FOREX: Analyst FX Views Amid Strengthening USD Trend
Jan-13 12:03
- *Goldman Sachs expect the dollar to rally by about 5% over the coming year on the realization of new tariffs and continued US outperformance. Even with this upgrade, GS still see the risks tilted towards more dollar strength, and are extending the target on their long USDSEK trade recommendation to 11.60, in line with our new 3m forecast, (revised stop to 11.00).
*ING think the defensive currencies of JPY & CHF can outperform on the crosses, while commodity and emerging currencies should take the brunt of the higher US rate story. Indeed, AUDUSD is not far from 0.60, where we could start to hear speculation over impending RBA intervention. - *SocGen: There is, in sum, a lot of US exceptionalism, and a lot of monetary policy divergence, already ‘in the price’. That, however, won’t stop the market overshooting. The current Bloomberg survey consensus forecast is for EURUSD to be at 1.04 at mid-year, could easily become a consensus forecast that we will be below parity.
- *BofA: Potentially higher trade uncertainty and relative monetary policy keep BofA cautious on EUR in the near term. But they are also getting concerned Euro area bearishness per se is getting "stretched", and some positions could get squeezed. EURJPY lower remains their preferred bearish EUR expression, while also favouring EURCAD downside, partly on their quant signals.
- *JP Morgan Tech: A break below 1.02 in EURUSD turns JPM's attention to the next support that includes the 1.009 Nov 2022 pattern breakout and then the 0.9909 Sep 2022 78.6% retrace.
- *MUFG: Even if there was a second consecutive month of softer US inflation it is difficult to see it triggering a significant dovish repricing of Fed rate hike expectations at the current juncture and reversal of US dollar strength given inflationary fears related to Trump’s policy agenda.
- *Rabobank: Heightened expectations of a February BoE rate cut would likely put the GBPUSD 1.20 level in view. Rabo have brought forward their forecast of GBP1.20 to a 1-to-3-month view (from 6 months).
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MACRO ANALYSIS: MNI US Macro Weekly: Inflation Data Keep Fed Cut On Track
Dec-13 21:13
We have published and e-mailed to subscribers the MNI US Macro Weekly offering succinct MNI analysis across the range of macro developments over the past week. Please find the full report here:
USDCAD TECHS: Fresh Cycle High
Dec-13 21:00
- RES 4: 1.4393 2.0% 10-dma envelope
- RES 3: 1.4327 2.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4296 2.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4246 2.00 proj of the Oct 17 - Nov 1 - 6 price swing
- PRICE: 1.4236 @ 16:38 GMT Dec 13
- SUP 1: 1.4069/3944 20- and 50-day EMA values
- SUP 2: 1.3928 Low Nov 25 and a key support
- SUP 3: 1.3822 Low Nov 6
- SUP 4: 1.3747 Low Oct 17
The trend direction in USDCAD remains up and this week’s gains to a fresh cycle high, reinforces the current bullish theme. The pair has cleared 1.4178, the Nov 26 high, to confirm resumption of the uptrend and maintain the price sequence of higher highs and higher lows. Sights are on 1.4246 next, a Fibonacci projection. Key short-term support has been defined at 1.3928, the Nov 25 low. Initial support to watch lies at 1.4069, the 20-day EMA.
US TSYS: Extending Late Session Lows, Curves Bear Steepen Ahead Next Wed's FOMC
Dec-13 20:40
- Treasuries traded steadily lower throughout Friday's session, initially mirroring weak action in Bunds and Gilts. By the close, the Mar'25 10Y contract slipped to 109-26 (-18) the lowest level since November 22, 10Y yield rising to 4.4046% high (+.0768).
- Initial technical support at 109-22 (76.4% Nov 15 - Dec 6 Upleg) followed by 109-20 (Low Nov 20/21).
- Curves bear steepened: 2s10s +2.272 at 15.568 as short end rates outperformed ahead of next week's FOMC policy announcement where another 25bp rate cut was expected but not certain amid current macro and political uncertainty. That said, the latest unemployment and inflation data have kept the FOMC on track to cut the federal funds rate by 25bp (to 4.25-4.50%) next Wednesday.
- Projected rate cuts into early 2025 look near steady to lower vs. this morning levels (*) as follows: Dec'24 cumulative -24.3bp (-23.7bp), Jan'25 -28.6bp (-29.6bp), Mar'25 -42.2bp (-43.9bp), May'25 -48.4bp (-50.5bp).
- No reaction to this morning's import/export prices, Monday brings flash S&P Global PMIs, Retail Sales, IP & Cap-U on Tuesday.
