Archives of “Forex” category

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Analysis, Forex

GS note CNH, and other Asian currencies, strength approaching the G20 meeting next week (June 28 and 29), and are looking to short CNH.

Citing that even if there is some sort of easing in trade tensions at the G20 they will not disappear entirely:
  • likely to “ebb and flow”
  • still see additional tariffs as “more likely than not”
GS also say yen looks attractive still (Fed rate cuts, signs of slower US economic growth to chip away at USD strength).Yuan had a good one last week, following the PBOC holding it fairly steady since mid-May  despite market expectations it would fall:GS note CNH, andother Asian currencies, strength approaching the G20 meeting next week (June 28and 29), and are looking to short CNH.

CFTC commitments of traders: EUR and JPY shorts trimmed

  
Analysis, Forex

Weekly Forex futures that noncommercial positioning data for the week ending June 18, 2019

  • EUR short 52K vs 87K short last week. Shorts trimmed by 35K
  • GBP short 53K vs 45K short last week. Shorts increased by 8K
  • JPY short 17K vs 45K short last week. Short trimmed by 28K
  • CHF short 15k vs 25k short last week. Shorts trimmed by 10K
  • AUD short 65k vs 63k short last week. Shorts increased by 2K
  • NZD short 24K vs 16K short last week. Shorts increased by 8K
  • CAD short 38K vs 33K short last week.  Shorts increased by 5K
  • Prior week
Highlights:
  • EUR shorts were trimmed by a decent 35K. The position short was as high as 100K a month or so ago.  Now 1/2 that position
  • JPY shorts were also trimeed significantly in the week.
  • GBP, AUD, NZD and CAD shorts on the otherhand were increased.

GBP/USD sits at six-month low with CPI to come

  
Analysis, Forex

UK CPI is due Tuesday

UK CPI is due Tuesday
Cable is down only 50 pips today but the decline is doubly disappointing because it comes after a sharp fall on Friday and because it broke through the May 31 support level. That’s an area that should have provided some decent support ahead of the FOMC meeting.
Instead, cable is already breaking down with little support now separating it from the January flash-crash low of 1.2441.
The main hurdle ahead of the FOMC decision is the UK CPI report on Tuesday at 0830 GMT. The consensus is for a 0.3% m/m and 2.0% y/y rise. A miss to the downside would further wound the BOE hawks and compound the pain from last week’s poor GDP and industrial production numbers.

Morgan Stanley says Fed could cut to near-zero in a year

  
Analysis, Economy, Forex

Morgan Stanley on the Fed

  • US-China trade tensions may lead to Fed to lower US rates near zero by Spring 2020
  • US-China tensions may tip US economy into recession in 2020, ‘depending on policy support’
  • US-China trade relations may knock S&P 500 down towards 2400, 10-year yields to 1.75% this year
  • Dollar initially higher against risk-sensitive currencies on trade war, but lower later
These comments are all conditional but point to an ugly outcome if it all goes badly. The question I always ask is: what’s a trade war? Are we in one now, or do we need 25% tariffs on everything and retaliation? There’s also plenty of gray area in between.
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