FOREX: USDJPY Consolidates Weekly Advance Ahead of Japan UH Election
Jul-18 17:02
- Despite trading with a softer tone for much of Friday’s session, some late greenback strength has seen the USD index pare losses to remain just moderately lower on the session. Some late weakness for equities appears to have been behind the dollar reversal, but overall, currency markets have lacked conviction across the session.
- Scandinavian currencies remain at the top of the G10 leaderboard, while the likes of AUD (+0.40%) and NZD have remained resilient (+0.59%). In contrast, the Japanese yen is lower on Friday, as markets remain concerned regarding this week’s upper house election in Japan, and the potential fiscal ramifications ahead. GBP is unchanged having briefly flirted back above the significant trendline break this week. A short-term bear cycle in GBPUSD remains in place.
- Despite the softer USD index today, it has broadly consolidated a solid weekly advance of around 0.5% and fresh recovery highs this week underpin the more constructive short-term outlook. Both the Australian dollar and the Japanese yen have been particular laggards across the week, as domestic developments weigh.
- In Australia, a much weaker-than-expected jobs report has bolstered RBA easing bets, while the increased volatility surrounding the Trump-Powell spat has likely provided an additional headwind to higher beta currencies. AUDUSD support at the 50-day EMA, at 0.6490, was temporarily breached. A clear break of this EMA would highlight a stronger reversal and signal scope for an extension lower.
- In Japan, the ruling party is still projected to lose its majority in the upper house, and this has allowed USDJPY to reach fresh 3-month highs this week above 149.00. Above here, attention will be on 149.38, the 50.0% retracement of the Jan 10 - Apr 22 bear leg, and 150.49, the Apr 2 high. On the downside, initial support is seen at 146.92 (Jul 16 low), however key short-term support is located at 145.66, the 50-day EMA.
- On Monday, New Zealand Q2 CPI highlights the economic calendar.
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FED: US TSY 17W BILL AUCTION: HIGH 4.235%(ALLOT 15.23%)
Jun-18 17:02
- US TSY 17W BILL AUCTION: HIGH 4.235%(ALLOT 15.23%)
- US TSY 17W BILL AUCTION: DEALERS TAKE 26.62% OF COMPETITIVES
- US TSY 17W BILL AUCTION: DIRECTS TAKE 5.40% OF COMPETITIVES
- US TSY 17W BILL AUCTION: INDIRECTS TAKE 67.97% OF COMPETITIVES
- US TSY 17W BILL AUCTION: BID/CVR 2.88
EURUSD TECHS: Bullish Conditions Remain Intact
Jun-18 17:00
- RES 4: 1.1783 1.764 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 3: 1.1696 1.618 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 2: 1.1685 76.4% retracement of the Jan ‘21 - Sep ‘22 downleg
- RES 1: 1.1631 High Jun 12
- PRICE: 1.1504 @ 15:50 BST Jun 18
- SUP 1: 1.1425 20-day EMA
- SUP 2: 1.1286/1.1210 50-day EMA and a pivot level / Low May 29
- SUP 3: 1.1131 Low May 16
- SUP 4: 1.1065 Low May 12 and a reversal trigger
The trend set-up in EURUSD remains bullish and short-term weakness is for now considered corrective. Recent gains have resulted in a breach of 1.1573, the Apr 21 high. This strengthens the bullish theme and confirms a resumption of this year's uptrend. Scope is seen for a climb towards 1.1696, a Fibonacci projection. Initial firm support is at 1.1425, the 20-day EMA. The 50-day EMA lies at 1.1286. Short-term weakness is considered corrective.
SWITZERLAND: Analysts Tilt Towards Modest CHF Strength In Tomorrow's SNB [2/2]
Jun-18 16:52
- Analysts on balance appear to see modest CHF strength as the relatively most likely outcome for FX markets for tomorrow's SNB meeting - but views are not unanimous:
- * Barclays: "Modest hawkish risks into the meeting, with the market having likely flipped short the franc in recent weeks."
- * Goldman Sachs: "We expect global drivers to be more important for the direction of CHF in the near term than domestic policy and think CHF should remain supported even in a backdrop of negative rates."
- * JP Morgan: "While CHF has usually weakened on days of dovish surprises in this cycle, there was only continued follow-through in the days and months after in two out of five instances (Jun, Dec’24). We do not think an ultimate landing zone in negative territory would be much of a headwind to franc strength if global/regional growth forces are in its favour."
- * Nomura: "We have been recommending long EUR/CHF, targeting 0.9650, since mid-May, because of the view that the SNB is more likely than not to deliver policy actions to alleviate Swiss deflationary risks and CHF appreciation."
- * UniCredit: "CHF is likely to weaken across the board, although a scenario of negative interest rates in Switzerland is already priced into forward rates."
