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Aug 14 - 11:00 AM
USD: Could Direct FX intervention Be On The Cards & Would It Ever Succeed? - Credit Agricole
First appeared on eFXplus on Aug 14 - 09:08 AM

Credit Agricole Research discusses a possible scenario of a US direct intervention in the FX markets to weaken the USD.

An FX intervention to cheapen USD may succeed in our view only if it not sterilized, that is, if it results in growing US money supply. The extra cash can spill over into extra demand for exports and worsen the US external imbalances, weakening USD on a more sustainable basis...

Higher US rates could in turn encourage foreign investment flows into USD, negating the impact of the Fed’s intervention. In addition, any unilateral FX intervention will most likely violate the recent G20 agreement to prevent any form of currency manipulation and even trigger a global currency war with foreign central banks trying to debase their currencies

A global currency war could ultimately encourage renewed foreign inflows into USD, which remains the most liquid reserve currency, offering superior returns and offering unrivalled access to funding. This is a war that President Trump is likely to lose," CACIB argues. 

Crédit Agricole Research/Market Commentary
Aug 14 - 09:48 AM
USD: S/T Upside Risk Vs CHF, JPY But Overall Contagion From Lira Crisis Relatively Modest - MUFG
First appeared on eFXplus on Aug 13 - 07:02 PM

MUFG Research discusses the USD outlook in  light of the ongoing Turkish Lora crisis.

"The macro-economic knock-on impact of a now possible recession in Turkey is likely to be small. Based on Eurostat trade data, we calculate that EU exports to Turkey accounted for a mere 1.5% of total EU exports. But the continued obvious reluctance of the Turkish authorities to tighten monetary policy will likely leave the lira vulnerable to further selling. Contagion is now more apparent although still relatively modest with the Russian rouble and South African rand the two most caught up in the EM space.

While we expect overall contagion to remain relatively modest, short-term risks point to further dollar upside in the coming days. The Swiss franc and the yen will continue to out-perform in current financial market conditions," MUFG argues. 

BTMU Research/Market Commentary
Aug 14 - 07:24 AM
USD/JPY - COMMENT-USD/JPY Bears Could Be Losing Their Grip
First appeared on eFXplus on Aug 14 - 05:30 AM

A tough call given Monday's turmoil, but the yen might be ripe for a retrace soon, and the technical picture is throwing up some reversal potential to support this argument.
Daily USD/JPY price, according to EBS, shows three consecutive hammer candles, long lower wicks with tight open and closes near the top of the day's range.
Monday's bull signal was the strongest of the three and confirmation so far on Tuesday suggests risk is building for a short-term reversal.
In terms of a USD/JPY target, it would probably pay not to be too greedy.
A run to 111.64 possible, 50 percent of the 113.18 July 19 top to 110.11 Aug 13 drop.
The 112.15 high from Aug.
1 might prove a level too far.
Risk markets calmer early Tuesday, but TRY, ZAR and MXN still very much at risk.
The causes of TRY losses remain, and uncertainty surrounding ZAR's domestic outlook mean it would not take much to push flows back towards the yen.
If stability holds into Wednesday, the recovery potential could improve.

USD/JPY Daily Candle Chart: Click here

Thomson Reuters IFR Markets
Aug 14 - 06:12 AM
GBP/USD - Drops From Intra-Day High On UK Earnings Data Miss
First appeared on eFXplus on Aug 14 - 04:55 AM
  • GBP/USD jumped to 1.2827 on unexpected decline in UK ILO jobless rate
  • 4.0 pct vs 4.2 pct f/c, lowest level since 1975 nL9N0MN00B
  • 1.2778 = ensuing low, courtesy of UK earnings miss. 2.4 pct vs 2.5 pct f/c
  • Cable rose to 1.2818 and then retreated to 1.2789 ahead of the UK data
  • EUR/GBP dropped to 0.88965 on the back of the UK ILO jobless rate surprise
  • 0.88965 is 76.4 pct of 0.8855 (Aug 2 low) to 0.9030 (recent 10-month high)

GBPUSD: Click here

Thomson Reuters IFR Markets
Aug 14 - 05:00 AM
EUR/USD - Some Questions Now Asked Of The Recent Bear Run
First appeared on eFXplus on Aug 14 - 03:10 AM
  • Looks to be ripe for a larger adjustment off Monday's and 2018's 1.1365 low
  • Above 1.1433 could open up a bigger retrace of the 1.1619-1.1365 drop
  • We offer 1.1470 and if filled will set tight stop-reverse abv 1.1535 10DMA
  • Monday action bounced off the 200WMA: Key now 100WMA just above at 1.1466
  • All about today's close and longer-term moving averages
  • Monthly action still very much with the bears: now below 21MMA, 1.1559

EUR/USD Trader:

EUR/USD Daily Candle Chart: Click here

Thomson Reuters IFR Markets
Aug 14 - 03:48 AM
USD/JPY - Consecutive Hammer Candles Warn Of S/t Trend Change
First appeared on eFXplus on Aug 14 - 02:35 AM
  • A third consecutive daily hammer candle Mon (bullish)
  • Strong confirmation so far Tues eroding the short to medium-term bear trend
  • Stochs confirming price pick up but momentum remains skewed to bear side
  • Today's close key and above 110.95 Mon high could be significant
  • Looking at the potential for a larger retrace of the 112.15 to 110.11 drop
  • We stand aside and await stronger reversal indications

USD/JPY Trader:

USD/JPY Daily Candle Chart: Click here

Thomson Reuters IFR Markets
Aug 14 - 02:36 AM
AUD/USD - Supported As Weak China Data Means More Stimulus
First appeared on eFXplus on Aug 13 - 10:35 PM
  • AUD/USD edging higher despite China monthly data weaker than expected
  • China stats bureau says infrastructure spending to pick up in H2
  • Increased spending underpins AUD through higher commodity demand
  • AUD also supported by muted reaction in Asia EM to Turkey turmoil
  • AUD/USD resistance and sellers around former support at 0.7300/10

aud/usd Click here

Thomson Reuters IFR Markets
Aug 14 - 01:24 AM
EUR/USD: Downside Risk Unlikely To Evaporate N-Term Even If Turkey CB Takes Bold Moves - Danske
First appeared on eFXplus on Aug 13 - 04:45 PM

Danske Research discusses EUR/USD outlook in light of the possible impact of the ongoing Turkish Lira crisis.

"Even in the event of a bold move from the central bank such as capital controls or a significant rate rise, we still doubt that the pressure on EUR/USD will evaporate near term: more fundamental TRY vulnerabilities (and in turn for EUR) have now been exposed, Italy fiscal risks linger for EUR, and the trade war issue remains a USD positive near term.

Furthermore, all this takes place in an environment of the Fed tightening policy both balance sheet and rate wise, which should keep USD bid for some time still.

Key technical levels have been broken on the downside in EUR/USD and a key level to watch as low as 1.1119," Danske argues.

Danske Research/Market Commentary
Aug 14 - 12:12 AM
AUD/USD - No Reaction To Softer Than Expected China Data
First appeared on eFXplus on Aug 13 - 10:10 PM
  • AUD/USD unchanged around 0.7270/75 after China data weaker than expected
  • Retail Sales July +8.8% Y/Y vs expectations of +9.1%; IP 6.0% vs 6.3% exp
  • Softer data despite China fiscal efforts to boost economy
  • It is likely the heightening US/China trade tensions impacting data
  • Reaction in China stocks & EM markets key, as well as impact on commodities
  • Lack of AUD/USD reaction reflects less contagion fear and market short AUD

Thomson Reuters IFR Markets
Aug 13 - 11:00 PM
GBP/USD - Bears In Control - Next Stop 1.2589 June 2017 Base
First appeared on eFXplus on Aug 13 - 09:00 PM
  • Flat early after closing -0.1%, with an inside day, amid Turkey led risk off
  • No fresh Brexit news, but bearish GBP analysis dominates nL5N1V20G7
  • Neutral momentum studies, 5, 10 & 21 daily & weekly MAs trend south
  • Strong bearish setup targets a test of 1.2589 June 2017 base
  • London 1.2731 low then Friday's 1.2723 trend & 2018 low first support
  • NY 1.2791 high then 1.2803 5 DMA, which has capped, initial resistance

gbp aug 14 Click here

Thomson Reuters IFR Markets
Aug 13 - 09:48 PM
AUD/USD - Risk Off Weighs - AUD/JPY Trends South For 79.30
First appeared on eFXplus on Aug 13 - 07:30 PM
  • AUD & AUD/JPY flat pre Tokyo after closing -0.3% & -0.5% respectively
  • AUD/JPY is a bellwether for risk & Turkish contagion fears dominate
  • No significant data today, so focus on TRY, steady at 6.9400, & news wires
  • 5, 10 & 21 AUD/JPY DMAs trend south, as will weekly's on a close here
  • Fresh 79.95 trend low yesterday opens the door to 79.30, 61.8% 2016/17 rise
  • NY 80.09/80.84 range is initial AUD/JPY support/resistance

auj aug 14 Click here

Thomson Reuters IFR Markets
Aug 13 - 08:36 PM
AUD/USD - Steadies At Lower Levels Ahead Of China Data
First appeared on eFXplus on Aug 13 - 06:35 PM
  • Consolidating between 0.7250/0.7300 as market assesses Turkey crisis
  • Growing view that contagion might be limited limiting risk sell-off
  • China in focus with IP and Retails Sales out later this morning
  • If recent China fiscal stimulus supports data it could underpin AUD
  • Support formed at 0.7250 while former support at 0.7310 now resistance

aud/usd Click here

Thomson Reuters IFR Markets
Aug 13 - 05:00 PM
EUR/USD: Could Test 1.10 On Further Lira Contagion; Room For More Shorts To Build - SocGen
First appeared on eFXplus on Aug 13 - 01:55 PM

Societe Generale Cross Asset Strategy Research discusses EUR/USD near-term outlook and thinks that the EUR is vulnerable to a further sharp sell-off on further contagion from the Turkish Lira crisis.

"The Lira is down 28% against the dollar so far this month. For some G10 context, the pound fell by just 11% in September 1992, though the Lira fell by 30% in February 2001 (with a formal devaluation) and lost half its value over the course of the year. A year when the rand lost 37%. Both are vulnerable to international portfolio flows drying up," SocGen notes. 

"Two further issues are worth attention. The first is the risk that the Lira's woes take EUR/USD to 1.10 or so. And the second, related, is that the global landscape is different now because US inflation is edging higher and the Fed has more work to do, limiting the scope to poor oil on the market's troubled waters.

The danger to the euro comes from BTPs, 6bp higher this morning, as well as Turkey. Europe is obviously more vulnerable to shockwaves, economically and politically, than the US is. And while the big EUR long has been all but eradicated, the euro still lacks yield support and there is room for shorts to build. There's nothing to stop the current slide continuing this week and beyond," SocGen argues. 

Société Générale Research/Market Commentary
Aug 13 - 03:48 PM
USD/JPY - And Crosses Get Tech Help, But Risk Rebounds Iffy
First appeared on eFXplus on Aug 13 - 02:30 PM
  • USD/JPY bounces by Fibo, 30-d Bolli & 200-DMA props by 110
  • Some bet S-T EM-derisking/JPY buying apex may have been reached
  • Sub-55DMA (110.78) close would favor bears & 109.75 Cloud break
  • Offers by 111, 111.50 & $1.1b of 110 expiries Tues to weigh
  • EUR/JPY risk rebound attempt ended by 38.2% & 100-WMA by 126.80
  • Italy-EU/ECB policy schism risk adding to Turkish woes for EUR/JPY
  • 124.62 May low, 61.8% of '17-18' rise & 50% of '16'18 rise @123.51/41

Chart: Click here

Chart: Click here

Thomson Reuters IFR Markets
Aug 13 - 02:36 PM
USD/JPY - COMMENT-USD/JPY's Risk Rebound Sets Up A Fade Near 111.50
First appeared on eFXplus on Aug 13 - 11:05 AM

Though USD/JPY and JPY cross bounces are possible into Wednesday and Thursday, perhaps with decent U.S. retail sales Wednesday, selling into last week's highs and the 30-DMA by 111.50 offers good risk/reward with another 110 support test likely afterward.
USD/JPY ran sell stops under 110.50 after opening the week below the 55-DMA at 110.77, but prices rebounded from 110.11 on technical and options supports, plus profit-taking on EM-led derisking flows.
JPY fell on rumors the U.S. and Turkey came to an agreement on the release of an American pastor, since denied by the U.S. embassy in Ankara, and after USD/ZAR's nearly 10 percent overnight surge to two-year highs was completely retraced.
A close above the 55-DMA is needed to suggest the supports by 110, which include the 61.8 percent Fib of the May-July rise, 30-day Bolli, daily cloud base and 100-DMA at 110.05-109.74, will hold near-term, but much depends on whether the Turkish situation stabilizes, USD/CNY holds below the crucial 7 level and Treasury yields can rebound as the weight of global derisking bids is lifted.

Chart: Click here

Chart: Click here

Chart: Click here

Thomson Reuters IFR Markets
Aug 13 - 01:24 PM
JPY: Japanese Investors' Foreign Assets & FX Exposure Is Significant - Credit Agricole
First appeared on eFXplus on Aug 13 - 12:00 PM

Credit Agricole CIB Research discusses JPY outlook in term of Japanese investors' foreign holdings which could indicate the currencies at most risk against the JPY in case of another bout of risk-off conditions.

"Japanese investors have been big buyers of foreign assets so far this financial year, according to Japan MoF data . Indeed, since the beginning of Abenomics, which began a push by Japanese asset managers to invest offshore in order to earn higher returns, this year has seen the most aggressive buying of foreign equities and bonds by asset managers. The latter has been significantly paired back in recent months, however, to be about in line with the median. So, Japanese investor exposure to foreign assets is significant. 

In terms of the by country breakdown of foreign bond holdings, accumulating flows since the beginning of Abenomics, over 60% of their holdings are in USDs and over 20% in EURs, according to BoJ data. The next most largest holding is ‘others’ at 8% and includes many EM markets. AUD holdings are 5% and CAD and GBP holdings are just 1%," CACIB notes. 

Crédit Agricole Research/Market Commentary
Aug 13 - 12:12 PM
EUR/USD - COMMENT-Turkish Exposure Should Keep EUR/USD Capped
First appeared on eFXplus on Aug 13 - 10:10 AM

EUR/USD hit another trend low due to ongoing Turkish lira weakness and faces continued downward pressure as long as the government in Ankara fails to ease market concerns. EUR/USD will likely remain heavy as euro zone bank exposure to Turkey is becoming a larger issue.
Default rates on euro-denominated loans made in Turkey by Spanish and Italian banks is increasing as lira weakness persists.
Growing default risk has sent Spanish and Italian government bond yields higher which in turn has widened spreads versus Germany.
That spread widening helped pressure EUR/USD lower.
Lira weakness likely has the ECB closely eyeing the situation.
Increased uncertainty over euro zone bank stability could temper the ECB's already cautious approach to rate hikes.
Any push back in hike forecasts would deepen bear pressure on EUR/USD.
Techs suggest lower levels as well.
Breaking the 50 percent Fib of the 2017-18 rally and neckline of the head and shoulders top would suggest runs towards 1.10 and 1.05 are possible.

chart: Click here

Thomson Reuters IFR Markets
Aug 13 - 11:00 AM
AUD/USD: Aggressive Downside Targets Ahead Pending Staying Below 0.7330/50 On A Weekly Close - NAB
First appeared on eFXplus on Aug 13 - 09:22 AM

NAB discusses AUD/USD technical outlook and flags a bearish setup underway targeting a move towards 0.7175 ahead of 0.6850.

"Last week’s break and close below the MT trend channel support at 0.7330/50, a level that held for almost two months, is further confirmation of this evolving downtrend bias.

While weekly closes remain below 0.7330/50 we are extremely comfortable holding more aggressive downside targets. We target 0.7175 ahead of 0.6850 in 1-3 months," NAB argues. 

NAB Research/Market Commentary
Aug 13 - 07:24 AM
EUR/GBP - Drops Towards One-Week Low Amid Turkish Turmoil
First appeared on eFXplus on Aug 13 - 05:05 AM
  • Cross down to threaten 0.8907 (early Asia one-week low) amid Turkish turmoil
  • Turkey CDS default insurance costs surge nS8N1S000A nS8N1S000A
  • Banks in euro zone are more exposed to Turkey than UK banks nL5N1V41FN
  • EUR/GBP scaled 10-month peak of 0.9030 on Aug 9, day before TRY collapsed
  • Ascent to 0.9030 was fuelled by fears of a "no-deal Brexit" nL5N1UX3C2
  • IMM speculators upped gross GBP shorts by 24 pct week to Aug 7 nL1N1V11O0

EURGBP: Click here

Thomson Reuters IFR Markets
Aug 13 - 06:12 AM
USD/JPY - Building For First Sub-55DMA Close Since April
First appeared on eFXplus on Aug 13 - 04:00 AM
  • Another bearish jolt and price breaks into its daily cloud
  • Failed to close below 55DMA Frid but potential for a sub-110.77 cls Monday
  • Now targeting the converged 200DMA and 30DMA lower Bollinger at 109.98
  • Cloud base and 100DMA just behind at 109.75 and 109.74
  • Daily stochs are flattening near o/s but bear momentum increasing
  • Weekly action could lead bears with a price inside a falling weekly cloud

USD/JPY Trader:

USD/JPY Daily Chart: Click here

Thomson Reuters IFR Markets
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