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The Brazilian real hits all time low as it’s the worst emerging market currency this year

  
Analysis, Forex
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Hard times in Brazil

The market seems to love the idea of opening up while hating the idea of not closing at all.
USD/BRL hit a record today at 5.50. The Brazilian real is now down 26.7% on the year with hardly a bounce off the bottom.
Hard times in Brazil
What’s even worse is that the Brazilian bovespa is one among the world’s worst performing equity markets — possibly the worst. In BRL terms it’s down 31% and in USD terms it’s down 49.3%.
The latest leg down in the currency comes on increasing bets of rate cuts and proposed amendments to the constitution to allow the central bank to buy government and corporate bonds.

EU leaders talks end with no agreement on recovery package, euro slides

  
Analysis, Forex

EUR/USD down to 1.0788

Another day, another meeting, another failure to agree.
The good news is that the did agree on the need for coronavirus recovery support but they tasked the EU Commission to assets the needs and propose a way to finance it.
This is the EU’s version of ‘we’ve decided to study it’. The market doesn’t want a study, it wants action but the differences and structure of the eurozone make it so difficult. The euro truly was a 21st century solution to 20th century problems. We’re now in the era of debt monetization and European countries can’t participate.

AUD/USD months-ahead view – below 0.59

  
Analysis, Forex
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  • outlooks for their respective main commodities, posing downside risks over the medium term
  • Oil prices have plunged over the past year, partly due to excess supply, but also due to a dire economic outlook
  • metals tend for follow (or co-move with) oil
  • iron ore prices have help up … mainly due to supply bottlenecks .. Once those have been cleared, there’s potential for iron to more closely reflect the deterioration in demand. So too for coal
For the AUD
  • multi-month, we hold a negative bias … targeting as low as 0.59. 

Not so ‘risk on’ in FX: The yen is the top performer this week, the kiwi lagged

  
Analysis, Forex

Bonds also not sending positive signals

US stocks are higher today and up on the week but the FX and bond market isn’t sending the same signal. US 5-year note yields matched the March low this week at just 0.32%. In FX, the weekly leaderboard looks like this:
Bonds also not sending positive signals
Looking at the NZD/JPY chart, what stands out is that even with the weakness this week, it only covers a portion of the gain last week. In the bigger picture, we’re in a retracement phase but have stalled out at the 50% area or at the August low, which is now resistance.
NZDJPY

CFTC Commitments of Traders: Few heroes in this market

  
Analysis, Forex

Forex futures positioning data for the week ending April 14, 2020:

Forex futures positioning data for the week ending April 14, 2020:
  • EUR long 87K vs 80K long last week. Longs increased by 7k
  • GBP long 3K vs 4K long last week. Longs trimmed by 1K
  • JPY long 22K vs 22K long last week. Unchanged
  • CHF long 5K vs 6K long last week. Longs trimmed by 1K
  • AUD short 36k vs 35K short last week. Shorts increased by 1K
  • NZD short 15K  vs 14K short last week. Unchanged
  • CAD short 24k vs 24K short last week. Unchanged
What’s shocking to me is how little appetite there is to take positions right now. Market participants are leaving the markets to the whims of flows.
Aside from that, the big and inexplicable long position in the euro. I question if that’s truly a non-commercial position.

AUDUSD trades to a new session high

  
Analysis, Forex

Highest level since March 12

The AUDUSD is trading to a new day high and in the process is trading at the highest level since March 12. The high price reached 0.6388.
Highest level since March 12
Last week (on Thursday) the price moved above the 50% retracement of the move down from the end of December high at 0.6268. The price also moved above the March 9 low at 0.6300 level.   The high price has reached  0.63883 today. Close risk off the daily is 0.6300 and then 0.62681.  Stay above is more bullish.
Drilling to the hourly chart below, the pair is in an uptrend and testing a topside trend line as the market consolidates with a upside bias. The lower trend line comes in at 0.6334. Bulls would eye that level for intraday support. Move below and the pair may look to correct toward the 0.6300 support from the daily chart.
AUDUSD on the hourly chart
Buyers in control in the AUDUSD as technical levels are breached.  However, the price has work to do on the hourly to continue the trend today.

CFTC commitments of traders: EUR longs remain the largest position

  
Analysis, Forex

Forex futures positioning data for the week ending April 7, 2020

  • EUR long 80K vs 74K long last week. Longs increased by 6k
  • GBP long 4K vs 5K long last week. Longs trimmed by 1K
  • JPY long 22K vs 18K long last week. Longs increased by 4K
  • CHF long 6K vs 5K long last week. Longs increased by 1K
  • AUD short 35k vs 31K short last week. Shorts increased by 5K
  • NZD short 15K  vs 16K short last week. Shorts trimmed by 1K
  • CAD short 24k vs 22K short last week. Shorts trimmed by 2K
Prior week report can be found here.
The EUR remains the largest position and continued to get larger (by 6K) and was also the largest change in position of the major currencies.  The EURUSD did correct higher during the week from the lowest level since March 25th
The 2nd largest position is a 35K short in the AUD. The AUD position was not so fortuitous as the AUD corrected higher in trading this week.
The other changes in positions were 4k or less in the current week.
Forex futures positioning data for the week ending April 7, 2020
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