New York

  • Implied volatility gauges expected actual volatility until expiry

  • Overnight implied volatility jumps from 14.5 to 22.0 today - high since June

  • Premium/break-even for simple vanilla straddle is now 61 from 40 USD pips

  • Shows amount of pips holders must capture in either direction before profit

Overnight expiry NZD/USD implied volatility Click here

Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  Aug 11 - 02:10 AM
  • Friday's bearish engulfing candle confirmed: drop under 1.1695 the risk

  • Fading the 10DMA-Tenkan line, 1.1800-1.1805, a possible strategy

  • 14-day positive momentum beginning to fade but RSI stalling at 61.00

  • First close Monday below the daily Tenkan line since June adds to bear risk

  • Fibos off Jun-Aug 1.1168-1.1916 are at 1.1630 and 1.1542, 38.2%-50%

  • Pivotal support levels for Tues 1.1695, Aug 3 low, and 1.1661 21DMA

  • Potential bearish engulfing line on weeklies holding after last week's doji

EUR/USD Trader

EUR/USD daily candle chart: Click here

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Aug 10 - 11:40 PM
  • AUD/USD opened 0.11% lower at 0.7149 after USD moved broadly higher

  • After trading at 0.7145 the AUD/USD tracked higher as Asian equities firmed

  • The AXJ equity index moved around 1.% higher and AUD/USD traded to 0.7177

  • Heading into the afternoon it is hovering around 0.7175 - near session highs

  • A close above 10-day MA (0.7172) would shift pressure back to the upside

  • Resistance is at yesterday's 0.7184 high

  • Key support comes in at the 21-day MA at 0.7118

  • For more click on FXBUZ

aud/usd Click here

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Aug 10 - 04:30 PM

NAB Research discusses AUD/USD technical outlook and sees a scope for short-term correction towards 0.7032/82 in the next 1-2 weeks.

"Friday produced a new 2020 high at 0.7243 before closing at 0.7157 and completing a bearish ST (daily) reversal pattern. Such a trigger implies that the uptrend has reached a point of ST exhaustion," NAB notes. 

"Weekly and monthly momentum indicators continue to confirm a strong and sustainable MT/LT uptrend bias. Daily momentum indicators however have produced bearish failures at the recent highs and confirmed ST correction risk.

Risk is high for a ST correction in the coming 1-2 weeks and retest of MT support at 0.7032/82," NAB adds. 

NAB Research/Market Commentary
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