• USD G10 Net spec long grew in Jan 8-14 reporting period; USD index +0.48%

• EUR specs bottom-fish, GBP long almost completely evaporates, yen short grew

• EUR$ -0.32%, specs +3,727 contracts, now -60.4k; ECB on dovish path

• $JPY -0.05%, specs -9.2k contracts, now -29.4k; BoJ seen hiking yen positive

• Markets see 2 BOJ hikes in 2025, 1-2 Fed cuts, converging rates aid JPY

• GBP$ -2.1%; specs -14.1k contracts, now +438; Fiscal issues weighed

• $CAD -0.13%; specs +11.4k contracts now -167.2k; outlook neg for CAD

• CAD dominated by Trump tariff uncertainty and diverging US-CA policy paths

IMM Position Table:


Majors w/IMM Performance Chart:

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

• NY opened near 1.0305, drop ensued on US$ buys; USD/CNH hit 7.3578

• 1.02658 traded on EBS, buyers emerged, sharp rally took hold

• US$ dropped on report Trump, Xi held an upbeat phone call

• Stocks , yields rallied & USD/CNH fell to 7.3338

• EUR/USD rallied to 1.03308 then turned lower again, neared 1.0280 late

• US$ buys, wider spreads helped EUR/USD trade down -0.20% late

• Monthly, daily dojis imply indecision; falling RSIs are bear signals
eurusd

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

Synopsis:

BofA’s latest FX and Rates Sentiment Survey highlights that positioning has emerged as the biggest headwind for the USD, with long USD positions perceived as the most crowded trade. Despite expectations for elevated US Treasury yields, conviction in long USD trades is relatively muted.

Key Points:

• Positioning as a USD Headwind:

  • Survey respondents identify positioning as the primary headwind for the USD.
  • Long USD is regarded as the most crowded trade, surpassing long risk positions.

• Historical Context:

  • USD longs are notably elevated compared to historical levels and the past year, aligning with other BofA positioning metrics.

• Muted Conviction in Long USD Trades:

  • Only 20% of respondents cite long USD as their highest conviction trade.
  • This contrasts with 42% of respondents expecting 10-year US Treasury yields to peak above 5%.

Conclusion:

While positioning presents a significant challenge to further USD strength, the divergence between market expectations for elevated US yields and limited conviction in long USD trades suggests cautious sentiment toward extending the USD rally.

• GBP$ soft in NorAm afternoon, -0.53% at 1.2174; Friday range 1.2245-1.2161

• BoE cut view boosted after UK retail sales downside miss; gilt yields slip

• Pair subject to notable yaw last 3-days, a few laps taken b/w 1.2265-1.2140

• Cheering the UK budget, selling sterling

• Recent sub-f/c UK data increasing BoE cut view for 2025 a weight on GBP/USD

• Of note, Sterling did a quick run higher on Trump-Xi talk report

• Concerns on fiscal uncertainties ebbing, focus now on BoE policy path

• Res 1.2260 the Jan 16 high, 1.2295 falling 10-DMA, 1.2307 Jan 15 high

• Supt 1.2140 Jan 14 low/lower 21-d Bolli, 1.21 2025 low put in Jan 13

GBP Chart:

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

Synopsis:

Credit Agricole highlights upcoming Eurozone data and ECB speakers as key focuses for EUR investors, with much of the negative sentiment already reflected in the EUR's price. Markets will look for signs of economic stabilization, while broader USD moves post-Trump inauguration could also shape EUR/USD direction.

Key Points:

• Upcoming Data:

  • Focus on preliminary Eurozone PMIs and the German ZEW for January to gauge the state of the economic downturn.
  • Evidence of economic stabilization could provide some relief to the EUR.

• ECB Focus:

  • Speeches from ECB President Lagarde and other officials will be monitored for any signals on monetary policy ahead of the 30 January ECB meeting.
  • Credit Agricole suggests markets may be overly dovish on ECB rate expectations, which could be tested next week.

• Broader Drivers:

  • EUR/USD expected to respond to broader USD moves driven by developments following President Trump’s inauguration on 20 January.

Conclusion:

With many negatives already priced into the EUR, next week’s data and ECB commentary could determine whether the worst of the Eurozone economic downturn is behind. However, external USD strength remains a potential headwind for EUR/USD.

• Shares of cryptocurrency- and blockchain-related companies jump as bitcoin gains over 2%

• Bitcoin , the world's biggest cryptocurrency, last up 2.5% at $102,595

• Bitcoin set for best weekly gain since November ahead of inauguration of Donald Trump as U.S. President on Monday

• Market participants expect a much more favorable regulatory regime for digital assets under Trump, who has promoted bitcoin and nominated a crypto-friendly candidate to head the U.S. Securities and Exchange Commission

• Crypto exchange Coinbase Global rises 5%

• Crypto miners up: Riot Platforms Inc up 5.1%, Marathon Digital up 6.5%, Hut 8 up 5.9%, and Bit Digital up 3.2%

• BTC buyer MicroStrategy rises 5.6%

• iShares Bitcoin Trust ETF up 2.8%

• Bloomberg News reported on Thursday that Trump could issue executive order to designate cryptocurrency as national priority in his first few days in office

• Bitcoin up over 9% this year; has gained 48% since Nov. 5 presidential election

(Reporting by Lisa Mattackal)

Synopsis:

ANZ maintains a neutral-to-negative stance on AUD/USD, with short-term risks skewed toward further downside, potentially below 0.613. Sustained USD strength, weak risk sentiment, and local economic data weigh on the pair, while shallow RBA easing expectations may provide limited medium-term support.

Key Points:

• Current Performance and Drivers:

  • AUD/USD has reached a five-year low near 0.613 due to firm USD tailwinds and declining risk sentiment.
  • Recent rebounds, following US CPI data, remain unsustainable without a significant deterioration in risk appetite (ANZ's threshold: sentiment index below -2).

• Market Sentiment and Flows:

  • Spot flows for AUD/USD have been volatile, with significant net selling post-December FOMC.
  • Rebounds into overbought territory signal heightened risk of short-term downside.

• Local and RBA Developments:

  • Softer trimmed mean CPI data (3.2% y/y) raises the likelihood of a soft Q4 CPI print on January 29.
  • ANZ expects the RBA to cut rates by 25bp in February and August 2025, maintaining a shallow easing cycle.
  • Favorable rate differentials against EUR and JPY could offer modest AUD/USD support in the medium term.

Conclusion:

ANZ is neutral to negative on AUD/USD in the short term, citing sustained USD strength and weak risk sentiment. While the RBA’s shallow easing outlook may offer some medium-term support, near-term dynamics favor further downside, with a potential drop below 0.613.

Synopsis:

Nomura now forecasts the BoJ to hike rates at the January Monetary Policy Meeting (MPM), citing reduced uncertainty about FY25 wage hikes and U.S. policy. However, the decision may hinge on developments following President-elect Trump’s inaugural address.

Key Points:

• Revised Timing:

  • The next BoJ rate hike is now expected at the January MPM, advanced from the previous March projection.
  • The decision reflects growing confidence in stable FY25 wage hike prospects and clarity on U.S. policies.

• Economic Forecasts:

  • The BoJ is likely to raise CPI inflation forecasts, factoring in yen depreciation, higher oil prices, and increased rice prices.
  • Despite the inflation forecast revisions, Nomura does not anticipate an accelerated pace of rate hikes.

• Uncertainty Factors:

  • The BoJ may postpone its rate hike depending on the content of Trump’s inaugural address (20 January) and subsequent market reactions.

Conclusion:

Nomura expects a BoJ rate hike at the January MPM, driven by improved clarity on domestic and international economic conditions. However, Trump’s policy signals and market responses remain pivotal in shaping the final decision.

• Busy option expiry diary Friday with deals from 1.0175 to 1.0500

• Total of EUR 34 billion with strikes ranging from EUR1.1 bln to EUR5.0 bln

• Huge deals close to mkt 1.0270-80 and 1.0300-10: EUR3.83 bln and EUR5.0 bln

• Expiries likely to lock EUR/USD down around the time of the New York cut
EUR/USD option expiries Jan 17

(Peter Stoneham is a Reuters market analyst. The views expressed are his own)

• Daily chart has a potential bearish continuation pattern

• Recent loss consolidation between 1.2100 and 1.2306

• However, modest gains on the week have formed a doji candle

• Doji candles can warn of a direction change

• Weekly RSI is also showing an over sold condition

• Daily RSI is also over sold and negative momentum stretched

• For now sterling bear trends are intactGBP/USD Trader: [page:2338]
GBP/USD Weekly candle chart:


GBP/USD daily candle chart:

(Peter Stoneham is a Reuters market analyst. The views expressed are his own.)

• USD/JPY is down, but not out, ahead of the BOJ decision

• Nikkei: majority of BOJ members to approve hike next week

• USD/JPY has seen a 154.98-155.85 range, on Friday, on the EBS

• Specs hunted for stops, good bids noted at lows

• Support was found one pip ahead of major 154.97 Fibo

• 154.97 Fibo is a 38.2% retrace of 148.65 to 158.88 (Dec to Jan) rise

• 30 and 60-day correlations between USD/JPY and EUR/JPY remain above +0.50

Daily Chart:


Seasonality Chart:

(Martin Miller is a Reuters market analyst. The views expressed are his own)

• Traders have been betting pound rises throughout its decline

• Drop has been very large and rapid from 1.3434-1.2100

• Losing long positions are a big factor contributing to extent of the drop

• Until traders sell short in a significant way pound may keep falling

• Should specs turn against pound it will come under greater pressure

• Without shorts move under psychological support @ 1.20 may be very damaging

•
GBPUSD

(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

• AUD/USD has traded a 22.5 pip range thus far Friday: 0.6196 = intra-day low

• 0.6196 is four pips above Thursday's low. 0.6228 was Thursday's NY high

• Thursday's NY high was notched after USD fell on dovish guidance from Waller

• Offers likely near 0.6250 (0.6247/48 = Wednesday/Thursday high)

• There is a big 0.6210 option expiry next week (Jan 22); A$2.1 billion strike

• Trump starts his second term as U.S. President on Monday

AUDUSD

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

• Cable falls to 1.2169 on unexpectedly negative UK retail sales print

• UK retail sales down 0.3% MM in December; increase of 0.4% was forecast

• 1.2169 is lowest level since Wednesday. 1.2206 was Asia low, pre-UK data

• Negative retail sales data underpins expectation of BoE rate cut on Feb 6

• GBP/USD support points include 1.2155 (Wednesday's low), 1.2140 and 1.2100

• 1.2260 was Thursday's high, after dovish guidance from Fed's Waller hurt USD

GBPUSD

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

• EUR/USD: 1.0175-85 (1.3BLN), 1.0200 (4.4BLN)

• 1.0220-25 (778M), 1.0240-50 (1.5BLN), 1.0255-65 (557M)

• 1.0270-80 (3.83BLN), 1.0285 (2.6BLN), 1.0300-10 (5.0BLN)

• 1.0325-35 (1.92BLN), 1.0340-50 (2.1BLN), 1.0355-60 (1.12BLN)

• 1.0370-80 (1.1BLN), 1.0390-00 (4.2BLN), 1.0425-30 (1.3BLN)

• 1.0500 (2.3BLN)(Peter Stoneham is a Reuters market analyst. The views expressed are his own)

• Trades up 0.05% in a tight 1.0299-1.0309 Asian range with the USD off 0.05%

• No tier-one EZ data - US building permits lead a second-tier US schedule

• Trump Treasury pick Bessent- Fed independence, USD, Russia oil sanctions key

• The Trump inauguration on Monday - the potential start of a new world order

• Charts - positive daily momentum studies, 21-day Bollinger bands ease

• 5, 10 & 21-DMAs coil, weekly moving averages fall - downtrend has stalled

• Wednesday's 1.0354 top, then last week's 1.0437 high are initial resistance

• 1.0195 0.618% of 2022/2023 rise then Monday's 1.0177 base are first supports

• Bulls need a close above last week's 1.0437 high to get excited

• 1.0300 4.517 BLN Jan 17th strikes acted as a magnet in Asia
Andy

(Andrew Spencer is a Reuters market analyst. The views expressed are his own.)

• AUD/USD unchanged in Asia, trades in a narrow 0.6207-0.6218 range

• Early dip on sales versus JPY fades as AUD/JPY bounces from 1-month low

• China's economic growth surpasses forecasts on stimulus push, lifts AUD

• Buoyant commodity prices support AUD; iron ore rallies to 1-month high

• Traders cautious ahead of Trump's Presidential inauguration Monday

• Chances of RBA Feb rate cut at 68%, likely to cap AUD recovery attempts

• Resistance 0.6230, 0.6250-60, support 0.6190-95, 0.6175
Reuters poll: U.S. Treasury yield outlook January 2025:

(Krishna Kumar is a Reuters market analyst. The views expressed are his own.)

• Steady in a very tight 1.2230-1.2239 range with light FX Matching interest

• UK retail sales lead data risk in London - RTRS poll forecasts +0.4% m/m

• Tear down barriers to growth, UK finance minister Reeves tells regulators

• Charts - daily momentum studies conflict, 21-day Bollinger bands head lower

• 10 & 21-DMAs slide - weeklies remain bearish - a strong negative setup

• Targets a test of this week's 1.2100 low then the 1.2038 Oct 2023 low

• Last Friday's 1.2322 high, then the key 1.2414 21 DMA are first resistance

• A close above the 1.2414 21-DMA would suggest further gains
Andy

(Andrew Spencer is a Reuters market analyst. The views expressed are his own.)

• Specs hunting for stops took USD/JPY to 154.98 after today's Tokyo fix

• The market has since bounced back above 155.00 on good bids in the area

• Some of the bids on massive $2.1 bln in options expiries at strike today

• Market likely to remain heavy on easier US yields, BOJ hike speculation

• More support below at 154.64 ascending 55-HMA

• Resistance around 155.50, site of $958 mln option expiries today too

• Descending hourly Ichimoku kijun at 155.75 above

• Related , for more click on [FXBUZ]

USD/JPY hourly:

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

• -0.05% after closing off 0.05% with the USD down 0.1%, and GBP/JPY off 0.9%

• UK inflation slowed, 10yr gilt fell 6bp 4.677%, and off 16 bp this week

• Thursday's inflation data, price-action will be welcomed by Fin Min Reeves

• UK retail sales will be closely watched in London - RTRS poll +0.4% m/m

• Charts - daily momentum studies conflict, 21-day Bollinger bands head lower

• 5, 10 & 21-DMAs slide - weeklies remain bearish - a strong negative setup

• Targets a test of this week's 1.2100 low then the 1.2038 Oct 2023 low

• Last Friday's 1.2322 high, then the key 1.2413 21 DMA are first resistance

• A close above the 1.2413 21-DMA would be a positive signal
Andy

(Andrew Spencer is a Reuters market analyst. The views expressed are his own.)

• Steady - closed +0.15% with the USD off 0.1%, as UST yields eased

• Strong yen capped USD - BOJ hike hopes fuelled repatriation - EUR/JPY -0.8%

• French PM Bayrou survived a no-confidence vote, though many obstacles remain

• Charts - positive daily momentum studies, 21-day Bollinger bands ease

• 5, 10 & 21-DMAs coil, weekly moving averages fall - downtrend has stalled

• Wednesday's 1.0354 top then last week's 1.0437 high are initial resistance

• 1.0195 0.618% of 2022/2023 rise then Monday's 1.0177 base are first supports

• Bulls need a close above last week's 1.0437 high to get excited

• 1.0300 4.517 BLN Jan 17th strikes a likely magnet in Asia
Andy

(Andrew Spencer is a Reuters market analyst. The views expressed are his own.)

Synopsis:

TD highlights the ongoing USD strength, supported by growth, inflation momentum, and favorable carry. They recommend long USD positions against several G10 and EM currencies while favoring BRL/MXN in EM.

Key Points:

• USD Strength Outlook:

  • TD’s quant/macro framework (MRSI) remains bullish on USD against G10 currencies, even as positioning and short-term valuations appear stretched.
  • Growth and inflation momentum favor the USD, further supported by attractive carry.
  • TD’s global regime indicator reinforces a bullish USD environment, driven by slowing growth in the rest of the world (ROW).

• Key FX Recommendations:

  • G10 Currencies:
    • Long USD vs EUR, CAD, GBP, AUD, KRW, and CNH.
    • Expectation for the Bloomberg Dollar Index (BDXY) to retest 2022 highs.
  • Emerging Markets (EM):
    • Favor long BRL/MXN exposure.

Conclusion:

TD emphasizes trading USD strength as market fundamentals shift in its favor. The supportive setup reflects robust growth and inflation trends in the US compared to the ROW, with tactical opportunities identified across G10 and EM currencies.

• AUD/USD opens 0.3% lower despite drop in U.S. yields as JPY strength weighs

• U.S. yields decline as Fed's Waller says 3 or 4 rate cuts possible this year

• AUD rally to 1-week 0.6248 high Thu quickly fades as AUD/JPY sales weigh

• AUD/JPY down 1.1% as JPY gains broadly on talk of BOJ rate hike next week

• Focus turns to China data Fri; Q4 GDP and Dec monthly activity data due

• Trump's Presidential inauguration Monday also key event

• Chances of RBA Feb rate cut at 71%, likely to cap AUD recovery attempts

• Buoyant commodity prices support; copper rallies to 5-week high

• Resistance 0.6230, 0.6250-60, support 0.6190-95, 0.6175

• Thursday range 0.6192-0.6248
The Fed at the Presidential handoff:

(Krishna Kumar is a Reuters market analyst. The views expressed are his own.)

• USD/JPY slides as Trsy yields slip following dovish Fed Waller comments

• Waller said falling U.S. inflation may allow Fed cuts sooner and faster

• Pair is down for a second day, setting a 155.11- 156.53 EBS range

• Momentum shifts in favor of bears, drop below 155 tests some long positions

• Vol levels are subdued, gamma in demand ahead of Trump inauguration Monday

• Supp: 154.97 Fibo of Dec to Jan rise, 154.87 Dec. 18 high, 154.45 Dec 19 low

• Resist: 157.05 Dec. 25, Jan. 14 low, 157.37 21-DMA and 157.80 Dec 19 high

• Increased expectations of a BOJ Jan. hike buoys yen broadly

• EUR/JPY steadies after setting 159.69 1-mo. low as fwds pts narrow

• GBP/JPY is guided toward the key 190 support level

• MOF weekly investment flow data due Friday
yen

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