Archives of “Forex” category

rss

Goldman Sachs best US recession hedge is short USD/JPY

  
Analysis, Forex

Client note from GS overnight, in summary:

  • A global recession is likely to see falling US yields alongside falling US stocks
  • USD/JPY the most likely pair to weaken
GS cite
  • US/yen falls during risk-off periods as investors move into the safe-haven yen
  • BOJ yield curve control policy fixes nominal yields in Japan, thus a US yield fall makes a more favourable Japan / US differential
(hmmmm …. the BOJ have allowed JGB yields to drift lower …. and regardless, while the differential might improve as GS suggest its still positive for US assets. Anyway, back to GS … )
  • not expecting a global recession in the near term
  • but do not a a drop in activity ex-US
Other trades GS like in the event of a global recession when US stocks drop:
  • long AUD/CLP, EUR/PLN,
  • short NOK/SEK, EUR/CZK and EUR/CAD

EUR/USD forecast to 1.10 before the end of the year (might be a little quicker than that though ….)

  
Analysis, Forex

A forecast for euro against the USD to fall to 1.10 before the end of this year.

Well, yeah. Not like there is far to go.
The forecaster, to be fair, has been calling it lower from a lot higher than here. After 1.10:
  • Rabo then expect it to trade to 1.15 on a 12 month horizon
Say the moves in Germany could prove supportive:
  • perhaps the German government will bow to calls of a fiscal belt loosening has breathed a little support into the EUR
On the European Central Bank:
  • In September it is likely that the outlook for the Eurozone and the reactions of the ECB will be instrumental in determining the direction of EUR/USD
On Italy:
  • the market has reacted well to the assumption that Italy could avoid a snap election and another budgetary battle with the EU in the near term
  • Italian politics combined with Brexit risks remain potentially negative factors for the EUR
On the Fed:
  • our expectation that the pace of Fed rate cuts are likely to accelerate in 2020 suggest that there is still scope for EUR/USD to head a little higher medium-term and we maintain our forecast of 1.15 on a 12 month view

CFTC commitment of traders: GBP shorts trimmed modestly. JPY longs increased.

  
Analysis, Forex
#  #  #  #  #  #

Forex futures positioning data among noncommercial traders for the week ending August 13, 2019

  • EUR short 47K vs 44K short last week. Shorts increased by 3K
  • GBP short 96K vs 102K short last week. Shorts decreased by 6K
  • JPY long 25K vs 11K short last week. Longs increased by 14K
  • CHF short 13k vs 16k short last week. Shorts trimmed by 3K
  • AUD short 63k vs 55k short last week. Shorts increased by 8K
  • NZD short 13K vs 12K short last week. Shorts increased by 1K
  • CAD long 14K vs 24K long last week.  Longs trimmed by 10K
Highlights:
  • JPY and CAD remain long, while the other major currencies maintain short position
  • The JPY longs increased by 14K. That is the largest long position since November 2016 (see chart below).
  • CAD longs were trimmed by 10K.
  • GBP shorts were trimmed modestly in the current week to 96K but the position remains the largest speculative position. The GBP moved modestly higher in the week.
JPY longs are the largest since November 2016

Japan is once again the largest holder of US Treasuries

  
Analysis, Forex
#  #  #

Japan re-takes the lead

The latest TIC flows data is out and shows:
  • Japan Treasury holdings at $1.123 trillion
  • China holdings at $1.113 trillion
They’ve been neck and neck for awhile. Two years ago China passed Japan but they’ve now reversed. One line of thinking will be that this is trade war related but I wouldn’t be so quick to draw that conclusion.

Eyes on the PBOC reference rate setting for onshore yuan due soon

  
Analysis, Forex

The mid rate from the People’s Bank of China for USd/CNY is due just after 0115GMT.

Reuters estimate is for a rate at 7.0421. If you’ve been following aolong the past week or so you’ll know that these estimates have come in on the igh side for USD/CNY. yes, the PBOC is allowing the yuan to weaken, but not by as much as expected.
I do wonder if that will change soon given the … is collapse to strong a word? … weaker credit growth reported yesterday:
  • New yuan loans ¥1,060.0 bn vs ¥1,275.0 bn expected
  • Aggregate financing ¥1,010.0 bn vs ¥1,625.0 bn expected
  • China FX regulator chief says does not expect disorderly depreciation of the yuan
Offshore yuan relatively steady today:
The mid rate from the People's Bank of China for USd/CNY is due just after 0115GMT.

USD/ARS hits 61 from 45 at Friday’s close

  
Analysis, Forex, Global Indices

It wasn’t even a real election

It wasn't even a real election
The primary vote on the weekend in Argentina was essentially an indicative vote but the market was betting that Macri could keep the gap close enough to win out in October.
Instead, he looks dead in the water, losing to Peronist Alberto Fernandez 32.1% to 47.7%.
The gap in the big-ask spread in USD/ARS is as much as 12%.
The main Argentina ETF is down 24%: (ARGT) with banks taking the brunt of the pain:
ARGT
Go to top