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By Christopher Romano  —  Oct 05 - 01:40 PM
  • US rates EDH3 gains buoy US$ overnight, AUD/USD fell in Europe

  • NY opened near 0.6475, drop extended after US data nN9N2YW00CnAQN1V92KT

  • Falls in equities ESv1, commodities HGv1, AUD/JPY help weigh on AUD/USD

  • 0.6471 traded when buyers emerged; stocks & copper bounced, USD/CNH slid

  • AUD/USD climbed above the 200-HMA, neared 0.6845 late in the session

  • Techs mixed; long legged doji forms, daily RSI drops, consolidation persists

  • US weekly jobless claims, Sept. employment are looming key data risks

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Oct 05 - 01:30 PM

Barclays Research discusses its expectations for this week's September US jobs report on Friday. 

"The main release is the September employment report (Fri). We expect 250k in nonfarm payrolls, steady unemployment and participation rates, and average hourly earnings to move up 0.4% m/m (5.0% y/y)," Barclays notes. 

"A strong report could drive the market to fully price a 75bp rate hike in November, expectations of which had declined recently, and this would further support the dollar," Barclays adds. 

Barclays Research/Market Commentary
By Content Admin  —  Oct 05 - 11:40 AM
  • USD/JPY is rebounding toward 145 and Monday's 145.40 high

  • Rising Tsy yields vs stagnant JGB yields extend after ISM nN9N2YW00C

  • Rebound in the employment index key ahead of payrolls Friday

  • And after weak ISM Mon nN9N2YW007 & 10% Aug job openings drop nAQN1UT0O7

  • Fed views tight labor market as cushion for rate hikes to beat inflation

  • But pricing of peak Fed hikes has stalled recently near 4.5%

  • USD/JPY facing MoF intervention may need solid payrolls to push new peaks

  • The 145.90 EBS peak that prompted intervention is the main pivot point

  • A close above 145 would also be supportive of run at 1998's 147.64 peak

  • If U.S. data miss badly, the kijun, last at 142.09, will be key support

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Oct 05 - 10:45 AM

Danske Research discusses the scope of coordinated USD FX intervention.

"We still think the probability of broad based global FX intervention to weaken the USD is very low; close to zero percent by end-2022 and 10% by end-2023.  A necessary condition for coordinated G10 FX intervention is US supporting such action. As long as US inflation pressures are high, we do not expect such support," Danske notes. 

"We warn against regarding FX intervention as an appropriate tool at this stage. In our view recent FX moves are fundamentally justified, FX intervention would only increase market volatility and a weaker USD only adds inflation pressures. More autonomous economic policies suggest persistent elevated FX volatility," Danske adds.

Danske Research/Market Commentary
By Christopher Romano  —  Oct 05 - 09:50 AM

EUR/USD fell on Wednesday and was threatening to break the 21-day moving average, with risks remaining tilted to the downside unless U.S. data can counter the latest dismal German economic reports.

A big downside surprise in the August German trade balance nL8N31611J and a downward revision to July trade data -- extending its trend lower -- combined with downwardly revised September German PMI nZRN00593Y to heighten recession risks in the euro zone.

The prospect of recession could result in a less hawkish ECB stance, which has led investors to price in a lower terminal ECB rate since late September, a combination which should weigh on the euro.

EUR/USD bulls will need help from U.S. data if they expect to see gains.
The September jobs report is due Friday, and estimates call for payrolls growth to drop to 250,000 from 315,000.
A downside surprise, especially after the latest JOLTS report nL1N315178, would bolster views that the jobs market is weakening.

Investors could then push rates lower EDH3 in anticipation of a less hawkish Fed, potentially emboldening dollar bears and allowing EUR/USD to extend its recent rally.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Oct 05 - 09:30 AM

MUFG Research discusses its reaction to this week's RBNZ policy decision. 

"After yesterday’s dovish RBA policy surprise when they slowed the pace of rate hikes to 25bps, market participants were braced for a similar dovish surprise from the RBNZ today. However, the RBNZ delivered a hawkish policy surprise by revealing that they considered raising rates by an even larger 75bps today but in the end delivered the fifth consecutive 50bps hike. In light of the potential lagged tightening impact from previous rate hikes, the RBNZ felt that it was more appropriate to deliver another 50bps," MUFG notes. 

"Overall, the news that the RBNZ considered a larger hike today and their increased unease over the weaker New Zealand dollar are both offering more support for the kiwi in the near-term alongside the recent improvement in risk sentiment as market participants speculate over a dovish pivot from the Fed," MUFG adds. 

MUFG Research/Market Commentary
By eFXdata  —  Oct 05 - 08:53 AM

Credit Agricole CIB Research discusses the USD outlook and sees this week's incoming US data in the driver seat for USD near-term direction. 

"One the big themes in the FX markets so far this week has been the renewed reassessment of the prospects for aggressive Fed tightening in the coming months. Growing expectations that peak Fed hawkishness is behind us could explain the recent dip in UST yields and US rates. Furthermore, the US OIS curve signals that the markets are not expecting the Fed tightening cycle to peak at around 4.35% next year. This is down from 4.60% in the immediate aftermath of the September FOMC meeting," CACIB notes. 

"The key risk in our view is that the incoming US data – services ISM , jobless claims on Thursday and the NFP on Friday – could surprise to the upside, give US rates & yields a boost and put the latest rebound in risk appetite to the test. Equally, if the US data continues to underwhelm, the overbought and overvalued USD could continue to struggle as investors are looking for higher-yielding proxies," CACIB adds. 

Crédit Agricole Research/Market Commentary
By Rob Howard  —  Oct 05 - 06:50 AM
  • Cable hits 1.1363 (intra-day low) after extending south from 1.1432

  • 1.1432 was high following upward revision to UK service PMI nZRN00594K

  • Drop from 1.1432 influenced by rise in UST yields nL4N3161H7

  • 1.1380 was pre-UK service PMI low vs 1.1493 early London high nL1N3160IC

  • UK PM Truss pledges to steer Britain through 'stormy days' nL1N3160AY

  • 1.1333 (Monday's high) and 1.1300 (Tuesday's Ldn/NY low) are support levels

Refinitiv IFR Research/Market Commentary
By Rob Howard  —  Oct 05 - 06:25 AM
  • AUD/USD falls to 0.6461 as greenback benefits from higher UST yields

  • See: nL4N3161H7. 0.6461 = intra-day low (0.6522 was early Europe high)

  • Bids are tipped ahead of 0.6450 (0.6451 was Tuesday's post-RBA hike low)

  • AUD/NZD slid to two-week low of 1.1245 in Asia on hawkish RBNZ hike

  • See: nL1N316026. AUD/NZD was at 1.1415 into dovish RBA hike Tuesday

Refinitiv IFR Research/Market Commentary
By Rob Howard  —  Oct 05 - 04:45 AM
  • Cable rises to 1.1415 after UK Sept service PMI revised up to 50, from 49.2

  • See: nZRN00594K. Service sector is dominant segment of UK economy

  • 1.1380 was intra-day low shortly before UK PMI data, as stocks swooned

  • See: nL8N3161U9nL4N3161FM. GBP is risk-sensitive; USD is safe-haven

  • 1.1493 was three-week GBP/USD high at 0646 GMT nL1N3160CUnL1N3160H4

  • UK PM Truss to address Tory Party conference this morning (BST) nL1N3160AY

Refinitiv IFR Research/Market Commentary
By Jeremy Boulton  —  Oct 05 - 04:15 AM
  • Spanish service sector contracts in Sep PMI 48.5

  • Italian service sector also contracts in Sep PMI 48.8

  • Situation in Germany worsening, service PMI 45.0 from 45.4

  • Eurozone composite PMI 48.1 from 48.2

  • German trade data will definitely undermine EUR/USD nL1N3160E1

  • EUR/USD drops to 0.9937 in wake PMI's after testing near parity

Refinitiv IFR Research/Market Commentary
By Martin Miller  —  Oct 05 - 03:00 AM

Corrects headline to 2022

  • EUR/USD, on Tuesday, saw the second biggest daily rise of 2022

  • It closed above the 0.9942 Fibo, 61.8% of 1.0198 to 0.9528 (EBS) drop

  • That has shifted the overall bias back to the upside

  • Odds increase for a retest of the September 20 1.0051 high initially

  • Caution is advised, however, as fourteen-day momentum remains negative

  • EUR/USD Trader TGM2334. Previous update nL1N315098

Refinitiv IFR Research/Market Commentary
By Jeremy Boulton  —  Oct 05 - 02:50 AM
  • Oct 4 saw EUR/USD rise 0.9861-0.99995 EBS (large seller at parity)

  • Oct 5 EUR/USD trades 0.9960-0.9995

  • The 55-DMA is 1.0033 and daily Ichimoku cloud is 1.0066-1.0258

  • Daily cloud base 55-DMA have capped EUR/USD rallies throughout 2022

  • They influenced five major highs: 1.1185, 1.0787, 1.0615, 1.0369, 1.0198

  • Drops from those highs reached 1.0349, 1.0359, 0.9952, 0.9864 and 0.9528

  • It's may be wise to hedge the risk of another sell-off

  • A close over daily Ichimoku cloud be game changing

Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  Oct 05 - 02:00 AM
  • Short stop hit late Tuesday as sterling climbs to a 1.1490 recovery high

  • Minor pullback early Wed but bullish signals are building

  • 14-day momentum poised to flip positive but RSI stalling at 54

  • Main resistance at 1.1738 and 1.1826, Sept. 13 high and a 38.2% Fibo

  • To the downside 21 and 10DMAs, 1.1298 and 1.1095

  • We stand aside for now but will monitor bullish progress

    For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Oct 04 - 11:40 PM

  • -0.4%, near base of a 1.1416-1.1485 range, quiet on D3, leading USD higher

  • UK government seemingly in disarray at the party conference nL8N315480

  • Truss must convince the party and voters UK needs 'to do things differently'

  • Charts, positive daily momentum studies, 21 day Bollinger bands flat line

  • 5, 10 & 21 day moving averages base or rise - net positive setup

  • Sustained break of 1.1297 21 day moving average was a bullish signal

  • Targets a test of 1.1541 61.8% Aug/Sep fall and 1.1738 September top

  • Close below 1.1094 10 day moving average needed to end topside bias

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Oct 04 - 10:40 PM

The contrast between the more hawkish-than-expected Reserve Bank of New Zealand and the Reserve Bank of Australia's surprisingly dovish rate decision is likely to send the AUD/NZD cross lower in the week ahead.

The RBA scaled back their tightening efforts with a 25 basis-point hike on Tuesday, when there was a clear consensus they would hike 50 bps for the fifth straight meeting.

The RBNZ followed on Wednesday by delivering the forecast 50 bps increase, but revealed they debated a 75 bps hike.

The RBNZ statement and minutes were unambiguously hawkish, focussing on inflation pressures arising from a tight labour market - without highlighting downside risks to the economy, as some commentators had expected.

The Click here the risks of a weaker NZD, stating: "a lower New Zealand dollar, if sustained, poses further upside risk to inflation over the forecast horizon."

The RBA didn't mention the exchange rate in Wednesday's statement, which suggests to the market the central bank is not as concerned as its counterpart across the Tasman.

AUD/NZD trended higher through much of September, as the five, 10 and 21-day moving averages stayed in a bullish alignment and were tilting higher.
The trend stalled last week and ended Wednesday when the cross dived below the 21-DMA at 1.1304.

It is now testing the 50% retracement of the 1.0991-1.1496 move at 1.1244 and a break targets the 61.8 Fibonacci retracement at 1.1184. A test of the key 100-DMA support at 1.1120 is the objective of the current drop.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Oct 04 - 09:15 PM
  • RBNZ hiked cash rate 50 BPs to 3.50% and indicated a resolve to do more nAZN0LZ52X

  • Statement and minutes hawkish as RBNZ considered hiking 75 BPs today nS9N2UZ01Y

  • RBNZ relatively upbeat on economy and their focus in on capping inflation

  • NZD/USD is above 0.5770 - up from 0.5730/35 before the decision

  • Resistance is at the 21-day MA at 0.6865 and break would end downtrend

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  Oct 04 - 07:35 PM

  • -0.05% early after closing down 0.3% with the U.S. dollar broadly lower

  • The USD fell, but Treasury yields only edged lower, supporting USD/JPY

  • A seventh day of choppy consolidation below 145/146 BoJ intervention level

  • If UST yields continue to consolidate or ease, 145/146 a potential top

  • Charts; rising Kijun line held on BoJ intervention - pivotal 142.09 support

  • New York 144.94 high is first resistance then Monday's 145.40 peak

  • Late New York 143.90 low then 143.58 Tenkan line are initial supports

  • Broad 143.00-146.00 range viable this week unless there is major news

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By John Noonan  —  Oct 04 - 06:35 PM
  • EUR/USD opens +1.67% after USD eased on soft US JOLTS and falling US yields

  • Subtle dovish shift in Fed expectations led to heavy EUR/USD short-covering nL1N3151BI

  • It closed above 21-day MA (0.9897 - signalling end of short-term trend lower

  • The 21-day MA at 0.9897 is now support and break would ease upward pressure

  • A down-trend line drawn from Feb 10 at 1.0053 is key resistance

  • Option related selling around 1.0000 may cap rallies in Asia

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Krishna K  —  Oct 04 - 06:10 PM
  • USD/JPY on the defensive after declining 0.35% Tue on broad dollar weakness

  • Undermined by lower US yields as job openings drop sharply nL1N315178

  • Signs of a cooling of US labor market raises hopes of inflation subsiding

  • USD interim top forms as constant threat of Japan FX action limits rallies

  • Hawkish Fed expectation to limit downside; ISM non-mfg Wed, NFP Fri key

  • Below 143.80 (21-DMA) opens 143.20; resistance 144.40-50, 144.90-145.00

  • For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Content Admin  —  Oct 04 - 03:00 PM
  • USD/JPY fell back below the 10-DMA at 144.15 on Tuesday

  • Drop is being squeezed toward the rising 21-DMA at 143.75

  • Massively widened 21-day Bolli band spreads collapse targets 21-DMA next

  • Key supports are the tenkan and kijun lines, last at 143.10 and 141.97

  • A 145+ close is needed to resume the rise toward 1998's 147.64 peak

  • 145 was trend high prior to 145.90 peak and 100% Fibo off of Aug's base

  • Value bid above the tenkan in lieu of a 145+ close buy signal

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By Content Admin  —  Oct 04 - 01:40 PM
  • USD/JPY breached the 10-DMA prop at 144.16 after soft JOLTS data

  • First time below 10-DMA since qtr-end post-intervention rebound

  • Prices also unable to post a close above the pivotal 145 level

  • Broader USD risk-on weakness and MoF threat weigh

  • Possible yen repatriation after N. Korean missile launch over Japan

  • ISM non-mfg Wed, NFP Fri eyed after Fed hike pricing peaked in Sept.

  • The 21-DMA and tenkan are next props, last at 143.76/10

  • Good US data and a 145+ close are key to retesting 145.90 EBS peak

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
By eFXdata  —  Oct 04 - 01:30 PM

Barclays Research discusses its expectations for tonight's RBNZ policy meeting. 

"We expect the RBNZ (Wed) to hike its policy rate by 50bp to 3.50%, broadly in line with OIS market pricing of 52bp. The in-line rate hike should provide little boost to the currency, but RBNZ guidance and assessment of growth-inflation outlook should have a bigger impact on sentiment towards it. The relatively strong fiscal position should also boost the NZD, in our view, reinforced with the Treasury releasing government financial statements (Wed) and the Finance Minister speaking at an event (Thu)," Barclays notes. 

"Rate differentials moved in the NZD’s favor last week; 1y ahead RBNZ OIS climbed 14bp to 4.85%, while 10y NZGBs cheapened 12bp, in contrast to the move lower in Fed pricing and rally in UST," Barclays adds. 

Barclays Research/Market Commentary
By Randolph Donney  —  Oct 04 - 12:20 PM

EUR/USD rose 1.6% by New York midday on Tuesday, erasing all of its post-Fed meeting and UK-led risk-off losses, with parity nearby after weaker-than-forecast JOLTS nAQN1UT0O7 reinforced suspicions peak Fed hikes have already been priced in.

Previous EUR/USD corrections of its Fed-tightening led downtrend this year ran into a well-defined downtrend line from February and the 13-week moving average, now at 1.0070/37.

Rebounds within the downtrend since April have also been thwarted by the daily cloud base, currently at 1.0066 and set to flatten out next week by 1.0050.
A close above those hurdles after Friday's non-farm payrolls report could expand the recovery toward September's 1.0198 EBS high.

EUR/USD's rebound is largely corrective, catalyzed by the BoE's intervention to halt the meltdown in gilts, which ultimately tamed safe-haven dollar bids.

Key is whether the markets, having priced in peak Fed hikes just above 4.5% last week, will be affirmed or refuted by Wednesday's ISM services and Friday's jobs reports.

Big Treasury yield drops and October stock market gains fly in the face of the Fed's mantra of higher rates for longer to tame inflation nS0N30D03JnS0N30D03J.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary
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