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By Rob Howard  —  Dec 07 - 05:35 AM

Sterling may buy fewer bucks if UK house prices fall further through the winter months and Britain's industrial unrest persists, with 1.1150 (November's low) among GBP/USD bear targets.

UK house prices fell 2.3% month-on-month in November, the biggest drop for 14 years, according to data published by mortgage lender Halifax on Wednesday.

The fall coincides with the prospect of widespread industrial unrest in Britain the run-up to the Christmas holiday and into January as workers struggling with double-digit inflation resort to strike action to demand better pay.

UK inflation data due next Wednesday (Dec.
14) will show if CPI rose further from October's 41-year high of 11.1% last month.

Cable scaled a 24-week peak of 1.2345 at the start of this week, after building on gains from September's historic low of 1.0327 that was triggered by 'Trussonomics' - which had a chilling effect on the UK mortgage market.

Related comment: nL1N32V0LK

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Martin Miller  —  Dec 07 - 05:10 AM
  • USD/JPY has risen from 136.80 to 137.85, on Wednesday, according to EBS data

  • Spot's recovery from the 133.62 multi-week low persists

  • The recent "bear trap" puts the focus on the key 137.94 Fibo nL1N32X0HX

  • 137.94 Fibo is a 23.6% retrace of the 151.94 to 133.62 (EBS) drop

  • USD/JPY's rise could run out of steam ahead of the 137.94 Fibo

  • However, euro has a strong bias to rise against yen in December nL1N32V0KP

  • Japan's FX reserves up for first time in 4 months nL4N32X07Y

Refinitiv IFR Research/Market Commentary
By Richard Pace  —  Dec 07 - 03:55 AM
  • Bank of Canada expected to lift rates by another 0.5% at 15.00GMT Wednesday

  • Because demand and Inflation still hot. Decision followed by policy guidance

  • BoC now captured by overnight expiry options to flag high volatility premium

  • Overnight expiry USD/CAD implied volatility 11.5 to 16.0 since BoC capture

  • Premium/break-even for straddle from 66 to 91 C$ pips in either direction

  • Volatility buyers can profit if actual volatility outperforms implied

  • Broader 1-week options flash U.S. CPI warnings

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Martin Miller  —  Dec 07 - 02:40 AM
  • EUR/USD has slipped under 1.0453 Fibo, a daily close below would be bearish

  • 1.0453 Fibo is a 38.2% retrace of the 1.0223 to 1.0595 rise

  • That would increase the odds of a bigger drop through the 1.0409 Fibo

  • 1.0409 Fibo is a 50% retrace of the same 1.0223 to 1.0595 gain

  • It sees last week's close above the 1.0512 Fibo is a potential "bull trap"

  • 1.0512 Fibo is a 50% retrace of 1.1495 to 0.9528 (Feb to Sept) EBS drop

  • EUR/USD Trader TGM2334. Previous update nL1N32W0FW

Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  Dec 07 - 02:30 AM
  • EUR/GBP rose above the 100-DMA Tues and closed tight on the 0.8628 average

  • A Wed close above the 10 and 100DMAs would negate the MA bear cross

  • Key resistance at 0.8675, the Nov. 28 high

  • Daily negative momentum readings are fading and RSI is flat lining

  • A rising 200DMA line defines the shallow bull bias

  • The average is at 0.8545 today and is the main downside trigger

  • On balance a bull market but tighter ranges will cloud direction

    For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Martin Miller  —  Dec 07 - 02:15 AM
  • USD/JPY recently left a "bear trap" under 135.48 Fibo, bias shifts to upside

  • 135.48 Fibo is a 76.4% retrace of the 130.40-151.94 (Aug-Oct) EBS rise

  • Bear trap: set when a market breaks below a tech level but then reverses

  • We have been caught short at 136.99, our stop is above 137.94 Fibo

  • 137.94 Fibo is a 23.6% retrace of the 151.94 to 133.62 (EBS) drop

  • USD/JPY Trader TGM2336. Previous nL1N32W0EM

  • EUR/JPY range has been 143.21-144.03, on Wednesday, according to EBS prices

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Dec 06 - 11:00 PM
  • AUD/USD opened -0.16% at 0.6688 after Wall Street fall weighed nL1N32W2LQ

  • It was bid in early Asia on AUD cross buying and traded up to 0.6716

  • It then drifted back below 0.6700 and is around 0.6695 into the afternoon

  • AUD/USD trend higher showing signs of exhaustion as top forms around 0.6850

  • 5-day MA tilts lower and a close below 21-day MA (0.6697) signals trend over

  • A close below 0.6697 targets the 38.2 0f 0.6170/0.6851 at 0.6590

  • Resistance is at the 10-day MA at 0.6734 and break would ease pressure

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Dec 06 - 10:45 PM
  • EUR/USD opened -0.20% at 1.0473 after USD rallied on falling stocks nL1N32W2LQ

  • In a quiet Asian session it traded in a 1.0455/76 range

  • Heading into the afternoon it was settled around 1.0460

  • Investors remain cautious and this will underpin USD for now nL1N32X029

  • EUR/USD support is at the 10-day MA at 1.0438 and break will add to pressure

  • Key support is at 1.0355/65 where the 21-day and 200-day MAs converge

  • Resistance is at the June 27 high at 1.0615 with sellers ahead of 1.0600

  • EUR/USD may remain under pressure ahead of FOMC meeting next week

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Dec 06 - 10:25 PM

  • +0.1% with the U.S. dollar off 0.1%, in an overall low key Asian session

  • Sterling trades at the top of a 1.2122-1.2148 range with solid flow on D3

  • U.S., Britain launch energy partnership to initially boost LNG supplies

  • Positive news for the UK cost of living crisis and clean energy nL8N32W48M

  • Charts; daily momentum studies crest, 5, 10 & 21 day moving averages climb

  • 21 day Bollinger bands rise - positive setup while 1.1959 21 DMA holds

  • 1.2119 10 DMA under pressure, a base on the close for this move, key support

  • 1.2266 NY high then this week's 1.2345 trend high are initial resistance

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Dec 06 - 07:45 PM
  • Aus Q3 GDP came in slightly softer than expected, but no reaction in AUD/USD nAZN0TEQLT

  • AUD/USD trading around 0.6695 after closing US session at 0.6688

  • AUD/USD getting some light support from AUD/NZD demand in early Asia

  • AUD/USD trading around 21-day MA and a close below would signal end of trend higher

  • Resistance is at the 10-day MA at 0.6734 and Tuesday's 0.6744 high

  • It may struggle due to hawkish Fed expectations and global growth concerns

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Dec 06 - 07:15 PM

  • -0.05%, extending Tuesday's 0.25% fall, as global recession fears resurface

  • Large U.S. global banks expect U.S. economic growth to slow nL1N32W1ZR

  • ECB may face a long road to reach 2% inflation target nL4N32V2RV

  • Cautious outlooks for inflation control, global growth, support the USD

  • Charts; momentum studies crest, 5, 10 & 21 day moving averages edge higher

  • 21 day Bollinger bands contract - recent rise is losing momentum

  • Close below 1.0364 21 day moving average and 1.0357 200 DMA would be bearish

  • No significant close strikes for December 7

    For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Dec 06 - 06:20 PM
  • EUR/USD opens -0.20% after easing late US as Wall Street tumbled nL1N32W2KF] nL1N32W2LQ

  • Repeated fails above 1.0500 causing EUR/USD bulls to take pause

  • EUR/USD trending higher with the 5, 10 & 21-day MAs in bullish alignment

  • Support is at the 10-day MA at 1.0439 and break would warn a top is in place

  • Key support at 21-day MA at 1.0364 and break ends short-term trend higher

  • Sellers are tipped ahead of 1.0600 with resistance at June 27 high at 1.0615

  • EUR/USD may struggle to regain upward momentum ahead of FOMC next week

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Dec 06 - 03:15 PM

ING Research maintains a bullish bias on the USD in the near-term.

"The dollar has recovered some ground, mostly against the Japanese yen (which is the most sensitive to the Fed factor) and some high-beta currencies. We think USD/JPY could climb back above 140.00 in the run-up to the Federal Open Market Committee (FOMC) meeting next week, as markets take stock of strong jobs data and weigh a more hawkish outcome than previously expected," ING notes.

"We discussed yesterday how the dollar had fallen back to a neutral position versus G10 currencies. This means that a further drop in the dollar will need to see investors make a conviction call on an extended dollar bear trend as the room for long-squeezing has now shrunk significantly. We think such a call would be premature and expect a dollar recovery into year-end," ING adds. 

ING Research/Market Commentary
By John Noonan  —  Dec 06 - 05:30 PM
  • AUD/USD opens -0.16% after USD gained as recession fears hit risk assets nL1N32W2KF] nL1N32W2LQ

  • It closed at the ascending 21-day MA at 0.6688 - which rises to 0.6697 today

  • A close below the 21-day MA would signal end of short-term trend higher

  • The next support is at the 38.2 of the 0.6170/0.6851 move at 0.6590

  • Resistance is at the double-top around 0.6850 where sellers are tipped

  • Aus GDP today with expectations for +0.7% Q/Q - unlikely to be a market mover

  • AUD/USD looking vulnerable in short-term as recession talk weighs

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Randolph Donney  —  Dec 06 - 01:40 PM

The dollar index rose on Tuesday in risk-averse U.S. trading as investors remained rattled by the previous session's unexpectedly strong services ISM and its implications for Fed rate hikes, though gains in the U.S. currency might not last.

Traders are caught in a central bank vigil ahead of Fed, ECB and BOE meetings next week while also attempting to square up year-end positioning.

The index's 105.50 Monday highs held below Friday's peak, the 200-day moving average and daily tenkan at 105.59/63/645.
Near-term gains should be seen as a correction within the downtrend from September's 20-year peak that reversed the 29% pandemic recovery the Fed led with its rate hikes nL1N32W15K.

But further rate hikes Fed Chair Jerome Powell and others have signaled will be smaller following four straight 75bp rises caused the recession-warning 2-10-year Treasury yield curve to invert to new multi-decade lows at -81.7bp Tuesday.

Two-year bund-Treasury yields spreads retreated this week from Friday's least negative levels since June, while ECB chief economist Philip Lane said he thought the inflation peak was close.

But there is concern that the ECB's own forecasts indicate inflation remaining far above the 2% target for years nL8N32S34EnL1N32W0AB, as core inflation unexpectedly increased in November nL1N32Q0PX.

EUR/USD fell 0.1% as risk-off flows intensified in U.S. trading, favoring the haven dollar.

Risk-sensitive sterling weakened modestly after Tuesday's early high at 1.2266 again ran into sellers near August's high and the 50% Fibo of the 2021-22 downtrend.

USD/JPY was about flat after its rebound following the ISM non-manufacturing beat was capped by November's 137.50 low on EBS and the 61.8% Fibo of last week's slide.

As with EUR/USD, sterling and other pairs, this week's dollar rebound is a correction of last week's oversold slide and glossing over of decent payrolls data.

Next week's U.S. CPI, Fed, ECB and BoE are next event risk, with all three priced to hike 50bp.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Christopher Romano  —  Dec 06 - 01:40 PM
  • AUD/USD lifted in Europe's morning on US$ sales, NY opened near 0.6725

  • Lift extended & 10-DMA was pierced, 0.6744 hit but a slide then took hold

  • US$ firmed despite softer rates EDH3; USD/CNH slide from day's high halted

  • Equity ESv1, commodity HGv1 slides helped drive risk-off sentiment

  • US$, yen buys persisted; AUD/JPY neared 91.40, AUD/USD neared 0.6680

  • Techs are bearish; RSIs falling, daily & monthly inverted hammers in place

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Dec 06 - 01:00 PM

Societe Generale Research likes short USD/JPY exposure going into 2023 with a target at 1.10, and a stop at 140.

"It took USD/JPY only a handful of months to fall back to 100 after almost reaching 150 in the summer of 1998. The Asian crisis dragged it back up to 135 in early 2002, but it was back at 115 after a few months. More recently, the USD/JPY rally from 100 to 125 in 2H15 was completely reversed in 1H16," SocGen notes. 

"The stock of Japan’s foreign assets, and the need to manage FX hedge ratios, encourages these acute moves, and after the big USD/JPY rally seen since the end of 2020, a repeat is easy to imagine," SocGen adds.

Société Générale Research/Market Commentary
Dec 06 - 01:55 PM

AUD/USD - Rally Sellers Are Exposed

By Christopher Romano  —  Dec 06 - 12:15 PM
  • AUD/USD pierced the 10-DMA and neared the December 2 daily low

  • Sellers emerged however and soured risk help erode the early gains

  • AUD/USD trades slightly lower on the session now & techs lean bearish

  • Daily & monthly RSIs are falling, implies downside momentum in place

  • Daily gravestone doji, monthly inverted hammer reinforce bear signals

  • The 21-DMA & November 30 daily low are immediate supports

  • Break of those supports puts supports near 0.6635 & 0.6580 in focus

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Dec 06 - 11:45 AM

MUFG Research discusses AUD outlook after this week's RBA Policy decision to raise rates by 25bps.

"At today’s policy meeting, the RBA raised rates by a further 25bps taking the policy rate to 3.10% in line with expectations. The accompanying policy statement has been closely scrutinized to assess the RBA’s plans for rate hikes at the start of next year. The overall tone of the updated guidance is less hawkish as the RBA emphasizes that while it expects to raise rates further, “it is not on a pre-set course”," MUFG notes. 

"We expect the sharp global slowdown and easing inflation pressures will result in a lower peak and weigh on the Aussie at the start of next year before the re-opening of China’s economy provides more support for it to stage a sustained rebound as next year progresses," MUFG adds.

MUFG Research/Market Commentary
By Christopher Romano  —  Dec 06 - 10:10 AM

EUR/USD traded near flat on Tuesday as the dollar weakened broadly, and the inability to sustain the previous session's downward momentum should be a concern for shorts.

Investors may be looking past the U.S. data that pushed EUR/USD lower on Monday, focusing instead on the yield curve and potential for a less hawkish Fed in 2023.
The 3-month/10-year spread is at its most inverted in 41 years, and 2s-10s is near its most inverted since October 1981.

With inversions traditionally considered a warning of recession, investors may become increasingly focused on the likelihood that a downturn would alter the Fed's bias toward cutting.

JP Morgan CEO Jamie Dimon said a mild to more pronounced recession was likely ahead, and BofA's CEO said research predicted three quarters of mildly negative growth next year.

Italian-German 10-year spreads are tightening -- indicating uncertainty over Italian government finances could be abating.
Spreads are poised to break Nov.
24 tights, potentially underpinning the euro.

data risk looms with November PPI and CPI due before the Fed's Dec.
13-14 meeting.
Downside surprises would probably send U.S. rates and the dollar lower.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Dec 06 - 10:30 AM

Danske Research discusses EUR/USD outlook ahead of net week's US CPI report.

EUR/USD has trended higher the past 1-2 month with some brief setbacks. The strong ISM service release yesterday led to another set back from close to 1.06 and down below 1.05. The question now remains whether the market discounted too much negativity with respect to the US economy in EUR/USD or whether this set back proves to be short lived before the trend higher continues," Danske notes. 

"If inflation expectations are high in the University of Michigan survey due on Friday and if CPI inflation next week surprise, then we think the market would be willing to extend the drop in EUR/USD heading into the FOMC meeting," Danske adds. 

Danske Research/Market Commentary
By eFXdata  —  Dec 06 - 09:25 AM
TD Research discusses the USD bias into year-end.
"The USD stumbled again last week, reflecting the easing of FCI that accompanies the scaling down of Fed rate hikes. The feedback loop has seen a mix of a reduction of global tail risks, easing global inflation surprises, and hopes of peak central bank hawkishness all marinating to ease FCI and weaken the USD," TD notes.
"A shift in momentum signals could keep the USD on the back foot in the very short-term. Yet, USD downside looks contained ahead of November CPI and the Fed meeting. We like fading the rally in GBPUSD and see USDJPY retesting 140 before year-end.
We also see dovish risks for BoC this week and like USDNOK topside, especially if risk sentiment peaks," TD adds. 
TD Bank Research/Market Commentary
By Christopher Romano  —  Dec 06 - 07:10 AM
  • RBA hikes 25 bps & statement taken as slightly hawkish nL4N32V11G

  • US$ lower versus most major & most EM ccys; USD/CNH back below 7.0000

  • CommodityHGv1, equityESv1 bounces & US yield slip help buoy AUD/USD

  • AUD/USD rallied 0.6697-0.6737 overnight, NY opens near the overnight high

  • Techs are mixed; daily RSI rises, monthly falls; pair between 10- & 21-DMAs

  • US October trade balance is a data risk during NY hours

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Martin Miller  —  Dec 06 - 05:40 AM

The Swiss franc usually serves as refuge during market worries and December is typically a month for risk aversion.
USD/CHF has fallen in 15 of the past 22 Decembers, notably the December 2008 drop of 12%, according to EBS prices.

While USD/CHF's trend in December points to a market that has a tendency to fall, seasonal trends should not be considered in isolation, but when combined with other factors they can be a useful tool.

USD/CHF 14-week momentum is negative, reinforcing the overall bearish market structure.
Scope is for eventual losses through the 0.9289 Fibo, a 61.8% retrace of the 0.8759 to 1.0147 (2021-2022) EBS rise.

European shares fell on Tuesday, dragged down by financials and energy stocks, as strong U.S. services activity data spurred fears that the Federal Reserve could stick to its aggressive rate-hike approach.

If risk aversion intensifies, expect funds to flow into the safe-haven franc, that would increase the odds that USD/CHF closes in negative territory this month.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
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