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Upward USD/JPY cycle still has legs to run – Deutsche Bank
FXStreet (Delhi) – Taisuke Tanaka, Strategist at Deutsche Bank, suggests that the US Fed will embark on a tightening cycle soon amid steadiness in the US economy, and Japanese economy is likely to remain firm as well in the coming quarters which strengthens the fact that it is premature to assume a turnaround in the upward USD/JPY cycle, which lags the economic cycle.
Key Quotes
“In the past, the USD/JPY market tends to follow the DI cycle with around 1.5 years lag. The ongoing strength of US economic indicators has spurred expectations of a rate hike, and gradual rises in 2y UST yields are typically accompanied by improving economic sentiment in Japan and an uptrend in the USD/JPY.”
“In other words, the correlation between UST yields and the USD/JPY may seem to have shrunk but remains in force. In the BoJ's quarterly Tankan today, the benchmark large manufacturers business conditions DI slipped to 12 from the previous Tankan's 15, and is projected to fall further to 10 in the next survey. The DI for large nonmanufacturers improved to 25 from 23, but is similarly expected to relapse to 19.”
“Overall, the results were not as bad as feared, but they nevertheless point to a listless economy. The USD/JPY has remained stuck recently at around 120, perhaps reflecting the uncertainty in the economic and interest rate outlook.”
Oct 01,2015
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EUR: ECB easing speculations bolstered by dipping inflation – MUFG
FXStreet (Delhi) – Lee Halpenny, Currency Strategist at MUFG, notes that the speculations about further easing from the ECB has been strengthened by the falling inflation in the Eurozone as the euro has weakened modestly driven both by the tentative improvement in the global investor risk sentiment.
Key Quotes
“The release of the weaker than expected inflation report from the euro-zone revealed that the annual rate of headline inflation fell back into negative territory declining by 0.2 percentage point to -0.1% in September. However, it was reassuring that the annual rate of core inflation remained stable at 0.9%.”
“The ECB has signalled clearly that it has moved closer to easing policy further and is sensitive to downside risks to inflation in the near-term. S&P announced yesterday the most aggressive forecast yet for further ECB stimulus expecting it to extend QE beyond September 2016 and most likely until mid-2018 which could result in total purchases of EUR2.4 trillion which is more than double the original commitment of around EUR1.1 trillion.”
“It appears unlikely that the ECB will announce such aggressive easing in the near-term, although S&P’s forecast highlights that the euro still remains subject to downside risks ahead.”
Oct 01,2015
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EUR/JPY testing key support at 133.80
FXStreet (Mumbai) - The EUR/JPY pair erased gains and fell back in the red below 134 handle and now tests the key support seen at 133.80 on hourly charts.
EUR/JPY drops as USD/JPY pares gains
Currently, the EUR/JPY pair trades -0.09% lower at 133.88, struggling below 134 handle. The EUR/JPY cross came under renewed selling pressure after the yen pares losses versus the US dollar on the back of easing risk-on sentiment across the financial markets.
While the offered tone remains intact as the EUR/USD pair remains weak as the recent streak of weak Euro zone fundamentals continue to weigh on the EUR. The main focus now remains the ISM manufacturing report and jobless claims from the US later in the day.
EUR/JPY Technical Levels
To the upside, the next resistance is located at 134.24 (Today’s High) levels and above which it could extend gains to 134.72 (Sept 23 High) levels. To the downside immediate support might be located at 133.53 (Sept 30 Low) below that at 133.11 (Sept 23 Low) levels.
Oct 01,2015
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EUR/SEK rangebound between 9.30-9.60 – Danske Bank
FXStreet (Edinburgh) - Senior Analyst at Danske Bank Sverre Holbek believes the cross could remain trading within the 9.30-9.60 range in the near to medium term.
Key Quotes
“The improving risk appetite is spilling over into Scandi currencies with in particular EUR/SEK falling sharply”.
“We expect that EUR/SEK will continue to respect the 9.30- 9.60 range given the threat of further Riksbank rate cuts”.
“Interestingly, FX flow data from Norges Bank for the week including the Norges Bank rate cut last week showed that the weakening of the NOK was far greater than what a historical/statistical relationship would suggest, supporting an underlying liquidity- and risk premium in NOK”.
“We expect EUR/NOK to stabilise in coming weeks forecasting EUR/NOK at 9.40 in 1M”.
Oct 01,2015
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Mixed data from Eurozone and UK PMI’s - TDS
FXStreet (Delhi) – Cristian Maggio, Head of Emerging Markets Strategy at TD Securities, notes that the recently released PMI data from the Eurozone and PMI were mixed bag of sorts.
Key Quotes
“The final euro area reading of 52.0 in September was unchanged from the flash estimate (vs 52.3 in August), suggesting relatively unchanged momentum in manufacturing activity.”
“On a Europe-wide country basis, however, the manufacturing PMIs were fairly mixed in September, with relatively large monthly declines posted in Italy (-0.9), Germany (-1.0), and Spain (-1.5) (the UK fell just 0.1). Conversely, Sweden eked out a +0.1 increase on the month, France managed to gain an impressive 2.3, and Norway was the real surprise, jumping by 4.0 (with gains across the board in the sub-indexes). All these countries except for Norway were in expansion territory in August.”
“The UK release, while remaining relatively flat on the month, suggested some underlying risks to the manufacturing sector there, with employment falling below the 50 threshold for the first time in two and a half years.”
Oct 01,2015
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GBP: Narrower current account deficit and stronger growth comes to rescue - MUFG
FXStreet (Delhi) – Lee Halpenny, Currency Strategist at MUFG, suggests that the UK pound has underperformed during the current period of heightened risk aversion which has pushed it lower than justified by relative economic fundamentals in our view but the recently released stronger GDP data and narrower current account deficit are likely to support the GBP.
Key Quotes
“The still favourable relative economic fundamentals were evident again yesterday in the latest UK GDP report which revealed an upward revision to growth. The economic recovery in the UK since the global financial crisis was stronger than initially recorded leaving real GDP at the end of Q2 at 5.9% higher than the peak prior to the global financial crisis compared to the previous estimate of 5.2%.”
“There was also a more favourable development in the UK’s current account deficit which narrowed more sharply than expected to 3.6% of GDP in Q2 from 5.2% of GDP in Q1. The narrowing was mainly driven by the trade deficit which reached its lowest level since 1998. The trade balance can be erratic and likely exaggerates the underlying improvement in the current account deficit, which remains elevated and a long-term concern. We still see scope for the pound to regain lost ground ahead.”
Oct 01,2015
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USD/CAD supported around 1.3250
FXStreet (Edinburgh) - The Canadian dollar remains on the right footing vs. its American counterpart on Thursday, with USD/CAD finding support around the mid-1.3200s.
USD/CAD looks to US docket, oil
Spot is losing ground for the second session in a row as the Canadian dollar keeps deriving support from a better tone around crude oil prices. Collaborating with the downside, the greenback is struggling to find direction today, extending the consolidative pattern across the board.
Moving forward, the critical ISM Manufacturing and Initial Claims are due in the US calendar, while the RBC Manufacturing PMI is due in Canada.
USD/CAD levels to consider
At the moment the pair is now losing 0.33% at 1.3270 and a break below 1.3250 (low Oct.1) would open the door to 1.3233 (low Sep.23) and finally 1.3219 (low Sep.22). On the upside, the initial hurdle lines up at 1.3334 (high Oct.1) ahead of 1.3412 (high Sep.30) and then1.3457 (high Sep.29).
Oct 01,2015
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EUR/USD extends the rebound to 1.1170
FXStreet (Edinburgh) - The common currency keeps recovering ground vs. the dollar on Thursday, now pushing EUR/USD to the area of 1.1165/70.
EUR/USD a tad better on US data
The pair has trimmed further its earlier losses after US Initial Claims have ticked higher to 277K in the week ended on September 25th, missing forecasts at 270K and up from 267K recorded in the previous week.
In the meantime, market participants keep waiting for the more relevant ISM Manufacturing, expected at 50.6 for the last month, followed by the speech by the President of the Federal Reserve Bank of San Francisco, John Williams.
EUR/USD levels to watch
As of writing the pair is losing 0.14% at 1.1159 and a breakdown of 1.1116 (low Sep.25) would aim for 1.1105 (low Sep.22) and then 1.1057 (low Aug.12). On the other hand, the initial resistance aligns at 1.1260 (high Sep.30) ahead of 1.1281 (high Sep.29) and finally 1.1296 (high Sep.24).
Oct 01,2015
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USD/JPY backs away from 120 and surrenders gains
FXStreet (Córdoba) - USD/JPY failed to sustain gains and pulled back from above 120.00 toward fresh daily lows at the beginning of the American session.
USD/JPY peaked at 120.26 during the Asian session but came under pressure and surrendered daily gains, sliding to a fresh low of 119.60 in recent dealings. At time of writing, the pair is trading at 119.66, 0.18% below its opening price. However, overall USD/JPY continues to trade within a narrow range, unable to set a longer-term direction.
US initial jobless claims rose to 277K in the latest week, above the 270K expected. However, data had virtually no impact on the dollar as investors attention turn to nonfarm payrolls tomorrow. Later on the session. the ISM manufacturing survey will be released with expectations at 50.6 versus 51.1 the previous month.
USD/JPY levels to watch
As for technical levels, next supports are seen at 119.60 (Oct 1 low) and 119.21 (Sep 24 low). On the flip side, short-term resistances could be found at 120.34 (Sep 30 high), 120.58 (Sep 28 high) and 120.87 (200-day SMA).
Oct 01,2015
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Brazil HSBC PMI Manufacturing increased to 47 in September from previous 45.8
FXStreet.com (Barcelona) For more information, read our latest forex news.
Oct 01,2015
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