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EUR / USD
GBP / USD
USD / JPY
USD / CAD
AUD / USD
NZD / USD
USD / CHF
AUD / JPY
AUD / NZD
EUR / CHF
EUR / GBP
EUR / JPY
GBP / JPY
By Christopher Romano  —  Feb 23 - 01:15 PM
  • NY opened near 1.0825, pair then hit a session high 1.0840 on EBS

  • Sellers emerged, 1.0812 was hit, pair neared flat late in the session

  • Pair's gains aided by wider DE-US spreads US2DE2=RR, EUR/JPY drop

  • Equity ESv1, gold XAU= gains & USD/CNH slip from high limited downside

  • Techs indicate investor indecision; daily & monthly doji candles in place

  • EUR/USD above 10- & 21-DMAs but below 200-DMA add to muddied tech signals

  • Investors await US Q4 GDP, Feb. PCE, claims reports for directional cues

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Feb 23 - 11:50 AM

Synopsis:

HSBC highlights critical levels for EUR/USD and EUR/GBP as the market anticipates the European Central Bank's (ECB) meeting in March. For EUR/USD, the 1.07 mark has emerged as a significant support point throughout February, expected to hold unless the ECB alters its communication tone. A steadfast approach from the ECB could see EUR/USD staying within a range, potentially reaching up to 1.0930. Should the 1.07 support level be breached, the market might quickly aim for 1.05. In the case of EUR/GBP, an ECB shift towards a more dovish stance could lead to a renewed test of the 0.85 level.

Key Points:

  • EUR/USD Stability: The 1.07 level serves as crucial support, with potential upward movement capped at 1.0930 in the absence of significant ECB language changes.

  • EUR/USD Downside Risk: A break below 1.07 could swiftly shift market focus towards the 1.05 target.

  • EUR/GBP Outlook: A dovish turn from the ECB might trigger an attempt to breach the 0.85 mark.

Conclusion:

Market participants are closely monitoring the ECB's upcoming March meeting, with specific attention to its impact on EUR/USD and EUR/GBP. The current technical setup suggests significant support and resistance levels, which could define the trading ranges for these pairs based on the ECB's communicated stance.

Source:
HSBC Research/Market Commentary
By Christopher Romano  —  Feb 23 - 10:05 AM

EUR/USD traded positive and above its 200-DMA on Friday as investors aren't panicking despite some bearish influences from the Fed and yield spreads.

The latest rhetoric from the Fed indicates the central bank will remain patient when it comes to cutting rates.

Fed Governor Christopher Waller said he wants to see if the recent inflation rise is just a bump in the road, and, therefore, he sees no need to rush rate cuts.

Fed Governor Lisa Cook said she would like to have greater confidence inflation is converging on 2% before beginning cuts.

Philly Fed President Patrick Harker said he's eying the start of rate cuts some time in the second half of 2024.

Meanwhile, Goldman Sachs analysts adjusted their expectations and no longer expect the Fed's first rate cut in May.

The rhetoric, and altered rate cut expectations, helped German-U.S.
2-year spreads US2DE2=RR, which EUR/USD is correlated with, to widen.

Despite those factors, EUR/USD longs are not running for the exits in a market that still remains positioned net-long the euro.
Thus, the pair's resiliency in the face of bearish influences may be considered a bullish signal.

In any event, EUR/USD longs are likely waiting for U.S. February PCE and payroll reports before they decide what their next move will be.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Feb 23 - 10:00 AM

Synopsis:

BofA anticipates the Reserve Bank of New Zealand (RBNZ) will maintain the official cash rate (OCR) at 5.5% during its meeting on February 28. Given recent economic indicators aligning with or underperforming against RBNZ forecasts, no significant shifts in guidance or OCR trajectory are expected. The RBNZ is likely to continue its hawkish stance, underscoring a commitment to sustaining high interest rates for an extended period.

Key Insights:

  • RBNZ's Hawkish Outlook: Despite recent economic data, the RBNZ's hawkish communication is expected to persist, indicating a prolonged period of high interest rates.

  • NZDUSD Trading Strategy: BofA views the NZDUSD pair positively, buoyed by the broader trend of high-beta G10 currency outperformance. The shift in 3-month option skew towards calls and a reduction in put costs bolster this outlook, suggesting potential upward movements for the NZD.

  • Considerations and Alternatives: While optimistic about NZDUSD, BofA advises caution due to possible adjustments in rates markets that might align more closely with their economists' predictions, potentially dampening the NZD's strength. In this context, a long position in AUD is deemed more resistant to such macroeconomic uncertainties.

Conclusion:

As the RBNZ meeting approaches, BofA's analysis points to a steady OCR and a continuation of the central bank's hawkish rhetoric. Investors are encouraged to look favorably upon NZDUSD, with adjustments for potential market shifts, and consider AUD as a safer alternative amidst macroeconomic fluctuations.

Source:
BofA Global Research
By eFXdata  —  Feb 23 - 09:14 AM

Synopsis:

Credit Agricole explores the attractiveness of FX carry trades by evaluating short-term returns adjusted for hedging costs. Utilizing the 3-month implied rate differential and 3-month ATM volatility as metrics, the analysis identifies the most favorable G10 carry trades. Current insights reveal short positions in JPY against USD, GBP, and NZD, alongside long positions in GBP/CHF, as the top choices for carry trade strategies in the present market environment.

Key Insights:

  • Carry Trade Appeal: The evaluation of carry trades involves assessing short-term potential returns against the costs associated with hedging, factoring in implied volatility and the relative pricing of risk reversals.

  • Optimal Trades Identified: The analysis pinpoints short JPY versus USD, GBP, and NZD, as well as long GBP/CHF positions, as the most attractive G10 carry trades based on the ratio between the 3-month implied rate differential and 3-month ATM volatility.

Conclusion:

Credit Agricole's assessment offers a strategic perspective on identifying high-potential carry trades within the G10 currencies. By focusing on specific currency pairings, investors can navigate the current market dynamics more effectively, leveraging short JPY positions against select currencies and exploring long opportunities in GBP/CHF.

Source:
Crédit Agricole Research/Market Commentary
Feb 23 - 08:55 AM

AUD/USD - Bearish Influences Ignored

By Christopher Romano  —  Feb 23 - 07:10 AM
  • AUD/USD rallied 0.6550-0.6580 overnight, NY opened near 0.6565, up +0.14%

  • Pair up despite some US yield US2YT=RR gains, USD/CNH rally to 7.2142 (D3)

  • Near flat equities ESv1, gold XAU= drop did not deter AUD/USD bulls

  • US$ weakness versus most major ccys, AUD/JPY gains helped buoy AUD/USD

  • Techs lean bullish; RSIs rising, long legged doji in place for February

  • Pair's hold above the 10- & 21-DMAs reinforces the bullish signals

  • US Jan. New home sales, Feb. Dallas Fed mfg business index are data risks

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Martin Miller  —  Feb 23 - 06:15 AM
  • Yen sinks as currency traders keep short and carry on nL2N3F80GF

  • USD/JPY has seen a 150.39-150.77 range, on Friday, EBS data shows

  • There is scope for much bigger gain above the 151 psychological level

  • Sustained trading well above a broken 149.17 Fibo bullish nL2N3F739C

  • 149.17 Fibo is a 76.4% retrace of the (Nov-Dec) 151.92-140.27 (EBS) drop

  • USD/JPY and EUR/JPY pairs currently have a strong positive correlation

Source:
Refinitiv IFR Research/Market Commentary
By Justin Mcqueen  —  Feb 23 - 05:30 AM
  • AUD/USD upside beginning to peter out ahead of 0.66

  • Fed pushback and firm US data continues to favour USD higher

  • Fitch says China rate cut impact is limited nFWN3F8071

  • Failure to close above 200DMA (0.6564) will be a worry for AUD

  • Near-term support resides at 0.6527 (200HMA) and 0.6500

  • CNH drift lower will also back shorts

  • Westpac sees lowest dividend flow related support since 2021

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  Feb 23 - 03:40 AM
  • Data driven volatility and a EUR/USD shake out Thurs

  • German Feb manufacturing PMI clear below 46.1 f/c at 42.3

  • IFO early Friday focus: bus climate exp. 85.5 vs 85.2: 0900GMT

  • No significant U.S. data, stocks likely lead risk appetite and the USD

  • EUR closed back below the 200DMA, 1.0828: nudges back above early Frid

  • Long upper candle shadow Thurs shouldn't be ignored

  • However, the sharp drop from 50DMA at 1.0887 keeps up-move healthy

  • Feb. 29 1.0932-37 cloud twist in the bullish mix: twists can attract

  • Risk of a bearish resumption but for now EUR/USD looks constructive

    For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  Feb 23 - 02:40 AM
  • Bearish key day reversal and engulfing line Thursday

  • Both signals need confirmation but have still damaged the recent bull run

  • Support at the 10DMA intact, today at 0.8545

  • bullish cross over, 10DMA over 21DMA also holding

  • Weekly action still capped by the 10WMA, currently 0.8583

  • Last week's hammer candle (bullish) struggling for confirmation

  • Mixed signals keep us side lined for now

    For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Martin Miller  —  Feb 23 - 02:30 AM
  • USD/JPY has scope for bigger gains to test 2023/2022 151.92/94 peaks

  • That after remaining above broken 149.17 Fibo for eleven days in a row

  • 149.17 Fibo is a 76.4% retrace of the (Nov-Dec) 151.92-140.27 (EBS) drop

  • Fourteen-day momentum remains positive, reinforcing the overall bull market

  • As does the positive alignment of the daily tenkan and kijun lines

  • EUR/JPY has seen a 162.82-163.07 range, on Friday, EBS data shows

  • USD/JPY Trader TGM2336. Bid at 150.05. Previous update nL2N3F70Q0

Source:
Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  Feb 23 - 02:10 AM
  • New recent range high, 1.2710, Thurs, but longer-term range intact

  • Long candle shadow Thurs but late rebound damaged our short play

  • Short from 1.2704 for 1.2535 with a trailing 1.2775 stop

  • All observed daily averages flat lining, reflecting range trade

  • Fourteen day momentum has spiked but RSI levelling off

  • Weekly action holding close to the cloud top, 1.2660

  • Close on the week will be pivotal for bears

    For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Feb 22 - 10:15 PM
  • Steady in the middle of a 1.0815-1.0831 range with the USD unchanged

  • German ifo Business climate leads the data, ECOFIN and Eurogroup meetings

  • Meetings suggest there will be plenty of headlines, unlikely market-moving

  • No significant U.S. data, so stocks likely lead risk appetite and the USD

  • Charts; conflicting daily momentum studies, 21-day Bollinger bands contract

  • Mixed 5, 10 & 21-day moving averages - signals show no significant bias

  • 1.0874 upper 21-day Bollinger band, Thursday's 1.0889 high first resistance

  • NY 1.0803 low and this week's 1.0762 low are the initial major supports

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Feb 22 - 04:30 PM

Synopsis:

ANZ outlines the significant shift in gold buying patterns among central banks, highlighting a move from developed market (DM) central banks being net sellers to a stabilization of holdings, and emerging market (EM) central banks significantly increasing their gold reserves.

Key Points:

  • DM Central Banks: Holding 57% of global official gold reserves, these banks transitioned from net sellers (offloading about 3,687 tons between 2000-2010) to stabilizing or increasing their gold holdings post-2010.
  • EM Central Banks: Now account for 30% of global official gold reserves, up from 19.7% before 2010, with notable buying spurts in 2015, 2018, and 2022.
  • Top EM Buyers: Russia, China, and Turkey lead, collectively adding 3,289 tons (62% of total purchases) since 2010. India, Uzbekistan, Kazakhstan, Poland, Thailand, and Iraq are also prominent buyers.
  • Russia's Buying Spree: Accelerated gold purchases in 2014 in response to sanctions, increasing gold's share in its reserves from 9% to 26% by the end of 2023, mostly between 2014-2019.
  • China's Gold Strategy: The People’s Bank of China (PBoC) embarked on sporadic gold-buying sprees over the last decade, with a notable uptick during the US-China trade war in early 2018 and continued buying since late-2022, taking its holdings to 2,235 tons by end-2023, which is 4.3% of its total reserves.
  • EM Central Banks' Gold Share: The share of gold in the foreign reserve holdings of EM central banks has been rising, notably after 2018, reaching 7.3%, nearly doubling over the last decade.

Conclusion:

The strategic shift towards gold among central banks, especially within EMs, signifies a diversification of foreign reserves and a hedge against geopolitical risks and economic uncertainties. This trend underscores gold's appeal relative to other reserve assets, particularly in light of recent global economic shocks and elevated geopolitical tensions.

Source:
ANZ Research/Market Commentary
By Krishna K  —  Feb 22 - 10:15 PM
  • AUD/USD rises 0.3% in Asia, boosted by Nvidia propelled risk rally

  • Shanghai Composite rises above key 3000 level before paring gains, supports

  • Underpinned by AUD/JPY demand despite closure of Japan markets Friday

  • Robust U.S. economic performance, elevated Treasury yields temper AUD rally

  • Fed officials Cook, Walker and Harker stress patience on rates

  • Asia range 0.6550-0.6574; resistance 0.6580, 6600-05, support 0.6540, 0.6520

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Feb 22 - 10:10 PM
  • +0.05% near the top of a 1.2650-1.2666 range with occasional interest on D3

  • UK consumer morale fell unexpectedly in February, GfK survey shows

  • UK government will be hoping that the upcoming budget will boost the morale

  • Charts; 5, 10 & 21-DMA's coil as the 21-day Bollinger bands contract

  • Positive daily momentum studies - the setup shows no significant bias

  • 1.2612 New York low and this week's 1.2579 base are initial supports

  • Thursday's 1.2710 high, then 1.2735 upper 21-day Bolli are first resistance

  • Close above the 1.2635 21-DMA targets 1.2735 upper 21-day Bollinger band

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Feb 22 - 07:05 PM
  • Steady after closing up 0.2%, supported by stronger PMIs and optimism

  • Stronger data dampens BoE rate cut hopes, BOEWATCH prices 24pts in August

  • No tier one UK data today so risk appetite and the U.S. Dollar to lead GBP

  • Charts; 5, 10 & 21-DMA's coil as the 21-day Bollinger bands contract

  • Positive daily momentum studies - the setup shows no significant bias

  • 1.2612 New York low and this week's 1.2579 base are initial supports

  • Thursday's 1.2710 high, then 1.2735 upper 21-day Bolli are first resistance

  • The close above well-tested 1.2635 21-DMA targets 1.2735 upper 21-day Bolli

    For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Krishna K  —  Feb 22 - 06:20 PM
  • USD/JPY bid after trading a 150.02-150.69 range and closing 0.15% higher Thu

  • Boosted by buoyant risk appetite as Nvidia fuels global stock records

  • Nikkei scores first record high since 1989 as foreigners return in force

  • Rising U.S. yields and 'higher for longer' Fed rates outlook support dollar

  • Strong U.S. economic data keeps Fed on track to delay rate cuts

  • Growing optimism of BOJ stimulus exit in April likely to slow USD RALLY

  • BOJ may end negative rates in Mar if strong wage hikes seen- ex-policymaker

  • Japan markets closed Fri for local holiday; thin market may exacerbate moves

  • Resistance 150.90-151.00, support 150.00-10, 149.70-75

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Feb 22 - 03:00 PM

Synopsis:

Danske Bank presents a bullish perspective on USD/CAD, noting the Canadian dollar's relative resilience this year compared to other commodity and cyclically sensitive currencies. The expectation of global monetary conditions tightening—as markets scale back rate cut expectations—should favor the USD and impact commodity-sensitive currencies like the CAD. USD/CAD is seen as a lower-beta counterpart to USD/NOK, with Danske maintaining a bullish stance over a 3-12 month horizon targeting 1.44 over the medium-term.

Key Insights:

  • Global Monetary Conditions: The anticipated tightening of global monetary policies, with reduced rate cut expectations for this year, is expected to bolster the USD while pressuring cyclically and commodity-sensitive currencies, including the CAD.

  • Bank of Canada's Policy Rate: Danske predicts the Bank of Canada will hold policy rates steady until June 2024, at which point the first rate cut is expected. Relative rates are considered a neutral factor for USD/CAD.

  • USD/CAD Movement: For USD/CAD to move significantly lower, it would require either a stronger global growth outlook than currently forecasted or a severe "hard landing" that necessitates a rapid easing of global monetary conditions, including a weaker USD.

Conclusion:

Danske Bank's analysis suggests that the CAD's performance this year has been stronger than other currencies in similar economic positions, but future global monetary policy adjustments are likely to support the USD and offer upside potential for USD/CAD. The trajectory of USD/CAD will closely follow global monetary policy shifts and the broader economic landscape.

Source:
Danske Research/Market Commentary
By Krishna K  —  Feb 22 - 05:20 PM
  • AUD/USD opens unchanged after rallying to a 3-week high of 0.6695 Thursday

  • Boosted by buoyant risk appetite as Nvidia fuels global stock records

  • Rising U.S. yields and a 'higher for longer' Fed rates outlook cap gains

  • Strong U.S. economic data keeps Fed on track to delay rate cuts

  • Asian stock markets and China house prices key for direction Friday

  • Japan markets closed Fri for local holiday; Thursday AUD range 0.6595-0.6540

  • Resistance 0.65750-80, 0.6600-05, support 0.6525-30, 0.6500-05

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Randolph Donney  —  Feb 22 - 01:55 PM
  • USD/JPY uptrend gained traction after six days of consolidation

  • Looks set to close above dn TL from 2024's 150.88 peak at 150.34

  • That would raise prospect of reaching 150.88

  • And if 150.88 is closed above, 2023's 151.92 high is likely

  • That high by 2022's 32-yr peak at 151.94, so a major hurdle

  • Bid lifted to just above Thur's 150.02 low and the tenkan now at 149.905

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Feb 22 - 01:30 PM

Synopsis:

ING's analysis identifies the Japanese Yen (JPY) as significantly undervalued, estimating it to be around 15% below its medium-term fair value. Despite this undervaluation, the yen's performance continues to be negatively impacted by the prevailing carry trade dynamics, with the yen serving as a primary funding currency in 2023. This trend aligns with the general performance pattern in the G10 currencies, where currencies offering higher risk-adjusted carry, such as the Canadian dollar and the British pound, have outperformed. The yen, in contrast, has depreciated by 6% against the dollar year-to-date.

Key Insights:

  • Carry Trade Dynamics: The current market environment, characterized by low volatility and favorable conditions for carry trades, is expected to persist, keeping the JPY under pressure.
  • Valuation and Trade Balance: Despite its weak spot value, the yen's valuation is bolstered by Japan's shifting trade balance. The transition from a JPY 2.5 trillion trade deficit during the 2022 energy shock to a trade surplus supports the currency's fundamental value.
  • Future Outlook: A meaningful recovery in the JPY's value against the USD may hinge on a broader downturn in the dollar's strength, anticipated towards the end of the second quarter. Any further rise in USD/JPY to the 155/160 range would present an opportunity for corporates to adjust their hedging strategies regarding USD receivables and JPY payables.

Conclusion:

While the JPY remains significantly undervalued based on ING's fair value models, its performance continues to be influenced by the carry trade, with the yen being a favored funding currency. The change in Japan's trade balance towards a surplus underpins the yen's fundamental valuation, despite its current weakness. Looking ahead, a shift in the broad dollar trend could catalyze a correction in USD/JPY, providing a strategic point for adjustments in corporate hedging activities.

Source:
ING Research/Market Commentary
By Christopher Romano  —  Feb 22 - 12:10 PM
  • EUR/USD rallied above the 55-DMA today and struck a 3-week high

  • Gains eroded however and the pair turned lower on the session

  • Daily RSI diverged on the high, daily inverted hammer candle formed

  • EUR/USD fell back below the 200-DMA; traded down -0.04% at Europe's close

  • The pair remains above the 10- & 21-DMAs however, gives longs some comfort

  • Daily chart also shows an inverse head & shoulders may be developing

  • The thinning daily cloud may eventually become magnetic, drive a rally

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  Feb 22 - 10:45 AM

Synopsis:

Goldman Sachs has adjusted its forecasts regarding the Bank of England's monetary policy and the UK's economic outlook. Anticipating a delay in the Bank of England's initial rate cut, Goldman Sachs now expects the first rate reduction to occur in June, a shift from the previous May prediction. This adjustment reflects recent data indicating that inflation persistence within the UK economy remains stronger than anticipated. Concurrently, Goldman Sachs has revised its 2024 UK GDP growth forecast downward to 0.4% year-on-year, from an initial estimate of 0.6%, attributing this adjustment to the weaker-than-expected GDP growth observed in the fourth quarter of 2023.

Key Insights:

  • BoE Rate Cut Delay: The revision of the first BoE rate cut to June stems from persistent inflation indicators outperforming earlier expectations, suggesting the BoE may adopt a more cautious approach before initiating rate cuts.
  • UK GDP Growth Downgrade: The downgrade in the 2024 GDP growth forecast to 0.4% year-on-year is a response to disappointing GDP performance in the last quarter of 2023, indicating a slower recovery trajectory for the UK economy.

Conclusion:

Goldman Sachs' adjustments in its monetary policy and economic growth forecasts for the UK reflect a cautious stance towards inflation persistence and economic performance. The delayed rate cut forecast underscores the challenges the Bank of England faces in balancing inflation control with economic stimulation. Additionally, the lowered GDP growth projection highlights the ongoing hurdles in the UK's economic recovery, necessitating a close watch on forthcoming economic indicators and BoE policy decisions.

Source:
Goldman Sachs Research/Market Commentary
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