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EUR / USD
GBP / USD
USD / JPY
USD / CAD
AUD / USD
NZD / USD
USD / CHF
AUD / JPY
AUD / NZD
EUR / CHF
EUR / GBP
EUR / JPY
GBP / JPY
By Peter Stoneham  —  May 23 - 02:00 AM
  • EUR/USD fell below the 10 and 21-DMAs then struck a five-session low Wed

  • The pair bounced but ended the day near the 1.0818 low: but above 100DMA

  • Daily RSI is falling but is no longer near overbought

  • Monthly RSI is rising and the pair holds above the daily cloud and 200-DMA

  • A rough bull pennant has formed on the daily chart

  • We went long at the market and target 1.0960 near the March highs

    For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Krishna K  —  May 22 - 11:45 PM
  • AUD/USD up 0.1% as risk sentiment in Asia lifted by Nvidia results

  • S&P 500 stock futures up 0.6%, Nasdaq futures +0.85%, underpin AUD

  • Upside limited; higher-for-longer Fed, profit-taking in metals sector weigh

  • AUD/NZD selling also caps as effect of RBNZ's hawkish surprise Wed lingers

  • Cross tests 1.0827-34 support, lows in April; break opens 1.0800-05, 1.0785

  • AUD/USD support 0.6600-05, stronger at 0.6580, resistance 0.6645-50, 0.6680

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  May 22 - 04:30 PM

Synopsis:

Credit Agricole projects that the British Pound (GBP) will generally outperform the Euro (EUR) over the coming years, with targeted movements in major currency pairs. The bank outlines its expectations for GBP/USD and EUR/GBP into late 2024 and throughout 2025.

Key Points:

  • EUR/GBP Forecast: Credit Agricole targets a decline to 0.84 by Q4 2024, with further pressure expected in 2025, bringing the pair down to 0.83.
  • GBP/USD Forecast: They anticipate that GBP/USD will reach 1.25 by the end of 2024, affected by domestic factors and heightened US political and global geopolitical risks. In 2025, the pair is expected to rise to 1.35, aligning with a broader USD downtrend.
  • Factors Influencing GBP: The forecast is underpinned by a mix of domestic economic developments in the UK and broader international dynamics, including US political risks which might negatively impact GBP/USD in the short term but support a recovery later on.

Conclusion:

While near-term challenges might suppress GBP/USD, Credit Agricole remains optimistic about the long-term trajectory of the pound against both the USD and EUR. The bank expects significant GBP appreciation by 2025 as it aligns with a forecasted general downtrend in the USD.

Source:
Crédit Agricole Research/Market Commentary
By Andrew M Spencer  —  May 22 - 11:25 PM
  • +0.05% in a very tight 1.2718-1.2725 range on D3 with moderate flow

  • Rishi Sunak calls UK national election for July 4 - it's 'time to choose'

  • Labour has a big lead in the polls - Sunak needs a spectacular campaign

  • PMIs lead data risk, Services poll 54.7, Manufacturing 49.5, composite 54

  • Charts; neutral daily momentum studies- 5, 10 & 21-day moving averages climb

  • 21-day Bollinger bands rise - daily charts show a strong positive setup

  • 1.2766 0.786% Mar/Apr fall capped in London- break targets 1.2893 March high

  • Close below the 1.2588 21-day moving average low would end the positive bias

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Krishna K  —  May 22 - 10:20 PM
  • AUD/USD unchanged in Asia, trades in a narrow 0.6615-0.66245 range

  • Slightly offered tone likely to persist after relatively sharp 0.7% Wed drop

  • Higher-for-longer Fed and profit-taking declines in commodities weigh

  • Downside limited as RBA also equally hawkish, signals status quo on rates

  • AUD/NZD selling undermines as effect of RBNZ's hawkish surprise Wed lingers

  • Cross tests 1.0827-34 support, lows in April; break opens 1.0800-05, 1.0785

  • AUD/USD support 0.6600-05, stronger at 0.6580, resistance 0.6645-50, 0.6680

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Andrew M Spencer  —  May 22 - 08:00 PM
  • Steady after closing down 0.3% with the U.S. dollar 0.3% higher

  • Yield spreads tightened a notch, 10yr bund +3bp 2.534%, 10yr UST +2bp 4.434%

  • Fed rates higher for longer contrasts with ECB's June cut rhetoric

  • PMIs across Europe and the U.S. today should contain interest in Asia

  • Charts - momentum studies crest, 10, and 21-day moving averages climb

  • 21-day Bollinger bands rise - uptrend stalled, signals net positive

  • 1.0835 10-DMA break flags caution to bulls, 1.0782 21-DMA break bearish

  • 1.0782 21-DMA and the 1.0847 New York high are initial support/resistance

  • There are no significant close strikes for May 23rd

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Krishna K  —  May 22 - 07:35 PM
  • AUD/USD on the defensive in Asia after declining 0.7% Wednesday

  • Weighed down by higher U.S. yields as Fed stresses higher-for-longer rates

  • Fed shifts talk to 'scenarios' as policy grows less certain

  • Commodities drop undermines AUD; NYK copper -5%, gold -1.8% on profit-taking

  • AUD also hit by technical selling after failure to rally on positive news

  • Minor support 0.6600-05, 0.6580, resistance 0.6645-50, 0.6680

  • Wednesday range 0.66855-0.66085

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  May 22 - 03:00 PM

Synopsis:

Goldman Sachs has adjusted its forecast for the Reserve Bank of New Zealand (RBNZ), pushing back the anticipated initial rate cut to November after a surprisingly hawkish stance in the May policy meeting. This represents a shift from their previous expectation of a rate cut in August.

Key Points:

  • RBNZ May Meeting Outcome: The RBNZ left rates unchanged but discussed the possibility of an increase, indicating a more hawkish perspective than anticipated.
  • OCR Track and Inflation Concerns: The OCR (Official Cash Rate) path was adjusted upward compared to the previous statement, reflecting heightened concerns about inflation expectations and potential fiscal stimulus impacts.
  • New Rate Cut Forecast: Goldman Sachs now anticipates the RBNZ will initiate rate cuts in November 2024, contingent on reviewing more comprehensive disinflation evidence in upcoming quarterly CPI data.

Conclusion:

Goldman Sachs' revised forecast aligns with a cautious RBNZ approach, awaiting further disinflation confirmation before adjusting rates downward. This adjustment underscores the central bank's commitment to maintaining stability amidst fluctuating economic indicators and potential fiscal changes.

Source:
Goldman Sachs Research/Market Commentary
By Paul Spirgel  —  May 22 - 03:05 PM

The USD index rose 0.3% to 104.93, strengthening after minutes from the Fed's latest meeting showed policymakers were concerned about persistent inflation.

Despite a recent slide amid diminished tail risk of a rate hike, the steady Fed rate outlook is keeping the dollar bid.
LSEG’s IRPR page still has 80% odds for the first U.S. rate cut in September, with less-than a 50% chance for a hike in August.

EUR/USD dropped 0.29% to 1.0823, sliding after the Fed minutes.
Earlier, EUR/USD had followed EUR/GBP lower after data showed UK inflation fell less than expected, which had tempered dovish UK rate expectations.

USD/JPY rose 0.24% to 156.55 and was holding near the top of Wednesday’s 156.63-12 trading range in U.S. afternoon trade.
The dollar remains bid as U.S.-Japan rate differentials continue to favor the dollar.

The consistent chorus of Fed speakers expressing concern about U.S. inflation persistence and market expectations of steady rates until September 2024 are helping to keep USD/JPY anchored near the May 14 high at 156.80.

GBP/USD rose to an early Europe high at 1.2761 after UK CPI, though those peaks were short-lived.
Price action suggested recent GBP/USD buyers had sold into post-data strength awaiting further clues to the UK inflation and rates.

The pound found a slight bid in late European trading after PM Rishi Sunak announced upcoming UK elections slated for July 4, but those gains were reversed after the less-dovish Fed minutes.

Gold slid 1.8% to $2,378, with the Fed minutes exacerbating earlier weakness.
Bitcoin weakened 0.44% to $69.4k, and ethereum slid 0.7% to $3,720.
ETH remains anchored near highs as market awaits news on ETH ETF registrations.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Paul Spirgel  —  May 22 - 02:35 PM
  • USD/JPY ending NorAm +0.27% at 156.60; Wednesday range 156.63-156.12

  • USD remained bid as UST yields ticked higher after Click here

  • Fed data dependent, disinflation taking longer than previously thought

  • Goldman Sachs CEO says Fed unlikely to cut rates this year nS0N2ZE02J

  • $JPY dominated by US rate advantage, w/Fed on hold USD likely to remain bid

  • USD/JPY bulls still hold the advantage nL1N3HP21J

  • Res 156.63 Wed high, 156.80 May 14 high, 158 upper 21-d Bolli

  • Supt 156.12 Wednesday low, 155.90 rising 10-DMA, 155.25 May 17 low

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Christopher Romano  —  May 22 - 02:20 PM
  • NY opened near 1.0840 after 1.08633 traded on EBS overnight, drop extended

  • US$ buying driven by yield US2YT=RR gains weighed on the pair

  • USD/CNH rally to 7.2550, equity ESv1 & gold XAU= falls added weight

  • EUR/USD pierced the 10- & 21-DMAs, 1.0822 hit on EBS then pair bounced

  • Pair sat near 1.0840 and was down -0.15% heading into the Fed minutes

  • Muted reaction to the Fed minutes, US$ firmed a bit, EUR/USD neared 1.0830

  • Techs are mixed; monthly RSI is rising but daily RSI is falling

  • US weekly claims and May S&P Global PMIs are key data risks Thursday

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Justin Mcqueen  —  May 22 - 01:20 PM

With markets in somewhat of a holding pattern on Wednesday but bias for risk appetite remaining firm, USD/JPY drifted to fresh weekly peaks, but the near-term term focus is on the May 14 high at 156.80, a break of which would likely open the door to 157.50, where intervention is suspected to have taken place.

As has been covered at length, the preference among traders is to be long carry, which is an environment where both the yen and the franc can be expected to underperform in and Wednesday’s session was no exception.

What’s more, a hawkish RBNZ - who had considered a rate hike - and UK inflation report, with closely watched services CPI falling to 5.9% versus the BoE projection of 5.5%, gave bond yields a lift, further adding pressure on the low-yielding yen and keeping bears very much in charge.

Looking ahead, the upcoming U.S. PMI survey will garner attention.
Though, while U.S. data has been softening of late, a continuation of this trend is unlikely benefit the yen significantly.
Dollar downside is likely better expressed versus GBP or AUD.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  May 22 - 10:45 AM

Danske Research push their forecast for the BoE rate cut from June to August.

"Following today's topside surprise and the May print unlikely to deliver an equally large downside surprise to sway the majority of the MPC to vote for a cut, we now expect the first 25bp cut in August," Danske notes.

"Our call. We now expect the BoE to deliver the first cut of 25bp in August (June previously). Given the later start to the cutting cycle, we subsequently now only expect one 25bp cut in the following quarter, totalling 50bp of cuts for 2024 (previously 75bp). Markets are pricing 40bp for the remainder of the year with the first 25bp cut fully priced by November," Danske adds.

Source:
Danske Research/Market Commentary
By Paul Spirgel  —  May 22 - 09:50 AM

Sterling rallied to a 2-month high at 1.2761 in early European trading, after hotter than forecast UK CPI diminished recent dovish BoE rate cut expectations providing fodder for further gains toward late-March highs by 1.2803 as UK-U.S.
rate spreads narrow.

The data, core and headline, showed continued progress lower, though the upside miss pared market expectations of June and August rate cuts.

The flash rise to 1.2761 post-CPI hints that traders are leaning toward a less-dovish BoE direction in the near-term, diminishing some of the rate cut speculation that resulted from the May 9 MPC meeting.

Though cable fell back toward recent peaks in the 1.2720s, it stabilized at stronger levels on the day.

With a June cut seemingly off the table, and a August move priced just below 50%, sterling bulls appear poised to make a run at upside targets at the March 21 high 1.2803, and the March 8 2024 high at 1.2894.

Sterling IMM positioning 1096742NNET in early 2024 had been rising as UK rate expectations, owing to above target inflation, were expected to remain above U.S. rates.

Should UK inflation reduction stall as it has in the U.S., high-for-longer UK rate sentiment could dominate, leading the current net short GBP positioning to flip back to long as bulls target 2024 highs.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By eFXdata  —  May 22 - 09:30 AM

Synopsis:

Bank of America outlines its expectations for a modest easing cycle by major central banks, highlighting the continuation of supportive conditions for carry trades. The firm maintains a short position on the Swiss Franc (CHF) based on the anticipated shallow rate cuts and robust market conditions.

Key Points:

  • Central Bank Easing: BofA anticipates that central banks may initiate rate cuts despite the ongoing scenario of strong economic indicators, such as resilient equities, persistent inflation above targets, and growth exceeding expectations.
  • Support for Carry Trades: The expected shallow rate cuts are seen as bolstering carry trades, particularly benefiting high beta G10 currencies like NZD, CAD, AUD, SEK, and NOK.
  • Short CHF Strategy: BofA remains short on CHF via options, influenced by the broader market dynamics and the differential in market pricing of terminal rates compared to historical averages.
  • Risk Considerations: There is an ongoing risk of a more significant economic slowdown, which BofA refers to as a "proper landing," that could alter the current market trajectory and central bank policies.

Conclusion:

Bank of America expects a limited easing cycle from major central banks, continuing to support carry trades and high beta currencies. The firm remains strategically short on CHF, anticipating that the current financial conditions will persist. However, it remains cautious about the potential for a significant economic correction that could shift central bank strategies and market dynamics.

Source:
BofA Global Research
By eFXdata  —  May 22 - 08:30 AM

Synopsis:

MUFG outlines a bullish outlook for NZD/CAD, driven by diverging monetary policy directions between the Reserve Bank of New Zealand (RBNZ) and the Bank of Canada (BoC). The firm attributes its stance to recent hawkish updates from the RBNZ and dovish shifts in BoC rate expectations.

Key Points:

  • RBNZ Hawkish Update: The RBNZ's recent policy projections indicate a slight increase in the expected peak for the official cash rate (OCR), hinting at a potential additional rate hike this year.
  • BoC Dovish Shift: In contrast, Canadian monetary policy expectations have softened, with markets now anticipating a possible rate cut as early as June, influenced by a series of lower-than-expected core inflation readings.
  • Market Reactions: These developments have fostered a favorable environment for NZD strength against CAD, further supported by improving external market conditions.
  • Forecasts: MUFG predicts continued NZD and AUD outperformance against CAD, with USD/CAD likely maintaining higher levels in the near term due to the anticipated policy divergence.

Conclusion:

MUFG maintains a bullish stance on NZD/CAD, expecting that the widening policy divergence between the RBNZ and BoC will bolster the kiwi. The bank also anticipates broader strength for the NZD and AUD against the Canadian dollar, reflecting a significant shift in central bank policies between New Zealand and Canada.

Source:
MUFG Research/Market Commentary
By Christopher Romano  —  May 22 - 07:15 AM
  • AUD/USD hit 0.66855 in Asia, sellers then emerged and 0.6654 hit in Europe

  • NY opened near 0.6665, pair traded down -0.04% in early NY trading

  • Pair's drop aided by US yield US2YT=RR gains driving US$ buying

  • Equity ESv1 and gold XAU= drops weighed on risky assets & AUD/USD

  • Techs lean bullish; monthly RSI rising, consolidation phase persists

  • Hold above 10-DMA, structural support near 0.6650 reinforces bull signs

  • Fed's Goolsbee, minutes of Fed's April 30-May 1 meeting may impact risk

  • US April existing home sales a risk in NY, May Judo Bank PMI a risk in Asia

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Jeremy Boulton  —  May 22 - 05:35 AM
  • EUR/USD has traded mainly within 1.05-1.10 since start of 2023

  • From Sep 2022 until April this year traders continually bet on pair rising

  • The 1.5% interest rate gap weighing EUR/USD is expected to widen this year

  • One-year forward swap has risen from around 150 points toward 200 points

  • Reduced FX risk is likely to encourage sellers who can bank the carry

  • Risk appetite in wider fin markets is robust which suits carry trades

Source:
Refinitiv IFR Research/Market Commentary
By Jeremy Boulton  —  May 22 - 04:55 AM
  • USD/JPY remain weak as a consequence of the 1985 Plaza Accord

  • To correct it's long-term drop USD/JPY must reach 183

  • The target for a minor correction of 1971-2011 USD/JPY drop is 183.22

  • U.S. interest rate is no longer seen falling far nor to be trimmed soon

  • The yen's plunge to a record low in April eases monetary policy

  • BOJ is still buying huge quantities of bonds - easing policy

  • If oil continues to fall it would support yen, but also depress CPI

Source:
Refinitiv IFR Research/Market Commentary
By Peter Stoneham  —  May 22 - 04:00 AM
  • Short and caught, our 1.2684 trade stopped at 1.2730

  • An early Wed high of 1.2761 followed by a 1.2745 pullback

  • Price has removed the 76.4% Fibo of the 1.2893-1.2299 drop, 1.2753

  • Sterling now clear above its daily Ichimoku cloud

  • Bulls target the 1.2803 high from March 21

  • Positive daily momentum extending: RSI nearing 70 and over bought territory

  • We are side lined for now

    For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Richard Pace  —  May 22 - 02:50 AM
  • NZD/USD options were primed for post RBNZ NZD/USD fx volatility and got some

  • NZD/USD from early 0.6094 low to 0.6152 post RBNZ, setback to 100-dma 0.6114

  • RBNZ hawkish hold (higher for longer rates) should limit NZD setbacks

  • Implied volatility drop reflects lower realised volatility risk post RBNZ

  • 1-week NZD/USD implied volatility 8.5 to 7.5, 1-month 8.7 to 8.35

  • 1-month implied volatility nears lower end of 10.5 - 7.6 2024 range

  • Past 1-month realised volatility at 9.0 may limit deeper implied vol loss

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Rob Howard  —  May 22 - 02:20 AM
  • Cable rises to 1.2753 after hotter than expected UK April inflation data

  • UK CPI up 2.3% YY vs 2.1% forecast. Services CPI up 5.9% vs 5.5% forecast

  • 1.2753 is highest level since March 21, and 76.4% Fibo of 1.2893-1.2299

  • 1.2709-1.2722 was Asia range (pre-CPI data). 1.2687-1.2727 was Tuesday range

  • Above forecast UK CPI is blow for doves advocating BoE rate cut on June 20

  • BoE's Bailey assessed money market impact of gilt sales in Tuesday speech

Source:
Refinitiv IFR Research/Market Commentary
By Krishna K  —  May 22 - 01:20 AM
  • NZD/USD up 0.45% heading into Europe but off day high of 0.6152

  • Likely to remain bid on dips as RBNZ signals higher-for-longer on rates

  • RBNZ holds rates at 5.5% but increases OCR path, raises annual CPI forecast

  • Sees rates peaking at 5.7% end 2024, compared with 5.6% three months ago

  • Governor Orr confirms that MPC had real consideration on raising rates Wed

  • NZ yields rise, AUD/NZD down 0.4%; Asia NZD range 0.6093-0.6152

  • NZD/USD resistance 0.6170, 61.8% Fibo of Dec-Apr drop; support 0.6090-0.6100

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
By Krishna K  —  May 21 - 11:35 PM
  • AUD/USD unchanged in Asia after trading in a 0.6666-0.66855 range

  • Rises to day high as NZD/USD rallies on hawkish RBNZ

  • Fails to sustain gains as AUD/NZD sellers cap, cross down 0.7%

  • AUD's inability to gain despite slew of positives a worrying sign for bulls

  • Ignores higher-for-longer RBA, elevated commodities, carry demand

  • Rallies capped as Fed officials urge patience on timing of initial rate cut

  • Fed April 30-May 1 meeting minutes, Nvidia earnings key Wednesday

  • Supports 0.6645-50, 0.6620-25, resistance 0.6690-95, 0.6710-15

  • For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary
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