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Key currency options


Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (14:00 GMT).


Here are the key options expiring today:


EUR/USD: $1.3150;


GBP/USD: $1.5450, $1.5500;


USD/JPY: 95.50 96.00 97.00 99.00;


AUD/USD: $0.9000, $0.9050, $0.9150, $0.9220;


USD/CAD: 1.0275.

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BNPP: sell GBP ahead of UK labor data


Strategists at BNP Paribas entered into a short GBP/USD targeting $1.5250. In their view, cable will lose ground on the back of the UK employment data on Wednesday.


"We expect another solid drop in the claimant count, but the unemployment rate is expected to rise to 8%," BNP projects.


"A firmer or even stable jobless rate should reinforce the perception that the rate is not yet trending towards the central bank’s threshold (unlike in the US), which should weigh on GBP", they add.


bnp-paribas-logo.png

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August 14: Asian session


asian1.jpg


The Dollar Index held a 3-day gain as encouraging figures released in the America on Tuesday increased expectations that the Fed will taper monetary stimulus in September. US data due tomorrow may show manufacturing in the New York region expanded at the fastest pace in 6 months and unemployment claims declined.


EUR/USD keeps testing support at $1.3260. Yesterday euro fell as low as $1.3232, but then closed at $1.3260. Demand for the single currency was supported before a report which may show the region’s GDP rose ending the longest recession (09:00 GMT). GBP/USD is little changed at $1.5440. Yesterday the pair spiked up to $1.5512, but failed to hold there. UK is to release unemployment data and the MPC meeting minutes (08:30 GMT).


USD/JPY closed above 98.00 yesterday after gaining more that 100 pips and is now trading in the 98.20 area. USD/CHF gained 70 pips yesterday and is trading on the upside at 0.9335 today. USD/CAD rose to 55-day MA at 1.0360.


AUD/USD is down for the third day in a row and is trading below $0.9100. NZD/USD rose to $0.7980, up from the low of Tuesday at $0.7934. New Zealand’s data brought a positive surprise: retail sales gained 1.7% (forecast: 1.4%), while core retail sales increased by 2.3% (forecast: 1.3%).

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Key currency options


Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (14:00 GMT).


Here are the key options expiring today:


EUR/USD: $1.3175;


GBP/USD: $1.5400, $1.5600;


USD/JPY: 97.45, 97.75, 97.85, 100.00;


AUD/USD: $0.9035, $0.9080, $0.9175, $0.9200;


EUR/GBP: 0.8620;


EUR/CHF: 1.2375;


EUR/JPY: 129.00.

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August 14: European session


GBP/USD


Cable jumped to $1.5500 as the negative GBP labor market forecasts didn't come true. Claimant count showed the biggest fall since May 2010. What's more, the previous reading was revised from -21.2K. Unemployment rate stayed unchanged.


As for the BoE minutes,


9-0 members voted to keep interest rates and QE on hold

8-1 members voted for forward guidance framework


britain.png


EUR/USD


Euro zone’s Q2 flash GDP rose by 0.3% q/q, beating the +0.2% estimate (prior: -0.2%). Indicator contracted by 0.7% y/y (estimate: -0.8% y/y, prior: -1.1%). EUR/USD stable around $1.3260.


eur%20gdp.png


Source: Forex Factory

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Trade signals from Danske Bank


EUR/USD: Waiting for signals, possibly sell


USD/JPY: Revised buy at 97.20 with an initial target of 98.78 and a stop at 96.86


GBP/USD: Stay long from $1.5435, with a target of $1.5616 and a stop at $1.5375


USD/CHF: Look to buy at 0.9290


AUD/USD: Buy at $0.9047, with a target of $0.9221 and a stop at $0.8996


USD/CAD: Stay short from 1.0345, with a target of 1.0170 and a stop at 1.0405

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BoA: USD/JPY will go up


Bank of America Merrill Lynch expects a long-term USD/JPY bullish trend to resume. The specialists recommend buying the greenback on the pullbacks down (declines should not breach 96.80/94.90) targeting 105.80/106.00, potentially 109.80. Note that triangle resistance at 99.70 may be sticky in the near term.


usdjpy.sdaily.png


Chart. Daily USD/JPY

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AUD/NZD: sell the rallies


AUD/NZD fell by 40 pips below 1.1400. New Zealand reported surprisingly good data today (retail sales gained 1.7% vs. 1.4% expected, while core retail sales increased by 2.3% vs. 1.3% expected). As for Australia, wage growth stayed at the slowest pace in more than 3 years.


Westpac recommends selling AUD/NZD on bounces due to the difference in the nations’ monetary policy: “The Reserve Bank of New Zealand is going to start tightening in March; the Reserve Bank of Australia is cutting rates.”


TD Securities points out that price signals are constructive on the weekly chart (two “hammer” like candle signals that point to a reversal which may be in process), but the broader trend remains lower and quite powerfully so, according to a range of trend momentum studies.


audnzd.sh4.png


Chart. H4 AUD/USD

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August 15: Asian session


asian1.jpg


US dollar weakened versus most of its counterparts as St. Louis Fed President James Bullard said yesterday policy makers should be careful in changing course based solely on their economic forecasts thus cautioning cautioned against excessive optimism over the economy. Economists predict a report today will show gains in US consumer prices slowed in July (12:30 GMT). Don’t miss the weekly report on the labor market, followed by regional gauges of the manufacturing sector – NY Empire State and Philly Fed (the latter is due at 14:00 GMT) indices.


EUR/USD recovered from $1.3250 to $1.3310, but then returned below $1.3300. No releases in the euro area today. French and Italian banks are closed for holidays. GBP/USD tested resistance line at $1.5540 and is now trading 20 pips below this level, at $1.5520. Pound’s on the upside for the second day before a report (08:30 GMT) that may show UK retail sales rose by 0.7% percent in July, from a 0.2% advance in the previous month.


USD/JPY has first strengthened from lows around 97.75 to touch 98.30, but touched a daily low of 97.60 on the news that both Japan’s chief cabinet secretary Suga and Japan’s Finance Minister Aso denied the fact that PM Abe made any instructions on a corporate tax cut.


AUD/USD found support at $0.9120 and strengthened to $0.9185 in the Asian trade. NZD/USD corrected slightly down after having reached a high of $0.8075 (highest since the end of July). New Zealand business manufacturing index rose to a record high of 59.5 in July (June reading revised up to 55.2). USD/CAD peaked at 1.0370 yesterday and slid to 1.0313 today. Canadian dollar benefited as the market’s sentiment improved on the news that the euro zone has finally emerged from recession.

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Key currency options


Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (14:00 GMT).


Here are the key options expiring today:


EUR/USD: $1.3140, $1.3250, $1.3305, $1.3330;


GBP/USD: $1.5425, $1.5515, $1.5545;


USD/JPY: 95.80, 96.00, 97.10, 98.10, 98.90;


USD/CHF: 0.9240;


AUD/USD: $0.9100, $0.9180;


USD/CAD: 1.0180;


EUR/GBP: 0.8550, 0.8640, 0.8650;


EUR/CHF: 1.2395;


EUR/JPY: 131.85.
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Trade signals from Danske Bank


EUR/USD: Short at $1.3275, with a target of $1.3203 and a stop at $1.3318


USD/JPY: Long at 97.90, with a target of 99.15 and a stop at 97.39


GBP/USD: Long from $1.5435, with a target of $1.5649 and a stop at $1.5415


USD/CHF: Long at 0.9325, with a target of 0.9395 and a stop at 0.9297


AUD/USD: Long at $0.9047, with a target of $0.9221 and a stop at $0.8996


USD/CAD: Short from 1.0345, with a target of 1.0170 and a stop at 1.0405

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GBP/USD extends growth


On Thursday British pound found support on better-than-expected July UK retail sales (+1.1% m/m vs. forecast +0.7% and June + 0.2%). The year-on-year reading came at 3.0% y/y vs. 2.5% consensus and beating previous 2.2% reading.


GBP/USD jumped to $1.5590, extending the upside and testing the levels above the $1.5575 resistance. However, the move was not strong enough to break above the $1.5600 hurdle.


We are ready to buy the cable on a break above $1.5600/10 area (May highs). Near-term support lies at $1.5550, $1.5520 and $1.5500/1.5490.


gbpusdh1.png


Chart. H1 GBP/USD

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EUR/GBP: negative picture


EUR/GBP slid today below the 100-day MA (0.8540) and the daily Ichimoku Cloud (0.8535). The picture looks quite negative. Euro is now testing yesterday’s low at 0.8527. A slide below this point might provoke a decline to 0.8485/70 and then possibly to 0.8450/00.


eurgbp.sdaily.png


Chart. Daily EUR/GBP

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USD/JPY: daily update


USD/JPY stalled yesterday at resistance in the 98.40/50 area. Today the pair is trading on the downside, though supported by the Ichimoku conversion line (red line), 50% Fibo at 97.65 and the middle of yesterday’s daily candle at 97.55. There’s also support at 97.40, 97.20 and 97.65.


The confusing news about Japanese tax reforms create uncertainty. All eyes are on US data due today at 12:30 and 14:00 GMT. In our view, the odds are that support holds and the greenback retests resistance at 98.50 and probably 98.75.


usdjpy.sdaily.png


Chart. Daily USD/JPY

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August 16: Asian session


asian1.jpg


On Thursday trading was quite volatile. The greenback initially strengthened on positive US data like lower unemployment claims, but then sharply weakened as the next bunch of figures (industrial production, New York and Philadelphia manufacturing indexes) came lower than expected. Today US dollar recovered a bit before reports forecast to show housing starts rebounded and consumer confidence increased to a 6-year high (12:30 GMT).


EUR/USD tested $1.3205 yesterday before jumping to $1.3362. The pair’s trading in the $1.3340 area at the moment of writing. The euro area will release inflation data today at 09:00 GMT which may show inflation is contained. In addition, reports due next week may indicate a pickup manufacturing and services expansion. GBP/USD jumped yesterday by about 140 pips to $1.5650. Today pound’s correcting to the $1.5600 area. USD/JPY recovered from a three-day low at 97.05 to 97.75. USD/CHF edged slightly higher to 0.9275 after the yesterday’s sharp dollar selloff.


AUD/USD slipped to $0.9150 after a test of $0.9180 earlier in Asia. NZD/USD dropped briefly below $0.8060 as Wellington in New Zealand was hit by a series of earthquakes. The New Zealand Stock has re-opened after temporarily closure. USD/CAD slid to levels just above 1.0300 yesterday and is correcting a bit up today. Watch Canadian retail sales at 12:30 GMT.

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Key currency options


Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (14:00 GMT).


Here are the key options expiring today:


USD/JPY: 97.00, 97.10, 97.50, 98.00, 98.10, 98.90, 99.00;


EUR/USD: $1.3200, $1.3250, $1.3270, $1.3300, $1.3395, $1.3400;


GBP/USD: $1.5400, $1.5500;


USD/CHF: 0.9360;


AUD/USD: $0.9100, $0.9105, $0.9150, $0.9160, $0.9165, $0.9200;


EUR/CHF: 1.2420, 1.2430, 1.2550;


EUR/JPY: 130.00;


GBP/JPY: 151.25.

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Trade signals from Danske Bank



EUR/USD: Buy at $1.3305 with a target of $1.3456 and a stop at $1.3255


USD/JPY: Sell at 97.90 with a target of 96.40 and a stop at 98.49


GBP/USD: Buy at $1.5617 with a target of $1.5753 and a stop at $1.5565


USD/CHF: Look to sell at 0.9320/30


AUD/USD: Long at $0.9090, with a target of $0.93201 and a stop at $0.9034


USD/CAD: Short from 1.0345, with a target of 1.0170 and a stop at 1.0405

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Morgan Stanley: buy USD/CHF


Strategists at Morgan Stanley recommend buying USD/CHF from 0.9290 with a target of 0.9700 and a stop at 0.9160.


"CHF is a cheap way to fund long USD positions. SNB Danthine’s comments earlier this week support our view that low Swiss rates and the SNB’s floor arelikely to remain in place for the foreseeable future", they say.


usdchfdaily.png


Chart. Daily USD/CHF
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Commerz: USD/JPY & AUD/USD view


USD/JPY


Commerzbank strategists expect USD/JPY to slide to the 93.75 support area in the coming weeks. In their view, the pair will remain under bearish pressure while the 99.97 level holds (4-month tren resistance).


usdjpydaily.png


Chart. Daily USD/JPY


AUD/USD


As for the Aussie, Commerz remains bearish and expects AUD/USD to retest $0.9040/9000 support zone (early and mid-July lows) in the near term. Longer-term downside target is seen at 0.8550 (50% retracement of the move up from 2008). Strategists will remain bearish below the $0.9390/9405 resistance (2011 low and 2009 high).


audusddaily.png


Chart. Daily AUD/USD

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August 19: Asian session


asian1.jpg


EUR/USD didn’t manage last week to reach August highs at $1.3400. Today the pair’s trading on the downside, though above $1.3300. Euro’s supported before German data this week (Tuesday and Thursday) that may show the currency bloc’s largest economy is gaining momentum. GBP/USD rose a bit to $1.5620 after opening the week with a gap down. Sterling is below Friday’s high at $1.5657. Britain released mixed data showing a monthly decline, but a yearly growth in house price.


USD/JPY is consolidating around 97.60. Yen fell earlier on data showing Japan’s trade deficit widened in July. USD/CHF is moving sideways below 0.9280.


AUD/USD reached 55-day MA at $0.9230. Australian dollar climbed amid speculation that the minutes tomorrow of the Reserve Bank’s last meeting will signal no hurry to reduce interest rates further. NZD/USD reached the top of the daily Ichimoku Cloud at $0.8120. USD/CAD is at 1.0330 after dipping to 1.0315 earlier today.


As for the greenback, the main theme will be the minutes of the Fed’s July policy meeting due later this week.
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Key currency options


Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (14:00 GMT).


Here are the key options expiring today:


EUR/USD: $1.3200, $1.3285, $1.3310, $1.3400, $1.3405;


GBP/USD: $1.5600, $1.5615, $1.5620, $1.5650, $1.5655, $1.5700;


USD/JPY: 96.80, 97.00, 97.50, 97.75, 98.00, 98.25, 99.25, 99.75;


USD/CHF: 0.9200, 0.9220, 0.9250, 0.9260;


AUD/USD: $0.9100;


USD/CAD: 1.0350, 1.0400;


EUR/GBP: 0.8550;


AUD/NZD: 1.1455.

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CFTC: USD longs fall for the 4th week


Here are the essentials of the latest Commitments of Traders (COT) report, released on August 16 by the Commodity Futures Trading Commission (CFTC) for a week ended on August 13.


The value of the dollar’s net long position declined from $21.62B on a week ended August 6 to $17.62B in a week ended August 13. Large speculators have been reducing long USD bets for the fourth consecutive week.


EUR. Market players were bullish on EUR for the second week, with net long contracts totaling 16K , up from 6K in the previous week.


eur.png


GBP. GBP net shorts slightly increased.


gbp.png


JPY. JPY net shorts declined by 6K.


jpy.png


CHF. CHF has switched to net longs.


chf.png


CAD. CAD net shorts kept contracting for a sixth week in a row. This time there was a small decline by 1K.


cad.png


AUD. AUD net shorts contracted to the lowest level in a month.


aud.png


NZD. NZD has switched to small net longs.


nzd.png


It’s necessary to note that the figures cited above are always a week old at the time of their release. Never the less, CFTC data gives a good oversight into how the market is positioned and if/how these positions are being unwound. Although the CME speculators represent a small fraction of trading in the currency markets, their trades are widely seen as typical of hedge fund investors' currency movements.

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