FOREX: USDJPY Accelerates Above 156.00 Following Katayama/Ueda Meeting
Nov-19 11:43
- USDJPY quickly accelerated through yesterday's highs to hit a new cycle high on Wednesday, extending as high as 156.30 following a meeting between Finance Minister Katayama and BOJ Governor Ueda. Katayama stated the two "did not specifically talk about FX", possibly suggesting JPY weakness is not the highest priority and greenlighting the market to put further pressure on the struggling yen.
- Price action takes the pair above 155.89, the Feb 3 high, while more meaningful resistance is seen at 156.75, the Jan 23 high. For EURJPY, targets rely on technical projections, with 181.01 and 181.70 the next levels of note based on the Jul 31 - Sep 29 - Oct 2 price swing.
- The likes of AUD (-0.32%) and NZD (-0.55%) are underperforming on the session, amid the ongoing concerns for risk and major equity indices consolidating near recent lows. Recent weakness in AUDUSD reinforces a short-term bearish signal on Nov 13 - a shooting star (inverted hammer) candle formation. NZDUSD has been grinding towards cycle lows, which are located at 0.5606.
- UK CPI printed roughly in line with expectations, which may lower the bar for a December cut a touch, however, overall the print should not have much of an impact for policy over the medium term. While the BoE will get the next round of CPI data under embargo on the Monday before the next meeting, the main risk event for BoE policy ahead continues to be next week's budget.
- Moving average studies in GBPUSD remain in a bear-mode condition and continue to highlight a dominant downtrend. The bear trigger remains at 1.3010, the Nov 4 and 5 low, while key short-term resistance stands at the 1.3198 20-day EMA.
- Nvidia earnings incl. guidance have the potential for an impact on FX, especially given recent caution around AI valuations. Fed's Logan, Miran, Barkin, and Williams are on the calendar, alongside the October FOMC minutes. US September Payrolls will headline Thursday.
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OUTLOOK: Price Signal Summary - Bull Phase In Gilts Remains Intact
Oct-20 11:24
- In the FI space, despite strong selling pressure on Friday, a bull cycle in Bund futures remains intact. The impulsive nature of the latest rally and a fresh cycle high on Friday, paves the way for a test of the next key resistance 130.80, the Jun 13 high. Clearance of this level would strengthen the bullish condition. Note that the contract is overbought, a deeper pullback would allow this condition to unwind. Key support is 129.12, the 20-day EMA. Initial firm support is 129.44, the Sep 10 high.
- A bull cycle in Gilt futures remains intact and last week’s strong impulsive rally reinforces current conditions. Recent gains resulted in a breach of key resistance at 91.82, the Sep 24 high. The break opens 93.30 next, a 1.236 projection of the Sep 3 - 11 - 26 price swing. Note that the trend is overbought and a deeper retracement would allow this condition to unwind. Key support to watch lies at 91.39, the 20-day EMA. Initial firm support is at 91.82, the Sep 24 high and a recent breakout level.
UK: MNI Gilt Week Ahead: Another huge data week to come
Oct-20 11:18
Full MNI Gilt Week Ahead here.
- It will be another busy week for UK data next week with fiscal data due for release on Tuesday, CPI on Wednesday and retail sales and flash PMI data due on Friday. Note that these will be the last releases of these data to be included in both the November MPR and the OBR's forecasts for the Budget.
- We look at the weekend's fiscal news and the impact on CPI that different changes to energy taxation could have.
- We also look back at last week's main MPC comments and ahead to this week.
- The full document also includes supply previews for the week ahead, balance sheet and repo operations trackers, a UK-focused calendar and a summary of gilt operations and the DMO's issuance plans.
EGB OPTIONS: Bund downside Put Spread
Oct-20 10:57
RXF6 129.00/127.50ps, bought for 33 in 2k.
