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Monday morning open levels – indicative forex prices – 28 December 2020

  
Analysis, Forex

Good morning, afternoon or evening to all ForexLive traders and welcome to the start of the new FX week – the final one for 2020.

On a Monday morning, market liquidity is very thin until it improves as more Asian centres come online – and its even less liquid than usual today due to the holiday mode many liquidity providers are in.

Prices are liable to swing around on not too much at all, so take care out there.
Guide:

  • EUR/USD 1.2188
  • USD/JPY 103.56
  • GBP/USD 1.3574
  • USD/CHF 0.8883
  • USD/CAD 1.2848
  • AUD/USD 0.7601
  • NZD/USD 0.7105

Japanese Prime Minister Sugua has painted a target on USD/JPY – don’t let it fall under 100

  
Analysis, Forex

PM Suga has told officials at Japan’s Ministry of Finance not to let USD/ yen drop under 100

Japanese media, Nikkei with the info:

  • “Make sure the yen-dollar exchange rate does not cross the 100 yen mark”
  • confirmed by multiple sources
  • came with an unspoken message: Be prepared to sell yen for dollars in case the Japanese currency breaches the key threshold.
  • Suga’s willingness to consider an intervention — an option often seen as a last resort — took many by surprise.
Suga’s order came just after US election day.
PM Suga has told officials at Japan's Ministry of Finance not to let USD/ yen drop under 100

CFTC commitments of traders: Most net positioned are trimmed this week

  
Analysis, Forex

Weekly FX positioning data for the week ending December 15, 2020

  • EUR long 142K vs 156K long last week. Longs trimmed by 14K
  • GBP long 4K vs 6K short last week. Longs trimmed by 2K
  • JPY long 44K vs 48K long last week. Longs trimmed by 4K
  • CHF long 9K vs 10K long last week. Longs trimmed by 1K
  • AUD short 9K vs 10K short last week. Shorts trimmed by 1K
  • NZD long 14K vs 11K long last week. Longs increased by 3K
  • CAD short 16k vs 21K short last week. Shorts trimmed by 5K
  • prior week
Highlights:
  • 6 of the 7 currencies saw the net speculative position trimmed
  • The EUR long position was trimmed the most by 14K
  • The EUR long position remains a largest at 142K. The JPY is the next largest position at long 44K

Downside for cable may be limited to 1.25, upside limited to 1.36

  
Analysis, Forex

Commentary on sterling via Scoita, leading off with a very fair observation indeed:

  • The outlook for GBP remains fluid, with the precise trade framework which will govern the UK’s trade relationship with the EU after Brexit at the end of the month still to be determined. 
Yep.
Further (bolding mine):
  • It remains unclear whether a trade deal can be reached, however. 
  • No deal will be negative for the GBP—and the EUR, to an extent—while a last-minute agreement will leave both sides of The Channel under-prepared for the new regime. 
  • We expect any early year EUR softness to remain relatively contained. And we also feel that a lot of bad news is already factored into the GBP, tilting medium-term risks towards the topside and suggesting shorter-term weakness may be limited to the 1.25/1.27 area.
‘Limited’ to 1.25 (even 1.27) …. I’ll take that!
A separate analysis from the bank:
  • Brexit negotiations … a fully-fledged trade compact with Europe and a settlement on the status of Northern Ireland are likely to remain pending agenda items into 2021 even if initial deals are concluded before the holidays. 
  • dim view of the UK’s prospects is compounded by Westminster’s uneven response to the COVID-19 pandemic
  • “We believe the GBP is gearing up for a sharp decline toward or below the 1.30 mark upon a final announcement that trade discussions have concluded without a deal; upside remains limited (1.36) given the still-low odds of a deal.”
Commentary on sterling via Scoita, leading off with a very fair observation indeed:

The AUD is the strongest for the week, while the GBP is the weakest

  
Analysis, Forex

The USD is modestly lower

For the week, the AUD is ending as the strongest of the major currencies, while the GBP is the run away weakest.  Nearly a 1/3 of the gains for the AUD was against the GBP (+3.02%).  The currency also moved 1.51% vs the EUR and 1.47% vs the USD.
The GBPU had declines ranging from -1.53% to -3.02% vs the major currencies.
In contrast, the USD is ending marginally changed vs all but the GBP and the AUD (the USD rose 1.59% vs the GBP and fell -1.47% vs the AUD).  In fact, the current snap shot shows the dollar moved from 0.04% to 0.33% vs the major currencies. That is not a big change for the trading week.
Safe to say, the USD consolidated the recent declines this week.

CFTC commitments of traders: EUR longs increased. GBP position switches from short to long

  
Analysis, Forex

Weekly FX positioning data for the week ending December 8, 2020

  • EUR long 156K vs 140K long last week. Longs increased by 16K
  • GBP long 6K vs 8K short last week. Longs increased by 14k
  • JPY long 48K vs 48K long last week. Unchanged
  • CHF long 10K vs 15K long last week. Longs trimmed by 5K
  • AUD short 10K vs 11K short last week. Shorts decreased by 1K
  • NZD long 11K vs 9K long last week. Longs increased by 2K
  • CAD short 21k vs 21K short last week. Unchanged
  • prior week
Highlights:
  • GBP position turned from short to positive
  • EUR longs increased
  • CHF and CAD are the only shorts. The biggest short is the CAD.

AUDUSD extends to highest level since mid June 2018

  
Analysis, Forex

Price today moved above the July high at 0.7483

The AUDUSD is following the USD lower, and has moved above the July 2018 high at 0.7483.  Yesterday, the high price stalled ahead of that level.
 The price is currently trading at 0.75212.  Looking at the daily chart below, that puts the price and then upper range from mid 2018 between 0.74526 and 0.7676.
Price today moved above the July high at 0.7483_
Drilling down to the hourly chart below, the pair yesterday extended above a swing area between 0.7448 and 0.74529, but failed.
However, the move back to the downside stalled against a lower trendline (see red numbered circle 5). The rebound was on.
In the Asian session today, the price move back above the swing area and after a retest of the level (see green numbered circle 8), buyers started to push the price higher and above the high price from yesterday at 0.7485 area.
AUDUSD on the hourly chart is breaking higher The buyers are making a  breakout play on the daily (above 0.7483) and on the hourly chart as well (above 0.7448-53 and the high from yesterday at 0.7484.  Stay above 0.7483 keeps the buyers in firm control. A move below that level could see more downside probing on the failure. The 0.7448-53 area is a key line in the sand for buyers now.  Move below would not be welcomed.

CFTC commitments of traders: EUR longs remain the largest speculative trader position

  
Analysis, Forex

Weekly FX positioning data for the week ending December 1, 2020

  • EUR long 140K vs 138K long last week. Longs increased by 2K
  • GBP short 8K vs 17K short last week. Shorts trimmed by 9K
  • JPY long 48K vs 40K long last week. Longs increased by 8K
  • CHF long 15K vs 15K long last week. Unchanged
  • AUD short 11K vs 5K short last week. Shorts increased by 6K
  • NZD long 9K vs 8K long last week. Longs increased by 1K
  • CAD short 21k vs 17K short last week. Shorts increased by 4K
  • Prior report
Highlights:
  • EUR longs remain as the largest speculative position (the EURUSD reached the highest level since April 2018 this week
  • JPY longs are the next largest position at 48K.
  • The largest short position in the CAD.  Traders are on the wrong side of that trade with the loonie ticking below the October 2018 low at 1.27819 today after a stronger jobs report. The 5th straight week of crude oil price gains has also benefited the CAD
  • Shorts in AUD, GBP are also the wrong direction as both traded to multi year highs this week.
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