Forex Insider Daily Update 25 May 2017

Major Bank Daily Position

USD/CHF - Credit Suisse - SHORT Limit Order - Canceled - Entry: 0.9789, Target: 0.9660, Stop: 0.9826 (S/T)

NZD/USD - Credit Suisse - LONG Limit Order - Placed - Entry: 0.6975, Target: 0.7090, Stop: 0.6918 (S/T)

USD/CHF - Credit Suisse - LONG Limit Order - Placed - Entry: 0.9735, Target: 0.9825, Stop: 0.9691 (S/T)

GBP/USD - Credit Suisse - LONG Position - From 1.2934 - Adjusted - Stop from 1.2884 to 1.2844, Target: unch. (M/T)

USD/JPY - Credit Suisse - LONG Limit Order - Filled - Entry: 111.65 - Target: 113.10, Stop: 110.85 (S/T)

USD/CHF - Credit Suisse - LONG Limit Order - Filled - Entry: 0.9735 - Target: 0.9825, Stop: 0.9691 (S/T)

USD/CAD - Credit Suisse - SHORT Position - From 1.3490 - Hit Target at 1.3415 (S/T) +75 pips

NZD/USD - UOB - LONG Position - From 0.7000 - Adjusted - Stop from 0.6930 to 0.6975, Target: unch. (S/T)

EUR/GBP - Crédit Agricole - LONG Position - From 0.8470 - Adjusted - Stop from 0.8490 to 0.8570, Target: unch. (M/T)

Major Bank Daily Analysis & Insights

Barclays

Barclays outlines 2 tightening paths for the Fed over the remainder of the year.

1.       Barclays base case

We Interpret the FOMC minutes as consistent with our view that the Fed is likely to raise more times in June, September and proceed with balance sheet run off in Q4.

2.       That said, the language could also be interpreted as a hike in June, Balance sheet run off in September followed by another rate increase in December.

Credit Agricole

1.       As the economic expansion continues, the FOMC believed that the policy accommodation arising from its large balance sheet should be gradually removed.

2.       We look for the Fed to shrink its balance sheet, possibly beginning in December with the aim of reducing it over time by about 2.5 trn USD

3.       We look for a modest controlled pace of reducing reinvestment ammounts in order to avoid disrupting markets and to smooth out the reinvestment process. That could be consistent with a reduction of USD 200-250 bn in 2018, 20 bn a month split between MBS and Treasuries.

BofAML

BofAML promotes long NZD/JPY position for the following reasons:

1.       Short NZD is the most stretched short position in G10 FX.

2.       Our data analysis flags upside risks for NZD/JPY.

3.       Domestic flow dynamics is becoming more supportive for USD/JPY and cross yen pairs.

4.       We believe that the RBNZ’s dovish stance is not sustainable.