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AUD/USD: Further rate cuts priced in for April?


FXStreet (Guatemala) - AUD/USD is currently trading at 0.7776 with a high of 0.7842 and a low of 0.7772.

AUD/USD is suffering to the downside and has lost the 0.78 handle with a move from 0.7820 resistance area. However, whether there is much more room to the downside at this stage, with the majority of the market that feels the RBA will be making further moves may have made their own moves already and a cut in April could have already been priced in.

Analysts at Westpac Banking Corporaton explained that in the RBA's statement, it was told there that, “Further easing of policy may be appropriate”, while rates were kept steady at this meeting, “for the time being”. Their analysts observes that this phrase has been used 8 times over the past 5 years, with a change in rates being delivered within 2 months on all 8 occasions.

It was also noted that RBA’s Lowe conceded that the Aussie is now a lot closer to fair value than it has been for some years. "Risks still seem to the downside for AUD in the month ahead but we switch back to neutral on the week."

Technically, however, Karen Jones at Commerzbank, explained that the AUD/USD remains capped by its downtrend at 0.7883 and for now it will maintain a negative bias. "The market failed at this downtrend last week and charted an outside day to the downside which suggests that we are likely to see the resumption of downside pressure."








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Mar 05,2015
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USD/JPY pressuring 120.00 – FXStreet


FXStreet (Barcelona) - Valeria Bednarik, Chief Analyst at FXStreet, gives the technical outlook for USD/JPY, expecting the pair to remain in consolidation mode ahead of tomorrow’s US employment figures.

Key Quotes

“The USD/JPY pair reached a daily high of 120.39 before the news, reversing its intraday gains and now pressuring the 120.00 figure.”

“The 1 hour chart shows that indicators turned lower from overbought levels, but that the price remains well above its 100 and 200 SMAs.”

“The price also stands above a daily descendant trend line coming from the multi-year high reached last year at 121.84, now offering support around 119.90”

“In the 4 hours chart, the technical indicators lost upward potential above their mid-lines, not giving too much clues on what's next on the pair.”

“The most likely scenario is some consolidation around the current levels, ahead of Friday's US employment figures.”

“Support levels: 119.90 119.40 119.10”

“Resistance levels: 120.45 120.90 121.35”







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Mar 05,2015
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Core Inflation is still low – Draghi


FXStreet (Mumbai) - The European Central Bank President responded to queries on inflation by stating that the core inflation would stay low and sees the output gap closing gradually by 2017.

With regards to the impact of sliding oil prices, he stated that the stimulus program has damped the second-round deflationary effects of weak oil prices.







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Mar 05,2015
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ECB Draghi reiterates QE program is open ended


FXStreet (Mumbai) - The European Central Bank President Mario Draghi stressed the fact that the bank’s QE program is open ended - as he stated readiness to continue with the monthly EUR 60 billion asset purchases beyond September 2016.

However, Draghi also stated that the bank cannot print money to buy government bonds. When questioned about the bonds with negative yields, the President reiterated the bank’s readiness to buy buy negative-yielding bonds up to the deposit rate.







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Mar 05,2015
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USD/JPY deflates from highs


FXStreet (Edinburgh) - The greenback is losing the grip now, pushing USD/JPY back to the area of 120.20 after hitting intraday highs beyond 120.40.

USD/JPY a tad lower on US data

The pair is leaving the region of session highs after Initial Claims to 320K in the week ended on February 20th vs. 295K expected and 313K from the previous week. Further data showed Unit Labour Costs expanding 4.1% during the fourth quarter while Non-farm Productivity contracted 2.2% during the same period.

Next on tap will be US Factory Orders, with consensus expecting an expansion of 0.2% on a month to January.

USD/JPY key levels

At the moment the pair is advancing 0.47% at 120.28 with the next hurdle at 120.48 (high Feb.11) ahead of 120.68 (high Jan.5). On the downside, a break below 119.47 (low Mar.4) would aim for 119.38 (low Mar.3) and then 119.17 (21-d MA).






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Mar 05,2015
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BoEs might hike rates despite low inflation, August likely Danske


FXStreet (Barcelona) - Mikael Olai Milhøj, Analyst at Danske Bank, explains that the BoE might hike rates in August, but risks also tilted towards a later hike in Q3 or Q4, but expects the central bank to hike irrespective of the inflation remaining low.

Key Quotes

As expected, the Monetary Policy Committee (MPC) just announced that it voted to maintain the Bank Rate and the stock of asset purchases at 0.50% and GBP375bn, respectively.

We still expect the first hike to arrive in August but stress that risks are tilted towards a hike later in Q3 or possibly in Q4.

There are several reasons for our somewhat dovish view. Firstly, the UK recovery remains on track and we expect solid growth both this year and next, supported by the low commodity prices, positive real wage growth and increasing growth in Europe.

Secondly, the unemployment rate is currently at 5.7% and is approaching the Bank of Englands estimated medium-term equilibrium unemployment rate at 5.5%, implying that the slack in the labour market is diminishing. In the Inflation Report from February, the Bank of England estimated that slack is around 0.5% of GDP.

Thirdly, both wage growth and core inflation are increasing, implying no deflationary tendencies.

Fourthly, the MPC recognises that the very low inflation is due to temporary factors that should drop out at the end of this year, implying that inflation could increase sharply.

As the MPC recognises that monetary policy works with a lag, we expect it to hike despite low inflation if the medium-term outlook calls for a tighter monetary policy.





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Mar 05,2015
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Goodbye Pound; GBP/USD breaks below 1.5300


FXStreet (San Francisco) - The British Pound extended its collapse against the US dollar beyond the 1.5300 level as the GBP/USD completed a 70-pip decline in the last few hours from 1.5360 to trade at fresh lows since Feb 12 at 1.5280.

Currently, GBP/USD is trading at 1.5285, down 0.52% on the day, having posted a daily high at 1.5375 and low at 1.5280. The hourly FXStreet OB/OS Index is showing oversold conditions, alongside the FXStreet Trend Index which is slightly bearish.

GBP/USD levels

If the pair consolidates levels below 1.5300, it will find supports at 1.5280, 1.5260 and 1.5220. To the upside, resistances are at 1.5300, 1.5320 and 1.5350.







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Mar 04,2015
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EUR/USD hits fresh 11-year lows


FXStreet (Córdoba) - EUR/USD came under renewed pressure at the beginning of the American session and printed fresh 11-year lows.

After showing little interest in US ADP private employment figures, EUR/USD faced selling interest and broke below the low scored on Jan 26 and fell to its lowest level since Sept 2003 at 1.1080 so far.

EUR/USD technical levels

At time of writing, EUR/USD is trading at the 1.1090 zone, recording a 0.75% loss on the day, with immediate supports lining up 1.1045 (Sep 8 2003 low) and 1.1000 (psychological level). Meanwhile, resistances on bounces are seen at 1.1185 (daily high) 1.1217 (Mar 3 high) and 1.1244 (Feb 27 high).







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Mar 04,2015
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EUR/USD keeps lows around 1.1120


FXStreet (Edinburgh) - EUR/USD remains unmotivated and depressed in the vicinity of 1.1120, retracing the bullish attempt to 1.1130/40.

EUR/USD now looks to the ISM, ADP report

Disappointing results from the Services PMIs in the euro area during February sparked the current leg lower, which found some support in the 1.1120/15 band. The greenback extended its upside momentum today, ahead of the ADP Employment report and the key ISM Non-Manufacturing in the US economy. Market consensus expects the US private sector to have added 220K jobs during February, while the ISM is expected a tad lower at 56.5 vs. 56.7 previous.

EUR/USD levels to consider

As of writing the pair is retreating 0.47% at 1.1122 facing the next support at 1.1115 (low Mar.4) followed by 1.1098 (11-year low Jan.26) and finally 1.1047 (low Sep.8 2003). On the flip side, a breakout of 1.1218 (high Mar.3) would expose 1.1245 (high Feb.27) and then 1.1271 (10-d MA).







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Mar 04,2015
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Strong Eurozone retail sales confirm the positive growth momentum – Danske


FXStreet (Barcelona) - Pernille Bomholdt Nielsen, Senior Analyst at Danske Bank, reviews the Eurozone retail sales data release, and further forecasts euro-area GDP to print an above consensus figure at 1.5% in 2015, and private consumption to see a boost.

Key Quotes

“Euro area retail sales increased for a fourth month in a row in January, when they were up 1.1% m/m. The figure for December was revised slightly higher to 0.4% m/m from 0.3% m/m in the first release.”

“The increase in January was mainly driven by strong German retail sales, which showed an increase of 2.9% m/m, and sales in Portugal which were very strong, increasing 6.8% m/m. French retail sales were up 0.1% m/m”

“The fourth month in a row of higher retail sales confirms our view that the recovery in the euro area is gaining momentum and that it is driven by higher growth in private consumption. The strong start to private consumption in Q1 even suggests some upside risk to our forecast for private consumption.”

“We expect GDP growth to be 1.5% in 2015, which is above consensus of 1.2%.”






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Mar 04,2015
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USD/CAD carving a triangle formation, to break higher – BBH


FXStreet (Barcelona) - The Brown Brothers Harriman Team comment on the BoC rate cut expectations and further share the technical outlook for USD/CAD.

Key Quotes

“BOC Governor Poloz dampened expectations for a cut today with last week's reiteration that the January rate cut was an insurance policy to buy time.”

“Yesterday's somewhat firmer than expected Q4 GDP (2.4% vs. 2.0% consensus) should have solidified such expectations, but the details were less encouraging, keeping some wary of a cut today. Inventory accumulation accounted for 0.4 percentage points while the two sectors the central bank has identified as key for the recovery, investment and exports, both fell.”

“The US dollar has been carving out a large triangle pattern against the Canadian dollar since the end of January. The bottom of the triangle is flattish around CAD1.2450. The top is marked by a falling trend line that coming in now near CAD1.2620. We look for an eventual break higher.”






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Mar 04,2015
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EUR/SEK points to further downside – Danske Bank


FXStreet (Edinburgh) - Signe Roed-Frederiksen, Senior Analyst at Danske Bank, sees the Swedish krona strengthening further in the upcoming months.

Key Quotes

“In the Scandies the focus is on EUR/SEK, which continues to fall like a stone”.

“The market is currently re-pricing Sweden from an economy that has been lagging the global recovery and fighting deflation to one where the bottom has been reached”.

“Technically, EUR/SEK looks oversold but the momentum is strong. We are fundamentally bullish long-term on the SEK and are reviewing our short-term negative stance”.






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Mar 04,2015
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Stay long GBP FX volatility into UK elections BAML


FXStreet (Barcelona) - Strategists at BofA-Merrill Lynch, give the trade setup for GBP into the UK elections, suggesting to remain long GBP FX volatility using GBP/USD.

Key Quotes

we continue to believe the optimal way to trade the election is to be long GBP FX volatility.

In our GBP Year-Ahead report we expressed our preference to be long GBP volatility by owning EUR/GBP straddles. However, we were reluctant to do so at that point with volatility trading on a 10% handle.

The recent sell-off in G10 FX volatility more broadly provides us with an opportunity step into a trade. However, we have chosen to switch focus to GBP/USD given much of the nearterm event risk in the Euro Area (Greece, ECB QE) has now passed and perhaps with it, appetite to own EUR-based options.

In our view, owning GBP/USD straddles on a 7% handle looks good value

The Trade Own 2mth GBP/USD Straddles

Buy a 2mth GBP/USD at the money straddle (1.5370), which expires on 30 April for 2.37% in GBP terms.






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Mar 04,2015
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ECB: Virtual currencies could offer better service than traditional providers – Coindesk


FXStreet (Barcelona) - The CoinDesk Analysis Team, shares the key points of ECB’s report on digital currency, with the central bank describing the virtual currency system as “inherently unstable” but potentially transformative in the realm of payments.

Key Quotes

“The European Central Bank has released a new report on digital currency, describing it as “inherently unstable” but potentially transformative in the realm of payments.”

“The ECB outlined a number of areas in which digital currency development could broadly impact the traditional payments space, noting that defects in the remittance ecosystem could provide an opportunity for the technology to flourish in the long term.”

“The report's authors state that digital currencies like bitcoin, given their cost structures, make the technology a potentially attractive option for both domestic and international remittances.”

“While acknowledging the technological resources required to build such a network, the ECB notes: "...there is major room for improvement, especially in [the remittance] field, and hence a VCS could have the potential to offer a better service than traditional providers (banks, money remitters and informal remittance systems)”."

“The ECB goes on to say that a significant barrier to broader adoption for remittance is the lack of centralized protections for those who opt to use digital currencies.”








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Mar 03,2015
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EUR/USD: lower lows supporting additional declines – FXStreet


FXStreet (Barcelona) - The EUR/USD pair trades soft printing lower lows, with the 20 SMA limiting the upside for the pair, notes Valeria Bednarik, Chief Analyst at FXStreet, as she shares the technical outlook for the single currency.

Key Quotes

“The bearish trend ruling the EUR/USD pair, took another step this Tuesday, with the pair falling down to 1.1154, a couple of pips below its previous low, whilst the upside was limited by selling interest around the 1.1210 level.”

“Earlier in the day German Retail Sales surged 5.3% yearly basis, supporting the short lived spike to the mentioned daily high."

“As the US session starts, the pair trades below its 20 SMA in the 1 hour chart, while the technical indicators aim higher below their midlines, reflecting the latest bounce from the daily low, but far from suggesting a strong advance on the makes.”

“In the 4 hours chart, the price stands below a strongly bearish 20 SMA whilst the Momentum indicator lies flat below 100 and the RSI holds at 41, all of which should continue to keep the upside limited.”

“Support levels: 1.1140 1.1095 1.1050”

“Resistance levels: 1.1210 1.1250 1.1285”







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Mar 03,2015
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Brazil and Mexico showing sharp differences – TDS


FXStreet (Edinburgh) - Strategists at TD Securities exposed the opposing directions regarding the macro and FX environment in both countries.

Key Quotes

“We expect differentiation between Mexico and Brazil to become more pronounced as Brazil enters a recession on the back of difficult fundamentals and a substantial fiscal adjustment, and inflation remains high as the risk of energy rations looms large. Meanwhile, the recovery in Mexico appears to be underway and the country is poised to capitalize on stronger US growth via manufactured exports”.

“Despite the weaker currency, Banxico is likely to remain on hold until the Fed begins hiking in the second half. In Brazil, fiscal policy will be supportive of the BCB’s goals, and we expect the Copom will leave rates elevated for a prolonged period of time, rather than looking to cut in the face of weak growth or the first inflation print that suggests an inflection point and the first signs that inflation is on a declining path”.

“With the gradual unwinding of the BCB swaps program and poor growth prospects, we expect BRL to depreciate over the course of the year. In Mexico, we expect MXN to appreciate over the course of the year, benefitting from stronger US growth, eventual hikes from Banxico, and FDI inflows towards the end of the year. However, we recognize that MXN volatility will remain high”.







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Mar 03,2015
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USD/CAD may rise to 1.31 in Q3 BAML


FXStreet (Barcelona) - Ian Gordon of BofA-Merrill Lynch, forecasts USD/CAD to rise to 1.31 in Q3 before falling slightly to 1.30 by 2015-end, viewing oil prices as the primary driver for this bearish view.

Key Quotes

We see USD-CAD rising to 1.31 in Q3 before ending the year at 1.30.

We continue to believe CAD will remain under pressure as oil prices will likely fall further (based on BofAML forecasts), and the risk management approach of the BoC pushes it in the direction of an easing bias.

Contrasted with increasing risks of a June Fed rate hike, policy differentials should also pressure the currency.







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Mar 03,2015
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EUR/USD remains above 1.1200 on US data


FXStreet (Edinburgh) - EUR/USD manages to keep the trade above the 1.1200 handle on Monday, following the results from the US data releases.

EUR/USD around 1.1220

The pair remained apathetic after US Personal Spending contracted more than expected 0.2% in January vs. 0.1% initially forecasted; Personal Income also disappointed investors, gaining 0.3% during the same period, below 0.4% expected albeit matching December’s reading. Further data showed the inflation measured by the Personal Consumption Expenditures rising 0.1% MoM while Core PCE rose above expected 1.3 on a year to January.

EUR/USD levels to consider

At the moment the pair is up 0.23% at 1.1216 with the initial hurdle at 1.1245 (high Feb.27) followed by 1.1317 (10-d MA) and finally 1.1345 (21-d MA). On the downside, a breach below 1.1100 (psychological level) would open the door to 1.1098 (11-year low Jan.26) and then 1.1000 (psychological level).






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Mar 02,2015
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GBP/USD weakens with fall in UK Gilt yields


FXStreet (Mumbai) - The British Pound weakened due to weakness in the UK Gilt yields, taking the GBP/USD down to 1.5378 levels. The pair failed to sustain above 1.54 levels despite the UK manufacturing PMI in February rose to a seven month high.

GBP/USD: Bond yields spread favors USD

The Pound weakened as the yield spread between the UK 10-year yield and the US 10-year yield is in favor of the US dollar. The 10-year Treasury yield in the US is trading 1 basis point higher at 2.012%, while the UK 10-year Gilt yield is down 3.1 basis points to 1.746%. Moreover, the weakness in the Gilt yield contradicts the data released today, that showed manufacturing PMI at 54.1.

The bond yield spread may tilt further in the favor of the USD if the ISM manufacturing index and personal spending and income data in the US beats the market expectations.

GBP/USD Technical Levels

The pair currently trades at 1.5384; down 0.35%. The immediate support is seen at 1.5342 and 1.5318 levels. On the flip side, resistance is seen at 1.5408 and 1.5447 (100-DMA) levels.





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Mar 02,2015
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CFTC: USD longs consolidation at their recent highs - Rabobank


FXStreet (Barcelona) - The Rabobank Team reviews the IMM Net Speculators’ Positioning data as at 24 February 2014.

Key Quotes

“Long USD positions increased modestly last week. They appear to be consolidating off their recent highs but still at very elevated levels.”

“EUR shorts fell for the third consecutive week although they remain substantial. News that Greece has agreed to a bailout extension with its creditors in addition to some better Eurozone data releases has lent the EUR some support. That said, the start of the ECB’s QE programme could pressure the EUR in March."

“For the fifth consecutive week, net GBP shorts edged lower. Pre-election uncertainty remains a negative sterling factor. However, the fact that UK bonds still offer better yield relative to many European alternatives coupled with assurances from BoE Governor Carney that the Bank will look through disinflation pressures (on the basis that low commodity prices is good for growth), is lending the pound support.”

“Net JPY shorts edged lower for a sixth week and are now less than half the size of their December highs. Any recovery in BoJ easing hopes could again undermine the JPY.”

“AUD net shorts edged pushed higher. They are holding at their highest level since Jan 2014. Net CADs shorts increased to their highest levels since April 2014.”

“CHF net shorts appear to have settled at moderately negative levels after January’s SNB’s surprise policy decision.”





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Mar 02,2015
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Gold awaits US data


FXStreet (Mumbai) - Gold prices are trading steady just above the 100-DMA located at USD 1215.54/Oz levels, ahead of the US personal income and spending data followed by the ISM manufacturing number.

Gold: Strong US data could weaken prices

The yellow metal could fall below 100-DMA if the personal spending in February enters positive territory after a 0.3% contraction seen in January. On similar lines, a better-than-expected ISM manufacturing figure in February could weigh on the yellow metal.

In the meantime, the slight decline of 0.1% in the USD index is supporting the metal. The negative action in the European equities also helps the safe haven metal.

Gold Technical Levels

The metal currently trades at USD 1216.60/Oz; up 0.29%. The immediate resistance is seen at at 1219.5, above which prices could re-test the daily high of 1223.1. On the flip side, support is seen at 1215.46, under which losses could be extended to 1211.76 (5-DMA).





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Mar 02,2015
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US NFP this Friday to raise the prospect of a Fed rate hike BTMU


FXStreet (Barcelona) - According to Derek Halpenny, European Head of GMR at Bank of Tokyo-Mitsubishi UFJ, Fridays NFP will likely come out stronger and raise the prospect of a rate hike by the Fed, and further adds that a delay in the rate hike will not undermine USD strength, as global easing will keep the dollar supported.

Key Quotes

On Friday, the NFP data is likely to confirm another solid month of job gains that will leave open the prospect of the Federal Reserve raising the federal funds rate for the first time since 2006.

One key area of the report will of course be the growth in average earnings. The 0.5% gain last month is expected to be followed by a 0.2% gain and our internal estimate based on other measures of labour market spare capacity continue to point to an acceleration in annual wage growth toward 3.0% in the second half of the year.

Wages and Salaries in the Employment Cost Index report is showing a pick-up is underway with the annualised growth rate in the second half of last year at 2.5%.

With gasoline and energy prices lower, the boost to real incomes will be key for supporting personal consumption and giving the Fed the confidence to believe economic growth has become more sustainable.

The employment reports are always important but the next few reports will be crucial in determining whether market rates have to adjust sharply higher or the FOMC has to adjust its message to the markets on the timing of the first rate increase.

Crucially though, while a delay may undermine the dollar, the dollar will remain supported by the much more active easing taking place internationally.






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Mar 02,2015
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