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Crucial Update :US Dollar Index ,USDJPY ,EURUSD ,USDINR ,AUDUSD ,GBPUSD,Chinese Yuan ,Bitcoin -Anirudh Sethi
Archives of “Forex” category
rssCFTC commitments of traders: EUR longs continue to grow.
Forex futures positioning data for the week ending March 31, 2020.
- EUR long 74K vs 61K long last week. Longs increased by 13k
- GBP long 5K vs 11K long last week. Longs trimmed by 6K
- JPY long 18K vs 24K long last week. Longs trimmed by 6K
- CHF long 5K vs 5K long last week. No change in the current week.
- AUD short 31k vs 25K short last week. Shorts increased by 6K
- NZD short 16K vs 16K short last week. No change in the current week.
- CAD short 22k vs 29K short last week. Shorts trimmed by 7K
Highlights for the current week:
- The EUR longs continued to add in the current week. The longs are at the highest level since June 2018. During the February 25 week, the shorts were at the lowest level at -114K. Since since that time, the position as swung 188K. The EURUSD has moved lower this week against the long position.
- AUD shorts increased by 6K this week. The AUDUSD as drifted lower this week
- Other positions remained relatively static and small. The CHF and NZD remained unchanged in the current week.
USDJPY has the largest trading range since November 2016
A trading range of 1052 pips
The USDJPY is finishing up a month where the low to high trading range has totaled 1052 pips. That is the 3rd highest range going back 10 years and the highs in trading range since November 2016 (US election month). The total range for 2019 was 939 pips. So one month, the range was bigger than one year.
Looking at the monthly chart above, the high for the month stalled near the high from last month and a trend line connecting the 2017 high and the high from February. That trend line cuts across at 112.06. The high for the month reached 111.71. Stay below, helped put a stall in the rallly. In the new month that trend line will cut across at 111.89, and a move above will be needed to give buyers more upside confidence.
On the downside this month, the price moved below the 100 month (at 105.55) and 200 month MA (at 104.06) after testing the MA twice in 2019 and bouncing. In 2018, there was two intra-month dips below the MA, but no closes below that MA level.
This month will also not close below the 200 month MA again (it has not closed below the MA since October 2016), but it did seriously break the MA in the month. The sellers had their shot to send the pair lower and weaken the technical bias from a longer term perspective, but they failed.
In the new month, it will take a move back below those monthly moving averages to hurt the longer term technical picture.
3 reasons why USD/JPY is heading back down to 105
A note via ING forecasting lower for USD/JPY, to 105 in three months
(1) Japan’s GPIF probably will not pour money into overseas bonds when $/JPY is above 110
(2) the rally to 112 was largely down to USD funding strains, which should reverse into April
(3) Japan’s large current account surplus will see JPY favoured in a recession.
Its a detailed note, but this snippet on point2:
- Amongst many fire-fighting measures, the Fed and the US Treasury have since re-introduced schemes to support the CP market directly (CPFF & MMLF) and measures to support investment grade corporate issuance (PMCCF and SMCCF)
- Along with the promise for unlimited QE, the Fed has managed to introduce some calm into money markets
- We expect even calmer conditions once the Japanese financial year-end has passed (March 31st) and the Fed starts its CPFF program in April. A turn-around in the basis swap should take some upside pressure off USD/JPY.
Nikkei 225 closes lower by 4.51% at 18,664.60
A rough day for Japanese stocks as Asian equities mostly fall
The Nikkei is the biggest loser in the region and Japanese stocks are not helped by the fall in SoftBank shares today, after Moody’s downgraded the company’s rating further from Ba1 to Ba3 yesterday – despite the company calling the move as “biased and mistaken”.
The Hang Seng is down by 0.8% while the Shanghai Composite is down by 0.4%, although there are decent gains in Australia (+2.3%) and India (+3.3%) on the day.
That said, with US futures sitting just over 1% lower currently, it is setting up a softer risk tone ahead of European morning trade. As such, risk/commodity currencies are on the back foot with AUD/USD down to 0.5915 currently – lower by 0.7% today.
Meanwhile, USD/JPY is also sitting lower as the yen is the best performing major currency amid a further drop in bond yields. The pair is currently trading at 110.60.
Yen crosses hit lower, AUD and NZD big losers
USD/JPY is back under 111 and the Australian and New Zealand dollars are dropping also
With the yen strengthening yen crosses are down, but especially against those two dollars.
Apart from what has been posted there is no fresh news. The US Congress negotiations seem set to continue for some time yet, this is not a ‘risk’ positive.
AUD/JPY hourly chart
European pre-market: Risk currencies lead the way
Risk is faring better as the US reaches a stimulus agreement
The dollar continues to sit at the bottom but is accompanied by the yen and franc on the day, as risk is keeping more optimistic to start European trading.
The aussie, kiwi and loonie have extended gains after the US reached a bipartisan agreement on the stimulus package to combat the economic fallout from the virus outbreak.
AUD/USD is back above 0.6000 as price also holds above both the key hourly moving averages, hinting that the near-term bias is now more bullish.
The pound is also continuing to capitalise on the weaker dollar after a solid performance yesterday, with cable now rising above the 1.1800 level.
But besides the aussie and kiwi, the other major currencies are sitting in a bit of a limbo against the dollar. Sure, they are paring losses against the greenback from over the past few weeks but the near-term technical picture remains more complicated.
As things stand, they are all (except the yen) sitting in between both the 100 and 200-hour moving averages against the dollar so far on the week still.
This points towards a more mixed mood that any significant dollar retracement may still be fleeting as the market continues to deal with the virus fallout.
As such, I would argue that we’re still a bit caught in the middle between a full-on ‘retracement week’ and a ‘early rally, late fizzle’ kind of week at the moment.
But for now, risk is sitting in a better spot but it is still too early in the day to draw conclusions. We have to wait and see what Wall Street has to say as well later today.
The Fed’s new dollar swap members
Dollar flexes its muscles to start the session
EUR/USD falls to a session low of 1.0845
The dollar is pushing forward with gains once again as it creeps higher against the euro and franc to begin the European morning. EUR/USD is brought down to a session low of 1.0845 after having traded around 1.0920 a few hours ago.
The greenback is also maintaining solid gains against the aussie and kiwi, while USD/JPY is looking to keep above 109.00 to start the session.
For EUR/USD, the pair looks to be making its way back to test the 1.0800 level but the key support level to watch out for will be the February low @ 1.0778.
Once that gives way, it opens up yet another slippery slope for the greenback to build further momentum to the downside.
As things stand, it looks like the dollar funding pressure is continuing to run its course.
EUR/USD falls to fresh two-week lows as dollar gains gather pace
EUR/USD looks for a firm break under its key daily moving averages
It looks like the blowup in funding pressures today is helping to settle the debate earlier in the day on which side EUR/USD may be looking to break out.
As mentioned then, one of the moving parts is dollar funding pressures but the blowup today has certainly seen a massive surge of flows into the greenback this morning.
EUR/USD has now fallen by 1.5% to fresh two-week lows and is looking for a firm break below the 100 and 200-day moving averages @ 1.1068 and 1.1097 respectively.
Keep a break under those levels and the bias in the pair turns more bearish once again. Further support is now seen closer to 1.0980-00 next.