Paul Ciana highlights key levels to watch in USD pairs – BBDXY is at critical support that held last week. Closes > 1150 keep hope for a USD oversold bounce. AUDUSD can’t seem to close up through its 200wk SMA and so price may fail at this resistance (.8012). EURUSD rally closed at a new closing high on Friday, though still below the 200wk SMA at 1.1798
– GBP may be vulnerable approaching the MPC meeting. There are 10bp of hikes priced to year-end 2017. Citi Economics expect just two dissents and more confidence among the core members that the slowdown they anticipated justifies keeping rates on hold in the face of stronger inflation prints. This could see year-end priced move down to 5bp, taking GBP FX lower.
– NZD sensitivity to even weak positive catalysts may be heightened given market positioning. According to our flow analysis, there has been intense selling of NZD in recent weeks, partly in response to the weaker-than-anticipated consumer price release. This may leave some investors poorly positioned for more positive news flow.