FX Market Update 15-11

Market Briefs

• EUR/USD 0.38%, USD/JPY -0.64%, GBP/USD 0.02%, EUR/GBP 0.32%
• DXY -0.32%, DAX -1.33%, FTSE -0.6%, Brent -1.32%, Gold 0.39%
• Fed’s Evans says will go into December meeting with open mind
• Fed should signal tolerance for higher U.S. inflation – Evans
• Waiting too long to stop stimulus could be disruptive – ECB’s Hansson
• ECB’s rate guidance to gain prominence in stimulus – Praet
• Global forex code bans ‘last look’ trading tactic
• GB Sept ILO Unemployment Rate 4.3% vs 4.3%, f’cast 4.3%
• GB Oct Claimant Count Unemployment SA 1.1k vs 1.7k, f’cast 2.3k, r’vsd 2.6k
• GB Sept Avg Wk Earnings 3M YY 2.2% vs 2.2%, f’cast 2.1%. r’vsd 2.3%
• GB Sept Avg Earnings (Ex-bonus) 2.2% vs 2.1%, f’cast 2.2%, r’vsd 2.2%
• EZ Sept Eurostat Trade NSA, Eur 26.4B vs 16.1B
• China says Venezuela can ‘appropriately’ handle debt load
• Oil prices slide after IEA casts doubt over demand outlook

Looking Ahead – Economic Data (GMT)

• 13:30 Retail Sales (Oct) (mkt 0.0% m/m, prev +1.0% m/m)
• 13:30 Retail Sales ex-Autos (Oct) (mkt 0.2% m/m, prev +1.6% m/m)
• 13:30 Retail Control (Oct) (mkt 0.4% m/m, prev +0.4% m/m)
• 13:30 New York Fed Empire State Manufacturing Survey (Nov) (mkt 26.0, prev 30.2)
• 13:30 CPI (Oct) (mkt +0.1% m/m, +2.0% y/y; prev +0.5% m/m, +2.2% y/y)
• 13:30 CPI ex-Food and Energy (Oct) (mkt +0.2% m/m, +1.7% y/y; prev +0.1% m/m, +1.7% y/y)
• 13:30 Real Average Weekly Earnings (Oct) (prev -0.1% m/m)
• 15:00 Atlanta Fed Business Inflation Expectations (Nov) (prev +1.8% y/y)
• 15:00 Business Inventories (Sep) (mkt 0.0% m/m, prev +0.7% m/m)
• 15:30 EIA Weekly Petroleum Status Report
• 16:00 Cleveland Fed Median CPI (Oct) (prev +0.2% m/m)
• 21:00 Treasury International Capital Statistics (Sep) (prev LT-ex-swaps +$67.2 bn)

Looking Ahead – Events, Other Releases (GMT)

• 13:00 BoE’s Braodbent speaks at LSE – London
• 15:05 Riksbank’s Skingsley participates at a discussion – Stockholm
• 16:45 FedTrade Operation 30-year Fannie Mae / Freddie Mac (max $1.905 bn)
• 21:00 Fed’s Rosengren remarks on the economy; Boston, MA
• 23:45 BoC’s Wilkins speaks before Money Marketeers of New York University, NY

Currency Summaries

EUR/USD

• EUR/USD higher 1.1785-1.1853 in Europe today
• Pair breezing through supposedly tough resistance last 24 hours
• Rally extends over Oct ECB day peak at 1.1837
• Daily cloud top 1.1870 & Oct 11/13 highs 1.1869/80/65 next resistance
• 1.1861 is 61.8% retrace 1.2092-1.1553 decline. 76.4% 1.1965
• ECB’s Hansson (hawk) scope for prudent but obvious recalibration policy

USD/JPY

• Risk-off mood sees Nikkei close down -1.57% at 22,028
• USD/JPY collapsed through 113.00 as expected, model funds blamed
• Range has been 112.65-113.49
• There has been solid and steady net selling of spot on EBS in Asia & Ldn
• Japanese importer and some speculative bids have limited further losses
• Scope for a drop down below 112.00 to 111.90 Fibonacci level
• Build up of IMM USD/JPY longs last wk was dangerous for bulls
• USD/JPY options set up for deeper spot decline

USD/CHF

• CHF dragged around by the broader market. UP vs USD. Down vs EUR
• USD/CHF plays 0.9893-0.9855 in Europe, the 200-DMA is next sppt at 0.9813
• EUR/CHF up to test 1.1688 from early Ldn 1.1652 low
• Closing in on key tech levels incl the upper 30-D Bollinger at 1.1704 Wed
• That is not far from the Oct 1.1713 peak
• 1.1713 = highest level for the cross since 0.8500 low after SNB removed floor
• Swiss govt: CHF remained “highly valued” despite recent weakening vs euro
• Echos those views of the SNB of late
• SNB’s prior 1.20 floor remains ultimate target for the bulls

EUR/GBP

• EUR/GBP rose to 26-day peak of 0.9014 during European am
• Peak scaled after 0.9000 option barriers successfully targeted
• 0.8980 was Asia high, revisited before UK earnings/jobs data
• Earnings 2.2% vs 2.1% f/c but biggest fall employment in Q3 since 2015
• EUR/GBP gains influenced 80 pip cable fall from 1.3215 earnings high
• Bids at 1.3135 based the drop (1.3135 = Monday’s Ldn/NY high)

USD/CAD

• USD/CAD eased to an intra-day low of 1.2714 during the European am
• 1.2751 = Asia high. 1.2701-1.2773 was Tuesday range (low before high)
• 1.2730 option expiry for NY cut (closest-to-market), USD 265mn strike

AUD/USD

• AUD/USD rose by a quarter-cent after threatening 0.7576 early Europe
• 0.7576 = 4mth low in Asia after Aussie wage data weaker than expected
• AUD/NZD extended south to a 27-day low of 1.0990 during Ldn am
• 1.1011 was Asia low. 1.1103 was Asia high, pre-Aussie wage data

NZD/USD

• Kiwi shorts squeezed during NZD/USD climb from 0.6862 to 0.6915
• 0.6862 was early Europe low. 0.6844 = 13-day low Tuesday
• AUD/NZD trading below 1.10 for first time since Oct 20
• 1.1138 was 11-day high Tuesday. Huge 1.11 option expiry Thursday

FX OPTIONS

• Solid vol gains extend, many from very low base levels
• Souring risk sentiment, USD weakness and short covering drive demand
• 1-month expiry options captured Dec FED, ECB and MPC to boost Tuesday
• EUR/USD short topside strikes. EUR calls bid. 5bln 1.1800-25 expiries today/Thur
• Brexit and UK political woes drive GBP vols. EUR/GBP breaks 0.90 barriers
• Asian stocks and poor Aus wage growth hurt AUD and boost vols there

COMMENT

EUR/USD reverse could cue move to new 2017 highs
EUR/USD’s rapid rebound suggests the pair could be on course for new 2017 highs. The strength of euro/crosses in the aftermath of the ECB meeting were a sign that EUR/USD traders were wrong to bet on a perceived dovish taper. Euro zone data has come thick and fast to suggest a taper needs to be anything but dovish in effect. It looks like this has come home to roost for those betting on EUR/USD topping with a widespread capitulation of short positions driving a fast recovery. There has been a series of easy breaks through supposedly tough resistance areas suggesting that those short EUR/USD had been inspired by bearish techs and are now reversing to longs. There is little resistance left with a thin daily Ichimoku cloud at 1.1828-70 easier to break (was 200pts+ Oct). A close above 55-DMA 1.1796 or break of Oct ECB day high at 1.1837 are sure to add to an already bullish picture. Chart 1)

CHART FOCUS

EUR/GBP on the cusp of a significant break
EUR/GBP looks poised to break higher as it probes key technical levels including the upper 30-D Bollinger and the daily Ichi cloud top at 0.9019 and 0.9027 respectively. A break and close above these levels is likely to push the cross towards the Aug 29 0.9307 peak next. Previous attempts higher on Oct 12 and 20 were rejected from the cloud preventing a further climb but the break of psychological resistance at 0.9000 could see the gains accelerate. The 50% Fibo of the 0.9307 to 0.8734 August to October drop is also in the key resistance region at 0.9020 adding significance to any break. The key Fibo of that drop is the 61.8% at 0.9088 where a breach would open the way for a full retracement. Should the cross fail and revert lower once more then a break back under the cloud (0.8928 base) is needed to deter the bulls.

Advertisements

Futuro del peso mexicano 15-11

USD/MXN opens NY 19.1560 v 19.1630 Tues cls, drifts up; o/n 19.2005-19.1330

NAFTA restarts, traders wary of US content & sunset clause

Lower commods adds to peso weakness, despite lower DXY and UST yields

USD/MXN sup 19.1330 Wed low, 19.0873 21-DMA, 19.00 Nov 10 trend low

Res 19.2005 Wed high, 19.2390 Nov 3 high, 19.3083 upper 21-d Bolli

ST vol elevated (NAFTA), Stoch’s near o/b

 

Futuro del peso mexicano 15-11

FX Market Update 14-11

Market Briefs

• EUR/USD 0.49%, USD/JPY 0.02%, GBP/USD -0.12%, EUR/GBP 0.58%
• DXY -0.24%, DAX -0.06%, FTSE 0.17%, Brent -0.28%, Gold -0.34%
• Fed chief says policy guidance beneficial but must be conditional
• ECB’s Draghi says “forward guidance” on policy a success
• EZ Q3 GDP Flash Estimate QQ 0.6% vs 0.6%, f’cast 0.6%
• EZ Q3 GDP Flash Estimate YY 2.5% vs 2.5%, f’cast 2.5%
• EZ Sept Industrial Production YY 3.3% vs 3.8%, f’cast 3.2%, r’vsd 3.9%
• DE Q3 GDP Flash QQ SA 0.8% vs 0.6%, f’cast 0.6%
• DE Q3 GDP Flash YY NSA 2.3% vs 0.8%, f’cast 2.3%, r’vsd 1%
• DE Oct CPI final YY 1.6% vs 1.6%, f’cast 1.6%
• DE Oct HICP final YY 1.5% vs 1.5%, f’cast 1.5%
• DE Nov ZEW Economic Sentiment 18.7 vs 17.6, f’cast 20
• DE Nov ZEW Current Conditions 88.8 vs 87, f’cast 88
• GB Oct CPI YY 3% vs 3%, f’cast 3.1%
• GB Oct RPI YY 4% vs 3.9%, f’cast 4.1%
• GB Oct PPI Core Output YY NSA 2.1% vs 2.5%, f’cast 2.2%

Looking Ahead – Economic Data (GMT)

• 13:30 PPI (mkt +0.1% m/m, +2.4% y/y; prev +0.4% m/m, +2.6% y/y)
• 13:30 PPI Core (mkt +0.2% m/m, +2.3% y/y; prev +0.4% m/m, +2.2% y/y)
• 13:55 Redbook Same Store Sales Index (prev +2.6% y/y)

Looking Ahead – Events, Other Releases (GMT)

• 15:30 ECB’s Coeure speaks at ICMA meeting – Belgium
• 16:45 FedTrade Operation 30-year Ginnie Mae (max $1.280 bn)
• 18:05 FRB’s Bostic speaks on economy and monetary policy; Montgomery, AL

Currency Summaries

EUR/USD

• EUR/USD opens 1.1674 and trades 1.1665-1.1725 range in Europe
• Push higher influenced by strengthening EZ area growth
• German Q3 GDP started the ball rolling, 0.8% qq in Q3 vs 0.6% f/c
• Italian GDP also impressed but overall EZ measure only matched 2.5% yy f/c
• German ZEW data then slightly undershot a bullish 20.0 f/c at 18.7
• 10-yr German bond yield opens strongly hit 0.43% but eased back to 0.40%

USD/JPY

• USD/JPY has risen from 113.52 to hit 113.91, but plenty of supply above
• 113.91 — 50% retrace of the 114.73 to 113.09 fall — weighs
• Expect decent amount of offers at 114.00 psychological level
• Further resistance should weigh heavily at last Thu’s 114.07 high
• 114.10 is 61.8% of the same 114.73 to 113.09 fall
• USD2bln 114.00-25 expires may help cap any further gains Tues

EUR/CHF

• EUR/CHF continues its run higher in line with EUR/USD which is up 0.5%
• Cross plays 1.1632 to 1.1661 in Europe. 1.1622 was the low in Asia
• Remains well supported by the 30-DMA line, rising to 1.1576 Tuesday
• Techs target the upper Bollinger at 1.1696 and the Oct 26 1.1713 peak
• Weekly Tenkan support is at 1.1551 – close below there would dent uptrend
• USD/CHF 0.9960 to 0.9940 in Europe. Within Monday’s 0.9937-87 range
• Weekly cloud twist by 0.9925 helping pull prices lower
• Swiss producer/import prices up 0.5% m/m, 1.2% y/y in Oct

GBP/USD

• Cable fell nearly half-a-cent to 1.3075 on UK Oct inflation data miss
• CPI +3.0% y/y vs 3.1% f/c. EUR/GBP rose to 19-day high of 0.8954
• 0.8933 was early Europe cross high after German GDP data beat
• Germany’s economy grew 0.8% in Q3, double the level of UK growth
• 1.3063 (Monday’s 1wk low) & 1.3040 (Nov 3 low) are cable support levels
• BoE dove Cunliffe speaks 1730GMT. Cunliffe voted against Nov 2 hike

USD/CAD

• USD/CAD scaled a six-day peak of 1.2755 during the European am
• 1.2728 = subsequent low water-mark. 1.2741 was Monday’s high
• Near quarter-yard 1.2730 option expiry Wednesday
• Next round of NAFTA talks due to get underway next week (Nov 15)

AUD/USD

• AUD met headwind at 0.7639 after rising from 0.7613 during European am
• 0.7639 was Asia high. 0.7609 was four-month low in Asia
• AUD/NZD up to 1.1138 (11-day high) as AUD outperforms NZD
• Huge 1.1100 option expiry Thursday, AUD 2.33bln strike

NZD/USD

• NZD/USD extended south to 13-day low of 0.6844 during the European am
• 0.6904 was early Wellington high. Bids expected near 0.6818
• 0.6818 marks the 2017, first plumbed in May & revisited late Oct
• AUD/NZD within strike of huge 1.11 option expiry for Thursday’s NY cut

FX OPTIONS

• Gains for 1-month vols as expiry captures FED, ECB, BOE MPC
• EUR/USD 1mth +1.0, USD/JPY 1mth+0.5, AUD/USD 1mth +0.75
• GBP related vols already paid up Monday amid Brexit and political woes
• EUR/USD gains help to lift vol curve further away from 3-year lows
• USD/JPY downside risk still apparent via JPY call risk reversal demand

COMMENT

Stars may be aligning for EUR/GBP parity

Latest evidence of widening divergence in the euro zone and UK growth and outlooks may spur EUR/GBP to rise to 1.00 in coming months. Data published Tuesdayshowed Germany’s economy grew by a higher than expected 0.8% in Q3–double the level of UK Q3 growth. The strength of the German economy suggests the euro should be stronger. EUR/GBP could also gain if the EU summit on December 14-15 concludes there has not been enough progress on Brexit negotiations to proceed to trade talks. Any such conclusion would only increase the political heat on British PM May–who is facing a UK parliamentary test over her government’s Brexit plans starting Tuesday. Sterling could also soften if UK annualized November CPI inflation eases after unexpectedly holding steady in October. November’s UK inflation data is due Dec 12, two days before the next BoE monetary policy announcement. EUR/GBP has never traded at 1.00 since the euro was launched in 1999, but got within two pence of parity after a 15 pence surge in December 2008. Chart 1)

End of year run not favouring the SEK

EUR/SEK is looking overbought but remains supported by fundamentals so looking to top pick is a dangerous game. The pair hit a new 2017 high today after weaker than expected Swedish October inflation data strengthened the view that prices are likely to ease next year with a first Riksbank hike in October/November 2018. A marked deterioration in the inflation trend could, however, see the hike date moved into 2019, further weighing on the SEK. October CPIF at 1.8% annualised matched the Riksbank call but was down from September’s 2.3% return. The krona has fallen to 9.8765 versus the EUR, last at this level early December 2016. Those looking to exploit the overbought condition on the daily chart should not be too greedy. Expect fresh bidding to emerge at the previous top at 9.8100 from Nov 3. Weeklies are also stretched and again 9.8100 is likely pullback level.

Futuro del peso mexicano 14-11

 

  • USD/MXN opens NY 19.0840 v 19.1265 Mon cls, hovers nearby; o/n 19.14-19.0495
  • Pair shrugs off oil dip (CLc1 -0.44%), follows DXY lower; no MX data this wk
  • Mexico readying plan for post-NAFTA environment , just in case
  • USD/MXN supt 19.0658 21-DMA, 19.0495 Tues low, 19.00 Nov 10 low
  • Res 19.1013 55-HMA, 19.1373 daily pivot, 19.1950 upper 21-h Bolli

Futuro del peso mexicano 14 -11

 

FX Market Update 13-11

Market Briefs

• EUR/USD -0.11%, USD/JPY -0.22%, GBP/USD 0.74%, EUR/GBP 0.63%
• DXY 0.15%, DAX -0.58%, FTSE 0.07%, Brent -0.24%, Gold 0.22%
• IMF says Europe’s growth more durable, warns of ‘disruptive’ Brexit threat
• PM May wants to agree outline Brexit transition in next few months
• Trump vaunts trade progress, red carpets on “fruitful” Asia trip
• Fed’s Harker stands by call for rate hike next month
• Over half of Spaniards want early national election -poll
• DE Oct Wholesale Price Index YY 3% vs 3.4%
• Venezuela to meet creditors in bid to dodge default
• EU markets agency warns new crypto coins could prove worthless
• OPEC, allies unlikely to delay decision on oil cut extension
• Oil steadies near two-year highs as geopolitics offset U.S. supply

Looking Ahead – Economic Data (GMT)

• 18:00 Treasury Budget (Oct) (prev Oct $45.831 bn deficit)

Looking Ahead – Events, Other Releases (GMT)

• 15:45 FedTrade Operation 30-year Fannie Mae / Freddie Mac (max $1.665 bn)
• 16:30 France’s Le Maire speaks at a conference – Paris

Currency Summaries

EUR/USD

• EUR/USD range tightens just 1.1639-1.1658 in Europe
• No market moving data on tap today. Few expiries EUR 500mln 1.1630-70
• Few flows EUR/JPY pressured by risk-off feel to stocks
• EUR/GBP underpinned by political uncertainty
• Big day tomorrow. EZ GDP/IP German ZEW & inflation & U.S. PPI
• Support @ option 1.1550 barriers. Resistance 21-DMA 1.1690/Oct 3 high 1.1691

USD/JPY

• USD/JPY remains heavy after being capped by 113.72 Fibo level
• 113.72 — 38.2% retracement 114.73 to 113.09
• Market has fallen from 113.71 to 113.27 so far, focus on 113.30 pivot level
• There are said to be decent bids ahead of kijun line currently @113.19
• More bids ahead of 113.00, 1.35 yards of 112.95-113.15 Mon NY cut strikes
• An eventual daily close sub 112.98/113.00 could see free fall
• Bulls would have to squeeze spot above last Thu’s 114.07 pk to worry bears

EUR/CHF

• EUR/CHF supported along the 30-DMA line, rising to 1.1569 Monday
• Last wk’s pullback attempts stalled at this line: look for the same again
• Sharp sell off, 1.1622 to 1.1590 in Europe
• CH domestic sight depos rise, 472.652bln vs 468.761 w/e Nov 10
• SNB may not have been happy with the drop from the Oct 26 1.1713 peak
• 0.9987 rejects USD/CHF lower through the hourly cloud. 0.9949 the low
• Bearish weekly close last week. Weekly cloud twist helps pull prices lower
• Sellers noted above parity last 3 weeks. 1.0039 Oct 27 peak

GBP/USD

• Cable fell to 1wk low of 1.3063 during European am on Brexit concerns
• On Sunday, Davis said UK won’t offer new figure on Brexit to unblock talks
• EUR/GBP up to 10-day high of 0.8918 during European am
• Sunday Times tip that 40 Tory MPs ready to oust May also GBP-negative
• Letters from 48 Tory MPs needed to trigger Tory leadership contest
• GBP/USD stops tipped below 1.3040 (Nov 3 low) & 1.3000

USD/CAD

• USD/CAD rose from 1.2680 to 1.2710 during the Ldn am
• Spot traded sub-1.27 in Asia, when 1.2671 was the early session low
• 1.2666 was Friday’s low. 1.2668 was last Thursday’s low

AUD/USD

• AUD/USD elicited support pre-0.7640 after falling from 0.7665
• 0.7665 = early Europe high. 0.7640 was Asia low
• More bids expected near 0.7625 (Oct low). 0.7628 was Nov 7 low
• Large 0.7650 option expiry Tuesday, AUD 437mn strike

NZD/USD

• NZD/USD threatened 0.6900 after falling from 0.6936 (early Europe high)
• 0.6900 approximates to Nov 8 low. 0.6916 was Asia low
• Huge AUD/NZD 1.1100 option expiry Friday, AUD 2.25bln strike

FX OPTIONS

• UK political and Brexit woes fuel demand for GBP vols, regain pre MPC highs
• EUR/USD consolidation leaves vols near last weeks 3-year lows
• EUR/USD 2.2bln 1.1650 expiry Wednesday helps contain pair ahead
• USD/JPY downside fears apparent, firmer JPY call bias on risk reversals
• USD/JPY options interest mixed however – buyers of strikes both sides of spot

COMMENT

Norway house prices may pull rug from under NOK

Economic performance has underpinned the NOK in the face of a dovishly cautious Norges bank but this prop may be pulled if the housing market slowdown becomes more entrenched. October house prices actually surprised with a 0.7% gain on the year but Real Estate Norway expects more negative price developments. Though a further significant downturn in house prices is unlikely given falling jobless, rising wages and low interest rates, a sluggish house price recovery poses risks to the broader economy. Recent kroner consolidation has allowed traders time to reflect on new likely trends and themes for the NOK. Established drivers–oil (albeit with a current lack of correlation) and Norges bank policy–have been joined by ECB QE rhetoric, and potential housing market woes. So, EUR/NOK could be a cheap buy at current levels, 9.4850, but with the Saudi political situation hanging over the oil market a tight stop necessary at 9.3800 looking for 9.75.

CHART FOCUS

NOK/SEK set to deteriorate further

NOK/SEK rebounds capped circa 1.03 and a fresh run south for the Viking cross is on the cards. NOK/SEK bears have set their sights on last week’s 1.0247 low. The break of the 1.0260 61.8% Fibo of the October 26 to November 6 1.0204 to 1.0350 rise failed to hold a first attempt. A break and close under there should open the way for a full retracement to 1.0204 in favor of short plays. The thin Ichimoku cloud, spanning 1.0223/1.0213, could help fuel the bears as thin clouds generally attract and note the pull of the twist on November 26 by 1.0220. Further support lies at the 1.0246 30-DMA, which coincides very close to the aforementioned November 8 1.0247 low. Given that the reversal came from close to the upper Bollinger around the 30-DMA then a test of the average looks likely. Any break risks a drop to the lower Bolli at 1.0147. Only a break back above the 200-DMA at 1.0330 would deter the bears.

Futuro del peso mexicano 13-11

 

  • USD/MXN opens NY 19.1425 v 19.1020 Fri cls, rises a tad; o/n 19.1960-19.0895
  • US tax reform, NAFTA (5th rd resumes this wk) remain drivers of USD strength
  • No MX data this wk, full Fed slate of speakers Tues, Wed
  • USD/MXN supt 19.0895 Mon Low, 19.0646 rising 21-DMA, 19.00 Friday low
  • Res 19.1873 upper 21-h Bolli, 19.21 Nov 7 high, 19.3325 trend high Oct 27
  • ST USD/MXN vol bid, flirts w/200-DMA; 25RR positive, hints at future gains

Futuro del peso mexicano 13-11

 

US T 30 years 10-11

BONDS ARE CLOSE TO INTRADAY SUPPORT IN THE 152.20 AREA. BREAK WOULD TAKE PRICE TO NEXT SUPPORT AROUND
151.30.
THIS WAS NOT CONFIRMED BY 10 YRS FUTURES PRICES WHICH STILL HOLD WITHIN RECENT S/T 125.15-124.20 PROFITABLE RANGE.  
WATCH INTRADAY OVERSOLD CONDITION IN BOTH.
BONDS FUTURES – 240MIN CHART:
US T 30 Years 10-11