Forex Insider Daily Update 11 June 2017

Major Bank Daily Position

EUR/GBP - Deutsche Bank - LONG Position - From 0.8608 - Hit Target at 0.8850 (M/T) +242 pips

EUR/GBP - Barclays - SHORT Position - From 0.8710 - Stopped out at 0.8854 (M/T) -144 pips

USD/JPY - Citi - SHORT Position - From 110.45 - Closed at 110.45 (TOTW-M/T) ±0 pips

EUR/AUD - Crédit Agricole - SHORT Position - From 1.5095 - Closed at market at 1.4835 (M/T)+260 pips

USD/JPY - UOB - SHORT Position - From 109.95 - Stopped out at 110.50 (S/T) -55 pips

EUR/USD - Danske - SHORT Stop Order - Filled - Entry: 1.1167 - Target: 1.0850, Stop: 1.1350 (M/T)

EUR/JPY - BNP Paribas - SHORT Limit Order - Canceled - Entry: 125.00, Target: 120.00, Stop: 127.00 (M/T)

Morgan Stanley

For EUR/USD in particular, MS expects a tactical correction lower and maintains its buy on dips at 1.103 targetting 1.18.

“We have turned tactically bullish on USD. We see negative sentiment and short positioning as extreme and a modest increase in the outlook could result in a significant USD appreciation. The weaker than expected payroll report on Friday is still good enough to enable the FOMC to raise rates next week.

Given our expectation for a tactical USD rebound, EUR bullish sentiment nearing extremes and speculative investors being most long EUR since the Eurozone debt crisis in May2011, we see potential for EURUSD to correct lower in the near term which we view as a buying opportunity.

TD

GBP direction in the aftermath of the UK elections noticing that the focus will shift now to the Brexit talks which set to begin in just 10 days.

“The neat term outlook for GBP is likewise clouded by the recent developments. The upside is that SNP’s loss of support reduces the odds of a Scot referendum.

However, the next few weeks will likely to see 2 way risks intensify but with a bias to trade lower.

CACIB

We remain bearish GBP in the near term also given that the election outcome will likely underpin the cautious outlook of the BOE next week,” CACIB argues.

On the EUR front, CACIB notes that the focus will be on the first round of the French legislative election on Sunday.

“That said, the ECB has signaled it is in no hurry to unwind its monetary stimulus so long as inflation remains firmly below its target. This could keep EUR grounded for now.

On the USD front, CACIB notes that investors will focus on FOMC meeting.

The Fed should hike rates but keep its forward guidance noncommittal about future rate move given the softer inflation data of late. Investors will look for more clarirty on the timing of reduction of the Fed’s balance sheet. Indications that a decision could come as soon as September could boost UST yields and USD.

On the JPY front, CACIB notes that BOJ meeting next week could attract more attention than usual given recent reports suggesting that the bank would conduct simulations to assess the impact of a potential QE exit.

BofAML

Investors went into the meeting with a relatively light position in our view, looking for an opportunity to buy any EUR dip. We have to wait for this fall to get the details on the future of QE after this year.

Pools suggest an easy win absolute majority for Macron in France next week. Such a victory would give more political capital to Macron, helping him to reform France and argue for broader EU reforms post QE with the winner of the German elections this fall. On balance, positive for the EUR.

All in all,BofAML expects mixed outlook for EUR/USD but recommends long EUR/GBP and is looking for the right opportunity to long EUR/JPY.

NAB

GBP outlook from here is especially confused and the only thing we can be sure of it the enormous uncertainity over the near term.

For the moment, the extent of the GBP’s decline has been limited by the belief that Mrs May will be able to carry on as OM but will be forced to change her stance on the terms of Britain’s exit from EU.

If either of these judgements prove to be wrong, then the pound is likely to fall further in the near term, especially if it were felt that another General election might then have to be called.

We will attempt a formal set of forecast revisions in the early part of the next week.

SocGen

It has now bounced off 73, some 4% below current levels, 3 times since 1992 in Feb 1993, Dec 2008 and Oct 2016.

We will probably test that level again this summer. That is likely to take GBP/USD to 1.25 but not to 1.2 and EUR/GBP above 0.9 but things have to get even worse before we can ponder levels above 0.95.

In the longer run, what drives the pound will be relative economic performance and policy. A minority gov can’t do the kind of damage to the economy a misguided one could do, but as growth slows, the MPC will remain on hold and as others raise rates. The contrast between MPC and Fed or ECB may not be stark enough to trigger a sterling collapse from here but will anchor it around these long term historical lows.