AUD: 'Patience Will Pay'; What's The Trade? – ANZ

ANZ FX Strategy Research argues that much of the good news that has propelled the AUD through the last month–looks well priced into the currency.

“With the USD back to its fair value levels, risk appetite looking stretched and given the current elevated level of the Australian surprise index, these sources are unlikely to provide further impetus to the AUD and, if anything, we see downside risks for the currency in the near term,” ANZ argues.

“Over the rest of the quarter though, things look different. The weaker US inflation pulse, together with the tentative improvement that we are seeing in the activity data in Australia, means that rate differentials are unlikely to move further in favour of the US for now. 

This shift, together with the fact that we expect global growth to re-accelerate in the months to come and that liquidity will remain at elevated levels for now, means that near-term downsides should be used to re-enter long positions. Patience will pay,” ANZ advises. 

Source: ANZ, eFXnews™

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AUD, NZD, CAD: Important Test Fore Longs; What's The Trade? – SocGen

Societe Generale FX Strategy Research notes that the latest positioning data suggest that the combined AUD, NZD and CAD long hasn’t been this big since AUD and CAD were worth more than a dollar each.

“Markets, as eager to jump on a new trend as teenagers, have been enthusiastic buyers of the idea that the Fed is old hat in the tightening cycle and the fun comes from BOC/RBA/RBNZ.

It’s better to be too early than too late, but the RBA this week and the RBNZ next week will both make us wait and no-one much wants a stronger currency so the longs are going to struggle for good news, other than the ongoing sogginess of US bond yields, and the revival in commodity prices.

Which is another way of saying we’ll be happy if we find AUD and CAD at these levels in a week’s time. The RBA meets tomorrow and the RBNZ meets next week. Neither will adjust rates, but maybe the RBA’s economic assessment will provide enough support to the market to prevent a correction,” SocGen argues. 

Strategy-wise, SocGen likes AUD and CAD longs against JPY and USD.

Source: Societe Generale Cross Asset Research

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EUR/CHF: Ride The Upward Momentum For Longer – Nordea

Nordea FX Strategy Research notes that recent weeks have seen a change of scenery and EUR/CHF is finally on the rise even without SNB helping the move.

“The post Sintra move up in EUR rates is helping, as EUR/CHF has been sensitive to rates spreads. And with a diminishing spread throughout the spring, EUR/CHF struggled to find pace, even with a stronger EUR momentum broadly.

Short-term we fancy riding the upwards momentum even longer, but beyond a 2/3 months horizon, we would still be cautious in terms of extrapolating the current momentum. Especially with an Italian election luring. And adding to that, there is the risk that markets will be left disappointed by the ECB,” Nordea advises.

Source: Nordea Research

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from eFXNews http://feedproxy.google.com/~r/Efxnews/~3/3eVpL1I3TBA/eurchf-ride-upward-momentum-longer-nordea

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USD: Stage Set For A Corrective Rebound But No Obvious Trigger Yet – BTMU

BTMU FX Strategy Research notes that the USD has continued to trade at weaker levels following the release of the latest US GDP and Employment Cost Index reports which proved weaker than expected.

Overall, BTMU notes that the reports will continue to dampen expectations for further Fed tightening this year and leave the US dollar offered.

However, BTMU argues that while the USD is lacking fundamental support, the risk of a reversal is also high against most other G10 currencies in the very near term. 

The stage is being set for a corrective rebound but there is no obvious fundamental trigger yet,” BTMU argues.

Source: BTMU Research

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from eFXNews http://feedproxy.google.com/~r/Efxnews/~3/UVn0R1H0iQ8/usd-stage-set-corrective-rebound-no-obvious-trigger-yet-btmu

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Citi Trade Of The Week: Sell GBP/NZD

Currency investors should consider selling GBP/NZD this week, advises CitiFX Strategy Research in its weekly pick.

“GBP may be vulnerable approaching the MPC meeting….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.

NZD sensitivity to even weak positive catalysts may be heightened given market positioning…This may leave some investors poorly positioned for more positive news flow,” Citi says as a rationale behind this call.

Source: Citi Research

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from eFXNews http://feedproxy.google.com/~r/Efxnews/~3/1U2yIyC8Lf8/citi-trade-week-sell-gbpnzd

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Preview: EMU: Euro Area (E19) Inflation HICP, Preliminary

Preview: EMU: Euro Area (E19) Inflation HICP, Preliminary

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Preview: EMU: Euro Area (E19) Inflation HICP, Preliminary

Preview: EMU: Euro Area (E19) Inflation HICP, Preliminary

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GBP: Balance Of Risks Into This Week's BoE – BTMU

BTMU FX Strategy Research expects that there will be no change from the BoE August policy meeting on Thursday but argues that the direction of recent UK data flow is clearly pointing to a greater probability of a rate hike at the next QIR MPC meeting in November.

On GBP front, BTMU notes that sterling is trading near levels not seen since 16th September last year before PM May’s ‘Hard’ Brexit speech at the Tory Party Conference on 2nd October.

We still see upside risks for the pound over the near-term,” BTMU adds.

Source: BTMU Research

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EUR/USD: Is Close Above 2015 Highs The Beginning Of Something More? – Barclays

Barclays Capital FX Strategy Research notes that that the current debate in FX market is whether the recent EUR/USD close above 2015 highs of 1.1714 represents the beginning of something more.

We address this subject and conclude that valuation, relative returns and risks do not support further appreciation. Instead, conditions for a tactical reversal are increasingly apparent,” Barclays argues. 

In terms of European data this week, Barclays notes that they are unlikely to change the well-appreciated dynamic of still-low inflation expecting Monday’s July HICP at 1.3% y/y in line with consensus.

Source: Barclays Research

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EUR/USD: 'Elevator Up, Stairs Down'; A Big Deal On Tech Front: Key Targets – Nordea

Nordea FX Strategy Research notes that EUR/USD recent price-action can be summarized by the phrase ‘elevator up, stairs down’.

“….And despite diverging vs rate spreads, despite stretched positioning (on IMM and similar data), despite a higher US economic surprise index, and despite a lull in equity inflows, the pair keeps rising.

We suspect real money reallocations amidst thin markets are at work, and while EUR/USD is now almost in line with its long-term (since 1973) average of 1.18, 1.25 – which is a nice round number, and 1.29 – the average since 2005 are more likely to be seen as “fair” values,” Nordea argues.

Technically, Nordea argues that the weekly close above 1.1685 is a ‘big deal’.

The next likely resistance is the 200wma at 1.1798, above which 1.25 beckons (38.2% retracement of the 2008-2017 drop),” Nordea project. 

Source: Nordea Research

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from eFXNews http://feedproxy.google.com/~r/Efxnews/~3/ExxCWPl6nwc/eurusd-elevator-stairs-down-big-deal-tech-front-key-targets-nordea

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