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By eFXdata  —  Feb 26 - 03:50 PM

ANZ Research discusses EUR/USD outlook and sees a scope for retesting 1.04 in the medium-term. 

"We have downgraded our 2020 GDP forecasts for the euro area as COVID-19 related disruption will delay the anticipated recovery in global trade and Europe’s manufacturing sector. We now expect GDP to rise by 0.9% vs 1.1%," ANZ notes. 

"The euro has reached our pre-coronavirus Q1 target of 1.08 vs USD. Severely limited reflationary policy room leaves the risks to the single currency skewed to the downside. A re-test of the post-crisis lows at 1.04 is expected," ANZ adds. 

ANZ Research/Market Commentary
By Randolph Donney  —  Feb 26 - 02:10 PM
  • Yen up, stocks, Tsy yields down on possible virus in NY nFWN2AQ0UI

  • No confirmed cases from New York State nL2N2AQ181

  • USD/JPY from 110.49-17 on story, 10-yr Tsy yields down by record low

  • S&P's below Tuesday's low and by 50% of Aug-Jan rally at 3,107

  • A USD/JPY close below 109.81 targets cloud & weekly kijun by 109

Chart: Click here

Refinitiv IFR Research/Market Commentary
Feb 26 - 02:36 PM

AUD/USD - No Floor In Sight Yet

By Christopher Romano  —  Feb 26 - 01:05 PM
  • Pair opens just off Asia low, small lift near 0.6580 sold into nL2N2AQ09X

  • Despite upbeat risk sentiment AUD/USD slides lower, 0.6550 neared

  • AUD/USD risk reversals show premiums for puts over calls grows again

  • RSIs continue to imply bearish momentum remains; rally selling to persist

  • AUD/USD longs side lined, AU Q$ CAPEX due tonight helps keep them quiet

  • Bearish factors have shorts targeting the 0.6400/15 zone nL2N2AQ0S5

chart: Click here

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Feb 26 - 12:00 PM

Bank of America Global Research discusses the EUR curve outlook. 

Depending on your sector of choice, the EUR curve has either reached its flattest levels since the crisis or since pre-2015 Bund tantrum extremesWhile the moves are superficially akin to last summer, a number of key differences suggest additional flattening risks cannot be ruled out; we are only at Stage 3 of 5 in the flattening move," BofA notes. 

"Stage 1 was driven by 50y, arguably on the back of expected Dutch pension discounting rule changes that increase the sensitivity of Dutch PFs to rates beyond the 30y. Stage 2 looks like insurance receiving, but with the regulatory push far in the offing, this may have been anticipatory flow, rather than actual hedging. In Stage 3, negative gamma on the other hand does seem to have been a driver, more so than in 2019. However, we may have yet to see broad-based capitulation of underweight duration positions in core EUR, though arguably price action Monday/Tuesday suggests this may be starting,"BofA adds. 


BofA Global Research
By Randolph Donney  —  Feb 26 - 10:15 AM

USD/JPY tracked Treasury yields and stocks rebounding from coronavirus-inspired lows hit over the last 24 hours nL3N2AP0BC as markets -- particularly record-low Treasury yields and money markets pricing in multiple Fed rate cuts -- appeared to reflect worst-case scenarios.
But tremendous uncertainty remains in markets about the cost of the outbreak spreading beyond China, limiting the scale of any risk rebound.
USD/JPY, after sliding 112.23-109.89 from Thursday to Tuesday, found support near the 21-DMA and 61.8% Fibo of February's rise.
A cluster of potentially daunting resistance awaits around today's $2.6bln of 111 expiries nL2N2AQ0D9 as markets await virus updates.
Expanded closures in Japan and fear the 2020 summer Olympics there might be canceled are dimming the yen's safe-haven allure nL3N2AQ0BP, but there's only 10bp of BOJ easing priced in by year-end due to the drag of negative rates on local banks, savers and pension funds.
This despite clear recession danger nZRN0007Z0.
Key for the USD/JPY is S&Ps holding above their 200-DMA at 3,045 and N225 holding above today's 22,127 low by the 233-DMA and 50% Fibo of the August-January rally.

Chart: Click here

Chart: Click here

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Feb 26 - 09:37 AM

MUFG Research discusses the JPY outlook and suspects that JPY sellers might not be inclined to re-establish short positions by buying the dip in USD/JPY around current levels.

"After last week’s sharp sell-off of the yen as COVID-19 risks remained front and centre there was understandable speculation that the yen may have been losing its safe-haven status. However, as quickly as USD/JPY broke sustainably 110.00 to set a high of 112.23, USD/JPY has reversed back to down. The key point being that last week even though COVID-19 was an obvious risk, the S&P 500 hit a record high last Wednesday – the very day USD/JPY broke higher," MUFG notes. 

"But the equity market declines this week has made clear again that the yen remains the go-to safe-haven currency. We believe the sharp drop in USD/JPY this week will make yen sellers more wary of re-establishing that trade. In the last eight episodes of ‘risk-off’ (>-3% S&P 500), the yen has consistently been the top performer," MUFG adds. 

MUFG Research/Market Commentary
By eFXdata  —  Feb 26 - 08:30 AM
Société Générale Research discusses the EUR outlook and flags a scope for a bounce on short covering if prices continue to go sideways for longer. 

"As for the euro, we're in watch-and-see mode. Sentiment remains bearish, given the weak growth backdrop, lack of policy dynamism and vulnerability if the virus epidemic starts to spread," SocGen notes. 
"But the market is short due to a concentration of large positions that outweigh a greater number of smaller longs. If the euro goers sideways for too long, short-covering is a distinct risk, that is not captured by the options market here," SocGen adds. 
Société Générale Research/Market Commentary
Feb 26 - 08:36 AM

AUD/USD - Another Leg Lower Begins

By Christopher Romano  —  Feb 26 - 07:35 AM
  • AU Q4 construction drops sharply nAPN04MI00, Q4 CAPEX tonight AUPNCE=ECI

  • Commodities HGv1CLv1 fall, highlights concerns over Covid-19 econ impact

  • AU short-term rate markets YBAU0 still price-in RBA cut RBAWATCH

  • Risk reversals AUD1MRR= see premiums for 1- & 6-mo puts over calls grows

  • Latest AUD/USD consolidation resolves with break to new 11-year low

  • RSIs imply bear momentum intact; barrier support likely into 0.6550 & 0.6500

  • AUD/USD bears likely target 76.4 Fib of 0.4775-1.1081 which is at 0.6263

chart: Click here

chart: Click here

Refinitiv IFR Research/Market Commentary
By Jeremy Boulton  —  Feb 26 - 05:30 AM

AUD/USD has been battered by the coronavirus, which has driven down commodities and hit any currency linked to an economy with close ties to China nL2N2AQ03O.
Australia's dollar probably tops the list of such currencies, but it's worth remembering that AUD/USD is also a sell when the going is good.
Australia's dollar swings with risk appetite, so right now it's heavy across the board.
Where it might rebound if fear surrounding the coronavirus subsides, AUD/USD shouldn't.
That's because the pair is weighed by an interest rate gap that favours the U.S dollar and that isn't likely to change.
Rates in both nations can come down and may fall if the situation worsens.
If the situation improves, Australia's economy, which has also been hurt by bush fires, will still need the help of low rates.
The economy in the United Sates won't.
The rate gap is more likely to widen and AUD/USD is likely to keep sliding whatever happens with the coronavirus.
Related nL2N2AO05S

AUDUSD: Click here

Refinitiv IFR Research/Market Commentary
By Rob Howard  —  Feb 26 - 04:40 AM
  • AUD/USD ran into resistance just shy of 0.6585 after ticking up from 0.6569

  • 0.6569 = fresh 11-year low in early European trade. 0.6585 was Monday's low

  • Risk-sensitive AUD is suffering on the coronavirus spread nL3N2AP0BC

  • S&P e-mini is currently down 0.5% (having been up 0.5% earlier)

  • S&P 500 fell by 3% on Tuesday for the second day running nL5N2AQ2CV

  • Bids may emerge near 0.6550 and 0.6500 if AUD/USD extends south

AUDUSD: Click here

Refinitiv IFR Research/Market Commentary
By Jeremy Boulton  —  Feb 26 - 03:05 AM
  • Risk taking has been pummelled but risk taking had reached extremes

  • USD/JPY 2% rally occurred at the height of the crisis

  • DJI brushed 30k mark around the same time

  • Current reverses might just be a small unwind of a lot of excess

  • Today USD/JPY has bucked a risk off mood to rally a little nL2N2AQ03O

  • Evidence that the demand linked to the earlier spike is yet to be exhausted

  • Should crisis pass stimulus added, or planned, likely too much stimulus

DJI: Click here

USDJPY: Click here

Refinitiv IFR Research/Market Commentary
By Richard Pace  —  Feb 26 - 02:45 AM
  • EUR/USD: 1.0800 (1BLN), 1.0825 (455M), 1.0850 (1.8BLN)

  • 1.0860-70 (1.2BLN), 1.0890-1.0900 (2.5BLN)

  • USD/CHF: 0.9745 (1BLN), 0.9885 (625M)

  • GBP/USD: 1.2850 (313M), 1.3000 (645M), 1.3030 (220M), 1.3120-25 (380M)

  • EUR/GBP: 0.8355-65 (325M), 0.8435 (250M)

  • AUD/USD: 0.6600-05 (650M), 0.6650 (455M), 0.6700 (550M)

  • NZD/USD: 0.6150 (675M), 0.6300 (430M), 0.6395-0.6400 (300M), 0.6530 (550M)

  • USD/CAD: 1.3240 (260M), 1.3270 (530M), 1.3300-10 (760M), 1.3345-50 (800M)

  • USD/JPY: 110 (800M), 110.45-50 (1.3BL), 110.75-85 (1.4BL), 111.00 (2.6BLN)

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Feb 25 - 03:00 PM

Credit Agricole Research discusses EUR outlook and sees a scope for further consolidation over the coming week. 

"The Euro has been stabilizing of late, partly on the back of improving fundamentals as for instance reflected in yesterday’s better than expected German ifo business climate survey. This is regardless of increasing worries over the coronavirus outbreak becoming a serious downside risk to the Eurozone’s growth outlook, a development that led to markets starting to price in further ECB monetary policy easing later this year," CACIB notes. 

"While we believe that excessive short positioning implies most negatives with respect to the monetary policy outlook are in the price we advise against chasing the single currency lower from here. If anything, we anticipate further stabilizing price developments in the weeks to come," CACIB adds. 

Crédit Agricole Research/Market Commentary
By Andrew M Spencer  —  Feb 25 - 10:15 PM
  • Touch softer, but busy when Asia fully opened in a tight 1.2993-1.3008 range

  • EU-UK trade talks to begin Monday, with little hope of early progress

  • IFS believes fin min Sunak should resist rewriting fiscal rules nL4N2AP119

  • Sunak must increase revenue to fund Johnson's post election spending plans

  • Yesterday's bounce leaves momentum studies basing, 5, 10 & 21 DMAs conflict

  • Neutral setup at familiar levels - 1.3000 555M, and 1.3030 211M strikes cap

  • Well tested 1.2843-1.3133 21 day Bollinger bands define the broad range

  • NY 1.2952-1.3018 range is initial support-resistance

gbp 2feb 26 Click here

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Feb 25 - 10:00 PM
  • AUD/USD traded down to 0.6588 earlier when mood in Asia was risk-off

  • Move lower also due to very weak Aus construction data nAPN04MI00

  • Support around 0.6585 held for the fourth trading day in a row

  • AUD/JPY buying late morning underpinning AUD/USD into the afternoon

  • AUD/USD unchanged at 0.6600/05 and AUD/JPY up 0.20% at 72.90

  • Resistance @ the 10-day MA at 0.6656 and break would suggest bottom in place

  • AUD/USD has been resilient, but break below 0.6580 would be bearish

aud/usd Click here

Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Feb 25 - 08:25 PM

The continued expansion of the coronavirus around the world has hit global confidence and the outlook for growth.
The S&P 500 has fallen 6.3% this week and the ASX 200 5.5%, as risk is sold and yields tumble.
Central bank expectations have become significantly more dovish.
A Fed rate cut at the April 29 meeting is now 65.5% priced on the CME and OIS fully price an RBA cut in August rather than September following a rise in unemployment to 5.3% last weeknL4N2AK0BB.
Meanwhile the AUD/USD has consolidated in a tight range around 0.6600, but the underlying downtrend remains intact.
Charts are bearish with daily, weekly and monthly 5, 10 and 21 moving averages tracking south. Twenty-one-day Bolli bands are a very good indicator of an overextended market.
The falling lower band comes in at 0.6587, which is close.
Technically the current consolidation is healthy price action in a strong trending market, which eventually targets a test of long-term support at 0.6263, 76.4% of the 0.4775-1.1081 climb between 2001 and 2011. Authorities are trying desperately to control the coronavirus, but it appears to spread very easily and the incubation term is uncertain at this point nL1N2AP0TC.
Sadly, this could be the next black swan event.

aud feb 26 Click here

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Feb 25 - 07:25 PM
  • AUD/USD was under pressure during US session when Wall Street cratered nL1N2AP1IK

  • AUD/USD traded to 0.6586 and AUD/JPY threatened key support at 72.30/50

  • The 61.8 of 69.93/76.52 is at 72.45 and daily lows in early Feb at 72.35/45

  • Standing buy orders in the 72.30/50 window held and the AUDJPY low was 72.50

  • The subsequent bounce in AUD/JPY to 72.80 has taken the pressure off AUD/USD

  • AUD/JPY resistance is at 73.50/60 where the 10 & 21-day MAs converge

  • A break above 73.60 would ease downward pressure significantly

audjpy Click here

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Feb 25 - 01:30 PM

Citi discusses GBP outlook and maintains a structural bullish bias in the medium-term.

"EU member states are due to finalize their negotiating priorities for a future trade deal with Britain. It will say that a trade deal should be based on EU rules in some areas as "a reference point". Meanwhile, UK ministers will also meet to discuss the government's opening stance for negotiations. The final agreement is due to be published online and presented in Parliament on Thursday. Chatter here could be a source of short term volatility for GBP," Citi notes. 

"Bigger picture, we maintain our structurally bullish view on GBP as 1) political risks recede and economic recovery carries on 2) long term investors are still structurally underweight GBP and UK assets," Citi adds. 

Citi Research/Market Commentary
By Christopher Romano  —  Feb 25 - 01:20 PM
  • Global yields dive, US yields fall faster than AU,AU-US spreads tighten

  • Iron-ore, copper & oil trade lower, equity markets extend the recent drop

  • Probability for Fed cuts increases FEDWATCH; USD/CNH drops slightly

  • AUD/USD holds near 0.6600 for most of NY & Europe trading sessions

  • Another daily doji forms, consolidation persists, suggests new lows likely

  • Investors continue to worry about Covid-19 impact on global econ growth

chart: Click here

Refinitiv IFR Research/Market Commentary
By Paul Spirgel  —  Feb 25 - 01:15 PM
  • GBP/USD Bid in NY aft, +0.63% at 1.3008, NY range 1.3018-1.2952

  • Cable traders shrug off coronavirus, Brexit; focus on lower Fed rate outlook

  • Sterling mounts another run at 1.3000 with BoE, US rates help nL1N2AP0BQ

  • EU-UK final status talks begin Mar 2 nB5N2AK01G, may temper further gains

  • Res at 1.3018 Tues high, then 1.3052 55-DMA; Support at Feb 20 low 1.2849

  • EUR/GBP -0.43% at 0.8362, Tues range 0.8395-0.8339; GBP gains outstrip EUR

GBP Chart: Click here

Refinitiv IFR Research/Market Commentary
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