Majors Outlook

From the FXWW Chatroom: USDJPY came back to 110.90/95 and went through 200 days moving average 110.65. I do not expect much movement today, but, it is difficult to trade divergence of 20 days moving average under the low volatility. BOJ will be no event, but, people are watching Kuroda’s press conference on exit plan and further BOJ monetary policy. Key levels of USDJPY are 111.40 111.80 112.50 and 110.60 109.90.
EUR
EUR(1.1147) Finally the market starts to clean out positioning – in hindsight the inability for euro to capture 1.13 may have enticed some more positioning and left the market further lopsided. Feels a move through 1.1110 is more likely now given the markets failure to bounce well overnight so would caution any eager longs around 1.1150 id reduce and look to add more through 1.1110 stopping 1.1078.
GBP
BoE came out with a surprise vote of 5 vs 3 with Saunder and McCafferty joining Forbes for a rate hike and caused the pound to rally.  GBPUSD traded to a high of 1.2795 while EURGBP traded to a low of 0.8723 on the back of the result but with USD trading bid in general GBPUSD managed to reverse to mid 1.27’s.  With “softer” Brexit talks combined with yesterday’s BoE outcome, I won’t be surprised to see GBP to trade bid, but for Cable, as long as the pair is below 1.2830/40, I don’t really think that this will become a trend.  For EURGBP, we need to see a clear break below 0.8700/10 as well.  As of now, holding shot GBP make sense until we see these levels to break.
AUD
Bumper jobs number yesterday makes things tricky for the AUD. It takes rate cuts off the table but I can’t recommend a long up here with no carry, plummeting commodities, AAA under threat, no inflation, and a weak consumer saddled with epic debt now being relentlessly squeezed as mortgage rates rise. With the BOE BOC FOMC all looking to reduce liquidity you certainly don’t want to own economies carrying max leverage in this environment. But the AUD has been immune to this story all year and now with UE falling its unlikely to suddenly tank. Stranger things have happened but for now I’m sidelined with a firm downside bias on a medium term horizon..
NZD
Happy to keep recommending shorts. Weak GDP (weaker still on per capita basis) again falling well short of the RBNZ forecasts and on the back of a widening CAD and horrible card spending numbers. Like Aust the Kiwis epic private debt makes the economy and the currency particularly vulnerable to rising global yields. JP strategy has written at length about their belief that this debt is becoming increasing difficulty to fund and with the currency rallying material since the RBNZ this task is not getting any easier.  In turn there’s no chance the RBNZ will be hiking. Id estimate NZD 10% overvalued with a benign outlook and significantly more so if there’s a serious shock.
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