Archives of “Currency pair” tag

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EUR/USD falls to fresh two-week lows as dollar gains gather pace

  
Analysis, Forex
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EUR/USD looks for a firm break under its key daily moving averages

EUR/USD D1 17-03

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.

Dollar poised to benefit as China economic growth takes virus hit – Citi

  
  Analysis
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The firm says that the dollar is well placed to benefit from the situation compared to other G-10 currencies in the market

Dollar

Citi’s currency strategist, Adam Pickett, says that “consensus expectations have not yet fully adjusted to the reality of weaker Chinese growth that will result from efforts to contain COVID-19”.

Adding that the market is underpricing the possibility of China’s economy being dealt a blow and overvaluing the prospects of recent stimulus measures. As such, Pickett argues that the dollar stands to benefit and outperform in this scenario.
Noting that the greenback should outperform against open manufacturing economies such as the NOK, NZD and EUR. Although safe havens may perform better, the US economy and key trading partners are “likely to be insulated”, he argues.
Additionally, he points out that market hopes for meaningful Chinese stimulus to ensure a V-shaped recovery are overblown – saying that the current Chinese administration “still prefers slower, sustainable growth than previous cycles”.
This adds to the NAB dollar call earlier in the day here but again, I would say it is conditional upon which currencies you’re looking at and on what scenario.
A highly risk-off landscape would still favour the yen more so than the greenback but against the likes of the kiwi and euro, the dollar definitely will shine if the situation plays out as what is described by Pickett above.

Cable climbs to highest level since June 2018 as exit poll forecasts big win for the Conservatives

  
Analysis, Forex
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GBP/USD climbs above 1.34 and is perhaps looking at the 1.35 level now

GBP/USD W1 13-12

The pound has surged ahead with a jump of nearly 300 pips on the headline earlier and is now possibly looking towards the 1.3500 level against the dollar next.
Looking at the chart, price is running into some resistance from the 61.8 retracement level @ 1.3453 though so perhaps that may help to limit gains for now.
Going into the exit poll, my bias was that an overwhelming majority should see cable run up the March highs of 1.3381 and the 1.3400 level. I reckon perhaps we could see price action consolidate around these levels amid some retracements over the next hour.
But if anything, keep an eye on resistance at 1.3453 and the key psychological level – 1.3500.
The exit poll has had a prescient track record in recent years but do be reminded that this year the election may be one of the tightest ones yet. As such, we’ll see how the actual results compare and if there is more potential for further moves in the coming hours.
Just remember, it is not over until the fat lady sings (actual results declared).

What lies ahead for the USD?

  
Analysis, Forex
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What is the outlook for the US dollar

What is the outlook for the US dollarThe USD has been steady versus a basket of major currencies since the start of 2019. The dollar index is trading close to September highs, which, in turn, are at the maximum levels since 2017.

The current week, however, hasn’t been very positive for the American currency. So, what future awaits it? In this article, you will find the fundamental outlook for the greenback.

US economy has faltered

Life shows that it’s not possible to fight in trade wars and stay unharmed. The data released on Tuesday showed that the US manufacturing sector is in its worst condition in a decade: ISM Manufacturing PMI dropped from 49.1 to 47.8 in September.

A reading below 50 indicates industry contraction. Given how low the latest number is, it’s certain that even if the underlying picture changes and positive factors come into play, the situation won’t be able to improve fast.

And so far, there are few reasons to believe that the United States and China will achieve a big breakthrough in their negotiations. Representatives of the nations will meet next week on October 10 and 11.

Although soothing comments may cheer the stock market, it will take the mutual renunciation of tariffs to amend the damage done to the economy. If talks fail, there will be more tariff hikes in the following months and hence an even stronger economic pain.

Moreover, recent rumors indicate that Donald Trump is considering limiting American investment flows to China. This step, if taken, would further escalate the trade conflict.

Remember that everything is interdependent in the economic world. Considering the external troubles, it’s now up to US consumers to drive economic growth. For them to be able to do that, they need ample wages.

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Deutsche Bank have raised their probability for a ‘no-deal’ Brexit to near 50%

  
Analysis, Forex
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The bank says sterling is not cheap and that GBP can go much lower

DB have raised the probability for a ‘no-deal’ Brexit to 45%.
The bank acknowledges that on long term valuation models (citing PPP and FEER models) GBP is close to fair value, but say political risk is skedded asymmetrically downwards. Short GBP/JPY “remains an excellent expression ” (adding that yen is ranking far cheaper across our suite of trade-based models )
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Weekly chart below:
The bank says sterling is not cheap and that GBP can go much lower

AUD/USD falls to two-week low amid poor data and firmer US dollar

  
Analysis, Forex
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AUD/USD falls to its lowest level since 24 June

AUD/USD H1 09-07

The pair is hitting a fresh low of 0.6936 on the day now as the aussie is dragged lower by poor business confidence data earlier and some notable strength in the greenback in the past hour of trading during the European morning.
That’s the lowest level the pair has traded since 24 June as sellers continue to stay in near-term control and are looking for a move towards 0.6900 ahead of Fed chair Powell’s testimony tomorrow and on Thursday.

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