Major Bank Daily Position
| USD/CHF - Credit Suisse - SHORT Limit Order - Canceled - Entry: 0.9810, Target: 0.9720, Stop: 0.9872 (S/T) |
| NZD/USD - Credit Suisse - SHORT Position - From 0.6900 - Stopped out at 0.6975 (S/T) -75 pips |
| EUR/CHF - Citi - LONG Position - Opened - Entry: 1.0910, Target: 1.1010, Stop: 1.0840 (TOTW-S/T) |
| EUR/JPY - Morgan Stanley - LONG Position - Opened - Entry: 125.15, Target: 130.00, Stop: 123.00 (TOTW-M/T) |
| EUR/GBP - Deutsche Bank - LONG Limit Order - Placed - Entry: 0.8608, Target: 0.8850, Stop: 0.8450 (M/T) |
Major Bank Daily Analysis & Insights
CIBC
CIBC FX Strategy Research notes that short CAD positions
have grown, as scrutiny on the housing market and trade policies returned.
“However, we felt that was an overreaction and it does
appear sentiment is improving again. That doesn’t necessarily mean a sharp
bounce back in the $C though,”CIBC adds.
“Previous instances where short positions were scaled back
from extreme levels show little consistency in the direction or height of
loonie’s flight afterwards,”CIBC notes.
As such, CIBC expects only a modest appreciation, with
USD/CAD reaching 1.34 by year end but with CAD underperforming other majors.
BTMU
BTMU FX Strategy Research notes that EUR/USD has extended it’s
rebound against the US Dollar over past week moving back in line with levels
which persisted prior to the US Election.
In addition, BTMU notes that the EUR is also deriving
support from the strengthening economic recovery in the euro-zone expecting
this week’s PMI surveys for May to signal that growth is likely to strengthen
further in Q2.
However, BTMU thinks that EUR/USD appears to be running a
little ahead of fundamentals now, argueing that recent US political
developments won’t materially alter the likelihood of the FED raising rates in
June.
As such, BTMU is turning neutral on EUR/USD around current
levels expecting the pair to trade in a 1.09 – 1.14 range in the near term.
SocGen
SocGen Strategy Research notes that the USD Index (DXY) has
been undergoing a break below the upward trend drawn since 2014. (98.5/98.85)
and a down slanting trend from December.
Such a pattern, according to SocGen, denotes that the down
move is likely to extend.
“The index should drift towards the daily channel limit at
96.45 as well as the 61.8% retracement from May 2016. This will be a prominent
support,” SocGen projects.
On the upside, SocGen think that 98.5/85 should cap near
term bounces.
UOB
EUR/USD: Bullish: Still bullish but odds for extension to
1.13 are not high
The 1.12 target that was first indicated last Wednesday, 17
May was exceeded as EUR staged a surprisingly strong push higher last Friday to
touch a high of 1.1211. Technically, the next target is at 1.13, the high in
November last year but the current rally appears to be running ahead of itself
and the odds for such a move are not high. Minor resistance is at 1.1244. We
have suggested taking partial profit at 1.117 last Friday and those who are
still holding long position should adjust their stop loss to 1.1095
GBP/USD: Neutral: In
a 1.285/1.305 range.
There is not much to add as GBP rebounded quickly last
Friday to hit a high of 1.304, holding just below the top end of our expected
1.285/1.305 consolidation range. While the undertone has improved, it is not
enough to shift the current neutral outlook to bullish. That said, an intraday
move above 1.305 is not ruled out but GBP has to register a NY close above
1.3085 to indicate the start of a bullish phase.
AUD/USD: Neutral: Rebound has room to extend to 0.748/85.
AUD hit a high of 0.747 last Friday, just below the “rebound
target” indicated in recent updates at 0.748/85. The undertone is still
positive and we continue to anticipate a move to 0.748/85. That said, AUD has
to register a daily closing above this level before the current neutral outlook
would shift to bullish. The current positive undertone would stay intact as
long as 0.74 is not taken out.
NZD/USD: Neutral: Back in a 0.685/0.695 range.
NZD is currently holding not far below our expected
0.685/0.695consolidation range. The undertone is improving but it is too early
to expect the start of a bullish phase. Only a daily closing above 0.697 would
indicate that a move towards 0.705/55 has started. In the meanwhile, we
continue to hold the view that this pair is trading in a 0.685/0.695 range.
USD/JPY: Bearish: Decline oversold but room for extension to
110.1
We
just turned bearish USD yesterday and held the view that the oversold decline
has room to extend lower to 110.1. USD touched a low of 110.21 before staging a
strong rebound. As indicated, the reward to risk ratio is not attractive but
further USD losses is not rules out until 111.9 is taken out. That said, the
low 110.21 is acting as a solid support now and those who are short should
consider booking some profit ahead of this level.
Nomura
Nomura FX Strategy Research argues that as occurred with the
USD after the US taper tantrum, the EUR is set to remain resilient as ECB
normalization approaches.
“We think ECB forward guidance will be more data-dependent
and as a result, EUR will be more sensitive to better euro area data,” Nomura
expects.
At the next ECB meeting on June 8th, Nomura
thinks that central bank will likely to take steps towards normalization and
expects the EUR to trade strongly into the meeting.
In line with this view, Nomura maintains a long EUR/USD
exposure.
Barclays (Trade Of
The Week)
Currency investors should consider selling USD/MYR this
week, advices Barclays Capital in its weekly FX pick.
“Short USDMYR, given our constructive view on the price of
oil and the extension of OPEC cuts.
Sentiment towards MYR assets have stabilized after last year’s
FX regulation shock, while growth and BoP fundamentals have improved.
The currency appears undervalued,” Barclays says as a
rationale behind this call.
Citi (Trade Of The Week)
Currency investors should consider buying EUR/CHF this week,
advices CitiFx Research in it’s weekly FX pick.
Citi recommended buying EUR/CHF around 1.091 targetting
1.101 with a stop at 1.084.
Citi weekly trades provide short term guidance on where they
see 1-2 week opportunities in G10 FX markets.
Morgan Stanley (Trade
Of The Week)
Currency investors should consider buying EUR/JPY this week,
advices Morgan Stanley FX Strategy Research in its weekly FX pick.
“We like to buy EUR/JPY at market with a target of 130 and
stop at 123,” MS recommends.
MS argues that this week’s release of the FOMC minutes may
be used to push up front end rates which will support higher long end US bond
yields and likely to weaken the JPY more than the EUR.
On the EUR side, MS thinks that the breaking through
technical levels over the past week opens room towards 1.2 in EUR/USD.
Credit Agricole
Credit Agricole CIB FX Strategy notes that CHF upside has
been limited, irrespective of weakening risk sentiment.
This is, according to CACIB, unlikely to change in an
environment in which the CNB continues to apply a policy mix that consists of
negative rates and currency intervention.
“Actual data, such as weekly sight deposits, seems to
confirm that the central bank has remained active in FX of late, even before
risk aversion returned,” CACIB adds.
All of the above suggests that the SNB will continue to do
its utmosts in order to leave the CHF subject to a gradual depreciation trend.
Accordingly we advise against buying the CHF, even if investors appetite for
risk assets continues to fall.” CACIB advices.
ING
ING FX Strategy Research notes that GBP/USD managed to punch
through 1.3, helped by strong retail sales & the stronger EUR/USD.
“Even though GBP positioning is a lot more neutral now, we
see a continued tail wind from EUR/USD dragging GBP/USD higher.
UK data is light, but planned fiscal loosening from Tories
may keep GBP bid. Indeed, GBP performed quite well last week, even though
evidence of the real income squeeze hit the front pages, “ING argues.
ING expects GBP to stay relatively well bid into June 8
election.
Barclays
Barclays Capital FX Strategy Research notes that GBP/USD has
been pushed above the psychological 1.3 level on higher than expected retail
sales last week combined with USD weakness.
“Although GBP remains on an appreciating trend, with market
positioning and valuation providing a boost, further near-term upside will
likely require a catalyst, in our view. Baring further unexpected negative
political headlines from the US, we do not think this week will provide such a
catalyst and expect the Cable to range-trade.” Barclays argues.
Data wise, Barclays notes the calendar is quite this week
and expects Q1 17 GDP to be confirmed at 0.3% q/q.
SocGen
SocGen FX Strategy Research promotes short GBP/CAD around
current levels.
On the CAD front, SocGen notes that a large net short in CAD
reported by the CFTC, added to the bounce in oil prices, may give CAD support
this week.
On the GBP front, SocGen notes that opinion pools in the UK
show a sharp narrowing in the Conservative lead, while warnings that the UK
could walk away from an exit deal if the final exit bill is too big don’t
encourage optimism about negotiations that start in earnest after the UK
election on 8 June.
BTMU
BTMU FX Strategy Research discusses it’s US dollar rebounding
modestly following last week’s heavy sell off which was triggered by heightened
US political risk.
On the macro front, BTMU notes that the US dollar has fully
retraced all of it’s initial gains following the US election victory for
President Trump highlighting that there is little to no reflation optimism left
priced in now.
“It should help to dampen the scope for the US dollar to
weaken further in the near term which will also building concerns over the
health of the US economy,” BTMu argues.
Technically, BTMU note the dollar index has fallen back to
within the consolidation range which persisted between March 2015 and November
2016.
“A break below bottom of that range would be a far more
significant long term bearish technical development for the US dollar although
remains unlikely in the near term,” BTMU adds.
NAB
NAB FX Strategy Research’s forecast profile for GBP has a
peak of 1.31 in this second quarter, with a steady decline over the next 18
months reflecting the harsh realities of the Brexit negotiations.
“For us, there are significant execution Risks on Brexit and
the BoE has admitted that is has done no scenario planning in case a favourable
outcome fails to materialize. This may be a politically astute but leaves it
open to the charge of presenting an unrealistically rosy scenario. As for
wages, its forecast of a pick up as the UK economy approaches full employment
has not thus far proved correct. We see little to suggest that this time it will
be different,” NAB argues.
“To sum up, we believe that the turning point for the
British Pound may not be far away,” NAB concludes.
NAB targets GBP/USD at 1.31 in Q2, 1.29 in Q3, and 1.27 in
Q4 of 2017.
BofAML
Starting with the USD, BofAML argues that the trigger for a
meaningful move higher in USD will be strongly predicated on progress on tax
reform, and USD bulls will need to be more selective.
On the EUR, BofAML notes that following the French
elections, the focus for the EUR shofts to the ECB QE tapering debate this
fall, and as both the FED and the ECB will be tightening policies, while the
BOJ remains on hold, BofAML recommends long both USD and EUR against JPY, while
sees the EUR/USD as being mixed for the rest of the year.
On GBP, BofAML is concerned that the consensus has become
too positive on Brexit, and expects that a tough negotiation ahead will likely
see GBP/USD trading below 1.25 again over the coming months.
All in all, BofAML’s trading strategy for the remainder of
the year is to long EUR, USD and NZD with short JPY, GBP, AUD and CHF.
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