Forex Insider Daily Update 4 July 2017

Major Bank Daily Position

USD/JPY - Credit Suisse - LONG Limit Order - Canceled - Entry: 110.86, Target: 113.10, Stop: 109.65 (M/T)

AUD/NZD - Société Générale - LONG Position - From 1.0460 - Adjusted - Stop to 1.0470, Target: unch.

Nordea

While the longer term direction for EUR/USD is higher, the pair is ripe for a set back in near term.

Everyone is already long European equities, seasonality for Bund yields is negative for July, while US data will improve. There are also signs unhedged equity inflows are moderating.

These unhedged investors are still well in the money, not due to European equities which have actually weakened since mid-May, but due to currency effects. If European equities continue to weaken, these market participants might need to reassess their FX hedge ratios which might add selling pressure on EUR/USD later this summer.

SocGen

EUR/USD to consolidate some of its recent gains this week before resuming its next leg higher.

The dollar is a bit oversold, maybe the market is thinking about Fed meandering is enough for a pause in the sell off?

As monetary policy cycle turns, there is more upside to long term ECB rate expectations and to Bund yield. Throw in the undervalued currency and the ingredients are still there for more euro upside in due course.

BTMU

BTMU short term metrics point to GBPupward momentum being more likely sustained going forward.

Short term yield spreads have moved in favour of the pound, unlike for the euro for example.  We assume modest further gains over the short term with an end Q3 of 1.31

Barclays

EUR to face some roadblocks and holds a base case for EUR/USD to range trade.

We believe that the ECB with a still significant output gap and the benefit of having seen how the inflation story has played out thus far in the US, will likely err on the side of caution and take gradual approach to stimulus removal. We would not be surprised to see attemps to dampen reactions in the EUR and European rates.

Consequently, we would fade the strength in EUR/USD as markets will likely reassess the balance of risks around monetary in the coming weeks.

Credit Agricole

CACIB believed US data will turn more positive before long and should ultimately vindicate the Fed’s constructive outlook.

When it comes to the USD, we remain of the view that current levels offer attractive risk reward for engaging in new longs, especially as there is room of rising rate expectations.

Morgan Stanley

JPY side should see market expectations building for new fiscal spending following the weak performance of Abe’s party at the weekend’s Tokyo election.

MS recommends buying USD/JPY at market with TP 116 SL 111.5