Forex Insider Daily Update 8 June 2017

Major Bank Daily Position

USD/JPY - UOB - SHORT Limit Order - Placed - Entry: 109.95, Target: 108.70, Stop: 110.50 (S/T)

AUD/USD - UOB - LONG Limit Order - Placed - Entry: 0.7515, Target: 0.7615, Stop: 0.7455 (S/T)

EUR/AUD - Crédit Agricole - SHORT Position - From 1.5095 - Adjusted - Stop from 1.5320 to 1.5230, Target: unch. (M/T)

USD/JPY - UOB - SHORT Limit Order - Filled - Entry: 109.95 - Target: 108.70, Stop: 110.50 (S/T)

Barclays

Barclays argues thyat ECB risks are skewed towards a dovish statement on Thursday, but a more hawkish statement would be disruptive.

“A change in ECB forward guidance or risk assessment is widely anticipated at its Thursday meeting. While this suggests an unchanged statement would likely weigh on the EUR and support a rally in European equity and fixed income asset prices, a more hawkish statement in line with our economists expectation of a removal of the reference to lower rates along with other adjustments may do the opposite.

On balance, risks to market expectations appear skewed to only a slight reduction of policy accommodation given actual and expected inflation trends and the experienced of other major central banks in more cyclically advanced economies.

BTMU

BTMU notes that most G10 currency pairs have already completely reversed the Trump move, with the exception of USD/JPY remains the one pair that is notably above the pre-Trump election.

“While we don’t see grounds for a complete reversal of the 10 y UST bond y move, the near term risks remains to the downside leaving USD/JPY vulnerable after breaking key 110 level.

“Given our broader dollar bear view, we assume USD/JPY will gradually decline reflecting primarily dollar weakness. The TWI strength for the yen will be more limited initially although further out global risks in relation to Trump expectations and European politics point to outright yen appreciation.

BofAML

BofAML outlines 4 main scenarios for the UK elections on Thursday and the potential GBP direction for each of them.

1.       Large Conservative victory (market consensus):

With market nerves having increased in the final weeks of the campaigh, we believe a large Conservative victory would be initially bullish for GBP. Our bias would be to sell GBP rallies.

2.       Small Conservative victory:

“Relative to market expectations, this would be seen as disappointing for GBp and though there would be some initial relief, we believe this would prove very short lived,” BofAML adds.

3.       Labour-led coalition:

“A hung parliament with a Labour –led coalition as the only viable option would be initially be negative for GBP in our view. We believe markets will focus on the implication of such a coalition through the Brexit lens. Any dips in GBP may be seen as a buying opportunities.

4.       Labour majority

We think the initial reaction is likely a steep decline and GBP weakness could persist for longer as markets digest the full implication of Labour’s macro policies.

SocGen

SocGen notes that ECB meeting could sees nothing but platitudes and disappoint a market that is getting ahead of itself.

But that would be a huge euro buying opportunity, because ECB normalization is coming.

And when it does, the Euro won’t be able to sustain undervalued levels for long.