Weekly Briefing 121119

1.  Review.

I said: “EURUSD: As we start a new week EURUSD is hovering close to 1.2650. Below here is the start of a technical downtrend “ Not yet, despite bad EZ data.
“GBPUSD: 10-year Gilt yields have trended lower this week as risk sentiment drained from the market, but the Inflation Report could see a reversal back towards the 200-day sma at 1.86%. This could benefit GBPUSD. 1.60 remains key near term resistance.” Not happened, the pair traded lower 1.59
“USDJPY: If communications indicate that the Fed is likely to engage in further balance sheet expansion to buy treasuries, the dollar could weaken and treasury yields may decline. This would likely weigh on USD/JPY as it traditionally has a close relationship to US treasury yields.” USDJPY jumped at 81.3 because of political issues.
Trades
None

2.  Analysis.

"Fundamental analysis"
Sunday:
Monday:
Tuesday: EUR German ZEW Economic Sentiment -15.7 -10.1 -11.5
Wednesday: USD PPI m/m -0.2% 0.2% 1.1%
Thursday: USD Core CPI m/m 0.2% 0.1% 0.1%, USD Unemployment Claims 439K 362K 355K,
Friday: USD Industrial Production m/m -0.4% 0.3% 0.4%, USD Capacity Utilization Rate 77.8% 78.4% 78.3%
Saturday:
Both ECB and FED have pledged “unlimited” support to sort out their respective problems and for the first time since the financial crisis broke out in 2008 the Fed and the ECB have said they won’t stop until the problems are solved. This is aggressive action from the world’s most important central banks and the markets like it. If the Fed is going to keep its foot down on the accelerator until the economy recovers then QE could be with us for the long-term, which may keep dollar strength capped and the Aussie, Kiwi and Real fairly strong.
USD: The November NAHB housing market index and weekly mortgage applications are also due next week. These data releases are becoming increasingly important as the Fed appears more concerned with the housing market to seek improvement in economic activity and the labor market. , “a number” of FOMC participants favored more QE after the end of the Maturity Extention Program (aka Operation Twist). The market impact of additional QE would likely be a weaker US dollar, lower UST yields, and a boost to equities. We note that each subsequent round of balance sheet expansion tends to have a diminishing impact and significant risks exist (i.e. US fiscal cliff, EU debt crisis) that can move markets.
Regarding the fiscal cliff, our main scenario is for protracted negotiations, however if headlines suggest the two parties are moving closer to an agreement then sentiment is likely to be given a boost which could see the USD trade softer.
CAD:
EUR: For the last few months Spain has been the biggest headache for the currency bloc, but as we move towards the final few weeks of the year Greece is once again coming back to take centre stage. , there are two things to look out for in Tuesday’s meeting: 1, If Greece gets its next tranche of cash and 2, if the finance ministers’ agree on how to reduce Greece’s debt load to 120% of GDP by 2020 as the IMF has requested. Seemingly never-ending sovereign debt problems combined with weak growth, the Eurozone slipped into a recession in Q3 after the economy contracted by 0.1%, could weigh on the euro in the long term.
GBP: Last week’s Inflation Report left the door wide open to more QE from the BOE.
JPY: will announce policy at the conclusion of a 2-day meeting on Tuesday November 20. With increases to its Asset Purchase Program (APP) in 2 out of the last 3 meetings, we expect the Bank to remain on hold for now before it resumes balance sheet expansion over the coming months. A changing political landscape is increasing speculation of more aggressive measures to come from the BoJ in efforts to weaken the currency as a December 16 election looms.
CNY: good data from China.
Gold: With both the Fed and Bank of Japan engaging in balance sheet expansion, gold has also regained its safe haven appeal and has performed strongly this week

Id	Driver	Comments	Immanency
1	On-going global recovery	EZ growth low but recovering. US growth may be picking up	Yes
2	FED and BCE	FED will be on hold for until 2015;	No
3	EZ break up	EU dynamic is a longer term dynamic of "putting the structures in place”; Greece exit	No
4	PIIGS	Greece government and Spain banks in focus	Yes
5	QE3	Until unemployment < 7% or inflation > 3% (maybe 2 years)	No
6	Commodity rise	Falling prices are confirming slowdown	No
7	US	Fiscal cliff and risk off	Yes

"Technical analysis"
EURUSD:
GBPUSD:
USDJPY:
AUDUSD:

Median grid
EURUSD GRID 1.2400-1.3000, neutral bias
USDJPY GRID 76.00-80.00, neutral bias

Currency	Short term view(technical)	Long term view (fundamentals)
USD	Short	Short
JPY	Neutral	Short
AUD	Long	Long
EUR	Neutral	Long

"Market dynamics”
EURUSD: . At the weekly London close EURUSD was just holding onto the 1.27 handle. 1.2653 is key support as below here is the start of a technical downtrend. This level has so far held, suggesting that there is buying interest down here; however, if we get a negative shift in the macro back drop then we could see the bears take control once more. Thus, we would look to sell EURUSD on rallies. We believe that strength will be capped above 1.28 due to a cluster of daily moving averages between 1.2750 and 1.3000 and also the top of the daily Ichimoku cloud at 1.2925 acting as stiff resistance.
GBPUSD:
USDJPY: We anticipate profit taking to slow the JPY’s sharp decline, however it appears as though a shift in the policy response may be forthcoming. As such, we favor JPY downside and would view dips in USD/JPY as potential long opportunities. Key levels to the upside are the 61.8% Fibonacci retracement around 81.50 and 76.4% Fib retracement that is around 82.50. The 80.00 big figure may be supportive as well as the 200-day SMA just below at around 79.70..
Key events:
Sunday:
Monday: USD Existing Home Sales 4.76M 4.75M
Tuesday: JPY Overnight Call Rate <0.10% <0.10%, USD Building Permits 0.87M 0.89M
Wednesday: USD Unemployment Claims 397K 439K
Thursday: CNY HSBC Flash Manufacturing PMI 49.5, EUR German Flash Manufacturing PMI 45.9 46.0
Friday: EUR German Ifo Business Climate 99.6 100.0
Saturday:

Prices and Risk on/off view

Date	CRB	WTI Oil	Copper	Gold	Silver	SP500	Tnote	Bunds	VIX
29-ott	296	86.1	355	1711	32.1	1411	1.74	1.53	17.8
10-nov	292	86.7	344	1730	32.6	1379	1.6	1.34	18.6
Difference	-1.35%	0.70%	-3.10%	1.11%	1.56%	-2.27%	-8.05%	-12.42%	4.49%

Date	Dollar Index	AUDUSD	USDCHF	USDJPY	EURUSD	AUDJPY	Risk on/off
29/10/2012	79.9	1.037	0.934	79.62	1.293	82.5	-3.89
10/11/2012	81	1.038	0.948	79.4	1.271	82.5	-6.01
Difference	1.38%	0.10%	1.50%	-0.28%	-1.70%	0.00%	-54.49%

RORO (30): -0.50 (-0.60)

3.  Plan

Weekly Briefing 121112

1.  Review.

I said: “EURUSD The sell-off in the euro last week coincided with weak PMI data from the Eurozone, thus further declines in economic data could cause more pressure on the single currency. If the data next week is truly horrible then we expect a sharp fall to 1.2800 and then 1.2750 – the low from the middle of September - in the short term. The private ADP report which is due out on Thursday may take on more importance as new enhancements have been made.” EUR stayed above 1.28 but broke it definitely on Wednesday reaching 1.2702.
“GBPUSD: is likely to remain range bound for the short-term between 1.5800 and 1.6150. It is also sensitive to overall market risk, so if we see market sentiment continue to drain then we may test the top of the 1.6065 key support zone.”
“USDJPY: In the long run, we would prefer to fade yen weakness as increases to the Bank’s APP have not had lasting impacts on the exchange rate. While BoJ action may result in short term yen weakness, we doubt that USD/JPY upside can last without support from higher US treasury yields.” Also JPY gained on risk off reaching 79.07 low.
Trades
USDJPY long closed flat

2.  Analysis.

"Fundamental analysis"
Sunday:
Monday:
Tuesday:
Wednesday:
Thursday:
Friday:
Saturday:
Both ECB and FED have pledged “unlimited” support to sort out their respective problems and for the first time since the financial crisis broke out in 2008 the Fed and the ECB have said they won’t stop until the problems are solved. This is aggressive action from the world’s most important central banks and the markets like it. If the Fed is going to keep its foot down on the accelerator until the economy recovers then QE could be with us for the long-term, which may keep dollar strength capped and the Aussie, Kiwi and Real fairly strong.
USD: many policy details need to be ironed out and we anticipate rhetoric to pick up ahead of the December FOMC meeting which is the last of the year before voting members rotate. Specific targets are not likely to be agreed upon any time soon and the current stimulus program is expected to remain in place for some time.
CAD:
EUR: President Draghi was very clear that there will be no bond purchases through the OMT programme without conditionality. Madrid still managed to sell a 20-year bond, the first bond with this maturity that it has sold in over a year. This doesn’t suggest stress in Spain’s bond market. The real problem begins on 18th January when its first major bond redemption of 2013 is due.
While we think that Greece will manage to stay in the Eurozone for the medium-term, the power balance appears to be shifting away from Athens and towards Brussels.
GBP: growth signals for October suggest that the economy is growing at a flat to weak rate of approx. 0.1-0.2%. Inflation pressures are also starting to rise. We believe the Bank will continue to expect inflation to fall throughout next year, which could open the way for more policy support in 2013. There is a chance that the Bank may ditch QE altogether next year and concentrate on yet more unconventional policy measures that target the economy directly. We will be watching for is any sign of who has the upper hand at the BOE – the QE supporters, or those who view QE as ineffective.
JPY:
CNY: good data from China.
Gold: With both the Fed and Bank of Japan engaging in balance sheet expansion, gold has also regained its safe haven appeal and has performed strongly this week

Id	Driver	Comments	Immanency
1	On-going global recovery	EZ growth low but recovering. US growth may be picking up	Yes
2	FED and BCE	FED will be on hold for until 2015;	No
3	EZ break up	EU dynamic is a longer term dynamic of "putting the structures in place”; Greece exit	No
4	PIIGS	Greece government and Spain banks in focus	Yes
5	QE3	Until unemployment < 7% or inflation > 3% (maybe 2 years)	No
6	Commodity rise	Falling prices are confirming slowdown	No
7	US	Fiscal cliff and risk off	Yes

"Technical analysis"
EURUSD: always range bound 1.28-1.31. Back towards 1.28. 1.2980 is good support ahead of 1.2850, that resisted.
GBPUSD: 1.60 , broken support at 1.6110 then 1.6050 and 1.5980.
USDJPY: back to 79.6 after breaking 80
AUDUSD: After a correction to 1.024, back to 1.037.

Median grid
EURUSD GRID 1.2400-1.3000, north bias
USDJPY GRID 76.00-80.00, neutral bias

Currency	Short term view(technical)	Long term view (fundamentals)
USD	Short	Short
JPY	Neutral	Short
AUD	Long	Long
EUR	Neutral	Long

"Market dynamics”
EURUSD: As we start a new week EURUSD is hovering close to 1.2650. Below here is the start of a technical downtrend
GBPUSD: 10-year Gilt yields have trended lower this week as risk sentiment drained from the market, but the Inflation Report could see a reversal back towards the 200-day sma at 1.86%. This could benefit GBPUSD. 1.60 remains key near term resistance.
USDJPY: If communications indicate that the Fed is likely to engage in further balance sheet expansion to buy treasuries, the dollar could weaken and treasury yields may decline. This would likely weigh on USD/JPY as it traditionally has a close relationship to US treasury yields.
Key events:
Sunday:
Monday:
Tuesday: EUR German ZEW Economic Sentiment -10.1 -11.5
Wednesday: USD PPI m/m 0.2% 1.1%
Thursday: USD Core CPI m/m 0.1% 0.1%, USD Unemployment Claims 362K 355K,
Friday: USD Industrial Production m/m 0.3% 0.4%, USD Capacity Utilization Rate 78.4% 78.3%
Saturday:

Prices and Risk on/off view

Date	CRB	WTI Oil	Copper	Gold	Silver	SP500	Tnote	Bunds	VIX
29-ott	296	86.1	355	1711	32.1	1411	1.74	1.53	17.8
10-nov	292	86.7	344	1730	32.6	1379	1.6	1.34	18.6
Difference	-1.35%	0.70%	-3.10%	1.11%	1.56%	-2.27%	-8.05%	-12.42%	4.49%

Date	Dollar Index	AUDUSD	USDCHF	USDJPY	EURUSD	AUDJPY	Risk on/off
29/10/2012	79.9	1.037	0.934	79.62	1.293	82.5	-3.89
10/11/2012	81	1.038	0.948	79.4	1.271	82.5	-6.01
Difference	1.38%	0.10%	1.50%	-0.28%	-1.70%	0.00%	-54.49%

RORO (30): -0.50 (-0.60)

3.  Plan
Still waiting to play JPY short trades (78 should be good) and EURUSD long on pullbacks (wait for 1.29).

Weekly Briefing 121029

1.  Review.

I said: “EURUSD: October flash PMI readings are released next week. The market expects these indices to move towards 50 but not get above this crucial level. But expect the markets to react to any positive PMI surprises from the Eurozone next week (1.31highs).” PMI was bad, but the EUR rallied in mid-week.
“We could be range bound in EURUSD for the medium term unless a big event – a Spanish aid request or volatility in Spain’s bond market – gives the market some direction.” Yes, Spain bailout is more unlikely.
“US date due next week, with the key report being Friday’s advance GDP figures for 3Q. Any surprises in the economic data is likely to see the dollar respond more the impact on the risk environment rather than Fed expectations. Therefore better than expected readings may see the dollar softer on improving sentiment while misses could see dollar gains amid risk aversion.” Ok, good GDP reading and small spike of EUR
“GBPUSD: In an environment of elevated Eurozone stress we could see the dollar attract some safe haven demand this week, which could weigh on GBPUSD.” Not in short term.
“USDJPY: we believe we are seeing bottoming behavior in USDJPY and it won't go lower. The USDJPY will move on what happens in the US and not in the Yen side of the equation. ,The JPY will remain sensitive to broader risk sentiment as well as US Treasury yields.” Rallied on more easing expected, but retraced on Friday.
Trades
USDJPY long

2.  Analysis.

"Fundamental analysis"
Sunday:
Monday:
Tuesday: CAD Overnight Rate 1.00% 1.00%, CNY HSBC Flash Manufacturing PMI 49.1 47.9
Wednesday: EUR German Flash Manufacturing PMI 45.7 48.1 47.4, EUR German Ifo Business Climate 100.0 101.7 101.4, USD FOMC Statement
Thursday: USD Unemployment Claims 369K 366k 388K
Friday: USD Advance GDP q/q 2.0% 1.8% 1.3%
Saturday:
Both ECB and FED have pledged “unlimited” support to sort out their respective problems and for the first time since the financial crisis broke out in 2008 the Fed and the ECB have said they won’t stop until the problems are solved. This is aggressive action from the world’s most important central banks and the markets like it. If the Fed is going to keep its foot down on the accelerator until the economy recovers then QE could be with us for the long-term, which may keep dollar strength capped and the Aussie, Kiwi and Real fairly strong.
Sentiment drained from the market . The key drivers of lower markets were weak economic data out of Europe, strong data out of the US which threatens to cut QE3 short and weak Q3 corporate earnings.

USD: The S&P 500 has seen 30% of companies that have reported so far miss earnings estimate. Since the tech sector is considered a lead economic indicator the decline in Q3 earnings could precede a sharper slowdown in the broader economy.
CAD: Finance Minister Jim Flaherty said that Canada may have to revise down its economic outlook and that Canada is not immune to world economic challenges
EUR: It doesn’t look like Spain is in any hurry to apply for a bailout (see the European section for more), European data is likely to remain fairly weak for some time. The sovereign debt crisis seems to have lost some of its potency to rattle financial markets in recent months. There is a deteriorating growth picture across the currency bloc and not just in Spain. Eurozone inflation is expected to have declined to 2.5% this month from 2.7% in September when it is released this week
GBP: dealt a blow last week when Q3 GDP data rose 1%, taking the UK out of recession in style. Next week’s October PMI surveys are going to be crucial to the QE decision at the next BOE meeting on 8th November.
JPY: the Price Outlook report will show a reduction in inflation forecasts which underscores the fact that the BoJ is struggling to achieve its 1% inflation target. We expect the Bank to respond with more stimulus in the form of yet another increase to the Asset Purchase Program (APP). A drop in economic activity will weigh on prices which have been indicating deflation for some time
CNY: good data from China. The growth outlook still faces a few hurdles and should not be greeted by traders with unbridled enthusiasm
Gold: Several of the big banks are currently very bullish on gold. From $2000 to $3000 in the next year or two are their calls. And it is mainly due to the money printing is good for gold price argument. They also know if there is a serious risk off event then gold goes down. Therefore the impression is that they are not only bullish on gold but also on the absence of such a big risk off event.

Id	Driver	Comments	Immanency
1	On-going global recovery	EZ growth low but recovering. US growth may be picking up	Yes
2	FED and BCE	FED will be on hold for until 2015;	No
3	EZ break up	EU dynamic is a longer term dynamic of "putting the structures in place”; Greece exit	No
4	PIIGS	Greece government and Spain banks in focus	Yes
5	QE3	Until unemployment < 7% or inflation > 3% (maybe 2 years)	No
6	Commodity rise	Falling prices are confirming slowdown	No

"Technical analysis"
EURUSD: always range bound 1.28-1.31. Back towards 1.28. 1.2980 is good support ahead of 1.2850, that resisted.
GBPUSD: 1.60 , broken support at 1.6110 then 1.6050 and 1.5980.
USDJPY: back to 79.6 after breaking 80
AUDUSD: After a correction to 1.024, back to 1.037.

Median grid
EURUSD GRID 1.2400-1.3000, north bias
USDJPY GRID 76.00-80.00, neutral bias

Currency	Short term view(technical)	Long term view (fundamentals)
USD	Short	Short
JPY	Short	Short
AUD	Long	Long
EUR	Neutral	Long

"Market dynamics”
EURUSD The sell-off in the euro last week coincided with weak PMI data from the Eurozone, thus further declines in economic data could cause more pressure on the single currency. If the data next week is truly horrible then we expect a sharp fall to 1.2800 and then 1.2750 – the low from the middle of September - in the short term. The private ADP report which is due out on Thursday may take on more importance as new enhancements have been made.
GBPUSD: is likely to remain range bound for the short-term between 1.5800 and 1.6150. It is also sensitive to overall market risk, so if we see market sentiment continue to drain then we may test the top of the 1.6065 key support zone.
USDJPY: In the long run, we would prefer to fade yen weakness as increases to the Bank’s APP have not had lasting impacts on the exchange rate. While BoJ action may result in short term yen weakness, we doubt that USD/JPY upside can last without support from higher US treasury yields.
Key events:
Sunday:
Monday: JPY Overnight Call Rate <0.10% <0.10%
Tuesday: USD CB Consumer Confidence 72.4 70.3
Wednesday: CNY Manufacturing PMI 50.3 49.8, EUR Unemployment Rate 11.4% 11.4%
Thursday: GBP Manufacturing PMI 48.1 48.4, USD Unemployment Claims 371K 369K, USD ADP Non-Farm Employment Change 139K 162K, USD ISM Manufacturing PMI 51.2 51.5
Friday: USD Non-Farm Employment Change 120K 114K , USD Unemployment Rate 7.9% 7.8%
Saturday:

Prices and Risk on/off view

Date	CRB	WTI Oil	Copper	Gold	Silver	SP500	Tnote	Bunds	VIX
22-ott	306	90.1	363	1721	32	1433	1.76	1.59	17
29-ott	296	86.1	355	1711	32.1	1411	1.74	1.53	17.8
Difference	-3.27%	-4.44%	-2.20%	-0.58%	0.31%	-1.54%	-1.14%	-3.77%	4.71%

Date	Dollar Index	AUDUSD	USDCHF	USDJPY	EURUSD	AUDJPY	Risk on/off
20/08/2012	79.6	1.034	0.92	79.3	1.302	81.9	-2.62
29/10/2012	79.9	1.037	0.934	79.62	1.293	82.5	-3.89
Difference	0.38%	0.29%	1.52%	0.40%	-0.69%	0.73%	-48.26%

RORO (30): -0.60 (0.27)

3.  Plan
Still waiting to play JPY short trades (78 should be good) and EURUSD long on pullbacks (wait for 1.29).

Briefing 121022

1.  Review.

I said: (121001) “EURUSD: the bias could be to the downside for the euro next week as fundamental and technical data continue to undermine the single currency. We believe that 1.25 will remain well supported as the ECB’s OMT programme has removed the tail risk that the currency bloc could collapse. We think there is still a lot negativity in the Euro that needs to be priced out. We are not returning soon to mid-low 1.20s, maybe mid-high 1.20s but more likely we settle above 1.30.” We settled here.
“GBPUSD: In an environment of elevated Eurozone stress we could see the dollar attract some safe haven demand this week, which could weigh on GBPUSD.” It did.
“USDJPY: we believe we are seeing bottoming behavior in USDJPY and it won't go lower. The USDJPY will move on what happens in the US and not in the Yen side of the equation. ,The JPY will remain sensitive to broader risk sentiment as well as US Treasury yields.” Yes, we are around 78
Bottom line - QE3 or not it won't change the current positive EUR situation materially”.
Trades
Closed EUR and AUD long.

2.  Analysis.

"Fundamental analysis"
Sunday: CNY CPI y/y 1.9% 1.9% 2.0%
Monday: USD Retail Sales m/m 1.1% 0.7% 1.2%
Tuesday: GBP CPI y/y 2.2% 2.2% 2.5%, EUR German ZEW Economic Sentiment -11.5 -14.6 -18.2
Wednesday: CNY GDP q/y 7.4% 7.4% 7.6%
Thursday: USD Unemployment Claims 388K 367K 342K, USD Philly Fed Manufacturing Index 5.7 1.3 -1.9
Friday: USD Existing Home Sales 4.75M 4.73M 4.83M
Saturday:
Both ECB and FED have pledged “unlimited” support to sort out their respective problems and for the first time since the financial crisis broke out in 2008 the Fed and the ECB have said they won’t stop until the problems are solved. This is aggressive action from the world’s most important central banks and the markets like it. If the Fed is going to keep its foot down on the accelerator until the economy recovers then QE could be with us for the long-term, which may keep dollar strength capped and the Aussie, Kiwi and Real fairly strong.

USD: Data out of the US and UK surprised to the upside last week and gave some very encouraging signals that growth may have woken up from its summer slump. T-note yields at 1.8%. Earning season quite good, even with some disappointing data from Google, IBM and Intel.
CAD: Finance Minister Jim Flaherty said that Canada may have to revise down its economic outlook and that Canada is not immune to world economic challenges
EUR: The chief outcome of the EU Summit has been an agreement with Europe’s leaders that the ECB will eventually be the single body responsible for all banking supervision in the Eurozone. Germany solidifying its opposition to using the ESM (the EU500bn long term rescue fund) to directly re-capitalise the banks in Europe. Spain yield lower, Some think Spain may now wait until the next finance ministers’ meeting in mid-November before making a request for a credit line that would trigger the ECB’s OMT programme.
GBP: economic and . labour market produced a positive surprise
JPY:
CNY: good data from China. The growth outlook still faces a few hurdles and should not be greeted by traders with unbridled enthusiasm
Gold: Several of the big banks are currently very bullish on gold. From $2000 to $3000 in the next year or two are their calls. And it is mainly due to the money printing is good for gold price argument. They also know if there is a serious risk off event then gold goes down. Therefore the impression is that they are not only bullish on gold but also on the absence of such a big risk off event.

Id	Driver	Comments	Immanency
1	On-going global recovery	EZ growth low but recovering. US growth may be picking up	Yes
2	FED and BCE	FED will be on hold for until 2015;	No
3	EZ break up	EU dynamic is a longer term dynamic of "putting the structures in place”; Greece exit	No
4	PIIGS	Greece government and Spain banks in focus	Yes
5	QE3	Until unemployment < 7% or inflation > 3% (maybe 2 years)	No
6	Commodity rise	Falling prices are confirming slowdown	No

"Technical analysis"
EURUSD: edging back towards 1.30. 1.2980 is good support ahead of 1.2850
GBPUSD: 1.60 , broken support at 1.6110 then 1.6050 and 1.5980.
USDJPY: flat in the week
AUDUSD: was given a boost by broader risk sentiment as the pair broke above the 200-day SMA and tested above the 1.04. A correction may be due.

Median grid
EURUSD GRID 1.2400-1.3000, north bias
USDJPY GRID 76.00-80.00, neutral bias

Currency	Short term view(technical)	Long term view (fundamentals)
USD	Short	Short
JPY	Short	Short
AUD	Long	Long
EUR	Long	Long

"Market dynamics”
EURUSD: October flash PMI readings are released next week. The market expects these indices to move towards 50 but not get above this crucial level. But expect the markets to react to any positive PMI surprises from the Eurozone next week (1.31highs). We could be range bound in EURUSD for the medium term unless a big event – a Spanish aid request or volatility in Spain’s bond market – gives the market some direction.
US date due next week, with the key report being Friday’s advance GDP figures for 3Q. Any surprises in the economic data is likely to see the dollar respond more the impact on the risk environment rather than Fed expectations. Therefore better than expected readings may see the dollar softer on improving sentiment while misses could see dollar gains amid risk aversion.
GBPUSD: In an environment of elevated Eurozone stress we could see the dollar attract some safe haven demand this week, which could weigh on GBPUSD.
USDJPY: we believe we are seeing bottoming behavior in USDJPY and it won't go lower. The USDJPY will move on what happens in the US and not in the Yen side of the equation. ,The JPY will remain sensitive to broader risk sentiment as well as US Treasury yields.
Key events:
Sunday:
Monday:
Tuesday: CAD Overnight Rate 1.00% 1.00%, CNY HSBC Flash Manufacturing PMI 47.9
Wednesday: EUR German Flash Manufacturing PMI 48.1 47.4, EUR German Ifo Business Climate 101.7 101.4, USD FOMC Statement
Thursday: USD Unemployment Claims 366k 388K
Friday: USD Advance GDP q/q 1.8% 1.3%
Saturday:

Prices and Risk on/off view

RORO (30): 0.27 (-0.21)

3.  Plan
Still waiting to play JPY short trades (78 should be good) and EURUSD long on pullbacks (wait for 1.29).

Weekly Briefing 120924

1.  Review.

I said: ”Post the QE3 announcement the dollar is looking extremely oversold, so a pullback in risky assets in the coming days would not be unusual. However, we believe that the sell-off, especially in EURUSD could be fairly shallow due to the ECB action to reduce credit risk in the currency bloc (see more below). We believe this pair could trade in a 1.28- 1.35 range until the end of the year”. There was a pullback for risky assets.
EURUSD sitting at 1.297
“USDJPY: It is natural for USDJPY to react to a move in Treasury yields, also as market and sovereign risk levels have dropped then the yen tends to get sold off. Thus, the move higher in USDJPY is perfectly normal at this stage.” T notes dropped and pair is at the same level.
It seems like the fundamental winds are at the back of the euro which should support the euro on dips as there is still an overhang of euro shorts.
Trades
None

2.  Analysis.

"Fundamental analysis"
Tuesday: EUR German ZEW Economic Sentiment -18.2 -19.4 -25.5
Wednesday: USD Building Permits 0.8M 0.79M 0.81M, CNY HSBC Flash Manufacturing PMI 47.8 47.6
Thursday: EUR German Flash Manufacturing PMI 47.3 45.4 44.7, USD Philly Fed Manufacturing Index -1.9 -4.1 -7.1
Friday:
Saturday:
Sunday:
Both ECB and FED have pledged “unlimited” support to sort out their respective problems and for the first time since the financial crisis broke out in 2008 the Fed and the ECB have said they won’t stop until the problems are solved. This is aggressive action from the world’s most important central banks and the markets like it. If the Fed is going to keep its foot down on the accelerator until the economy recovers then QE could be with us for the long-term, which may keep dollar strength capped and the Aussie, Kiwi and Real fairly strong.
Fed: its QE3 programme will last until the unemployment rate drops to a level acceptable to the Fed (probably be somewhere south of 7%) or inflation rises above 3%. Lockhart indicated that the “immediate outlook for jobs” is the focus of the Fed and said that the potential risks associated with QE3 are “manageable”. Dallas Fed President Fisher who said that he sees a sharp rise in inflation expectations and long-term inflationary fears.
EUR: OMT is not yet triggered. There is hope that Spain will apply for a bailout after reports on Friday that Spanish officials were in negotiations with the EU. A sovereign bailout for Spain also has significance for the wider market as it would trigger the ECB’s OMT programme. Once this happens the ECB becomes a lender of last resort for the currency bloc
GBP:
JPY The BOJ surprised some by adding to their QE programme. With Qe3 in play, the JPY is emerging as a more attractive haven. Recent economic data that showed continued contraction in Europe and in China’s manufacturing sector spurred risk aversion which saw the JPY outperform the US
CNY:

Id	Driver	Comments	Immanency
1	On-going global recovery	Germany slow down. EZ growth low. US growth may be picking up	Yes
2	FED and BCE	FED will be on hold for until 2015;	No
3	EZ break up	EU dynamic is a longer term dynamic of "putting the structures in place”; Greece exit	No
4	PIIGS	Greece government and Spain banks in focus	Yes
5	QE3	Until unemployment < 7% or inflation > 3%	No
6	Commodity rise	Falling prices are confirming slowdown	No

"Technical analysis"
EURUSD: 1.30, at top of the grid. Need a grid adjustment. Golden cross of the 200 sma
GBPUSD: testing the extreme of the trading range 1.54-1.60, at 1.62
USDJPY: broken the top of a recent range and broke above the 79.00 figure.

Median grid
EURUSD GRID 1.2400-1.3000, north bias
USDJPY GRID 76.00-80.00, neutral bias

Currency	Short term view(technical)	Long term view (fundamentals)
USD	Short	Short
JPY	Short	Short
AUD	Long	Long
EUR	Long	Long

"Market dynamics”
EURUSD: we believe this pair could trade in a 1.28- 1.35 range until the end of the year. We expect to trade in a 1.2830 (200-day sma) – 1.3100 range in the coming days.
Practicalities will cause euro dips but they will be short and shallow. Spain is the biggest concern for euro markets at the moment. If it applies for a bailout in the next couple of weeks we could see the single currency and euro-based assets start to rise, if we don’t then they could just as easily sell off sharply.
Buy the dips if they are there. You can also sell the tops, but be aware that the train is going UP.
I think there is still a lot negativity in the Euro that needs to be priced out. We are not returning soon to mid-low 1.20s, maybe mid-high 1.20s but more likely we settle above 1.30.
GBPUSD:
USDJPY: we believe we are seeing bottoming behavior in USDJPY and it won't go lower. The USDJPY will move on what happens in the US and not in the Yen side of the equation. ,The JPY will remain sensitive to broader risk sentiment as well as US Treasury yields.
Bottom line - QE3 or not it won't change the current positive EUR situation materially.
Key events:
Monday: EUR German Ifo Business Climate 102.7 102.3
Tuesday: USD CB Consumer Confidence 62.9 60.6
Wednesday: USD New Home Sales 381K 372K
Thursday: USD Unemployment Claims 378K 382K
Friday:
Saturday:
Sunday:

Prices and Risk on/off view

RORO (30): +0.39 (1.21)

3.  Plan
Play JPY short trades and EURUSD long on pullbacks

Weekly Briefing 120917

1.  Review.

In the last 10 days EURUSD is up 600 points, the S&P 500 is comfortably above 1,450 and Brent crude oil is testing $117 per barrel and may test $120 in the coming days. Chief drivers have been stimulative monetary policies from the Federal Reserve in the US and the European Central Bank in the Eurozone
Trades
None

2.  Analysis.

"Fundamental analysis"
Monday: CNY Trade Balance 26.7B 18.9B 25.1B
Tuesday:
Wednesday : USD Trade Balance -42.0B -44.2B -41.9B
Thursday: EUR German Constitutional Court Ruling, USD PPI m/m 1.7% 1.1% 0.3%, USD FOMC Press Conference
Friday: USD Core CPI m/m 0.1% 0.2% 0.1%, USD Retail Sales m/m 0.9% 0.7% 0.6%, USD Prelim UoM Consumer Sentiment 79.2 74.1 74.3
Saturday:
Sunday:
Both ECB and FED have pledged “unlimited” support to sort out their respective problems and for the first time since the financial crisis broke out in 2008 the Fed and the ECB have said they won’t stop until the problems are solved. This is aggressive action from the world’s most important central banks and the markets like it.
Fed: its QE3 programme will purchase $40bn per month of mortgage backed securities until the unemployment rate drops to a level acceptable to the Fed (probably be somewhere south of 7%).
EUR: : there has been a significant reduction in the tail risk of 1, the Eurozone falling apart and 2, the fear of Spain applying for a sovereign bailout as the ECB‘s bond-buying programme won’t actually get triggered until Spain or Italy apply for either a bailout or a precautionary credit line.
GBP:
JPY: 1, the threat of intervention risk from the Japanese authorities and the prospect of the Bank of Japan significantly boosting the size of its Asset Purchase Programme when it meets on Wednesday and 2, the rise in the Treasury yields tends to be positive for USDJPY
CNY:

Id	Driver	Comments	Immanency
1	On-going global recovery	Germany slow down. EZ growth low. US growth may be picking up	Yes
2	FED and BCE	FED will be on hold for until 2015;	No
3	EZ break up	EU dynamic is a longer term dynamic of "putting the structures in place”; Greece exit	No
4	PIIGS	Greece government and Spain banks in focus	Many Yes!
5	QE3	Yes!	No
6	Commodity rise	Falling prices are confirming slowdown	No

"Technical analysis"
EURUSD we are stuck in a range between 1.2250 and 1.2450 although a surprise reading for the August’s PMIs or if the German Finance Ministry’s monthly report suggests that the German economy is deteriorating then we may break out of this range.
GBPUSD managed to get above 1.57 and even test 1.5740– its 200 day moving average.
USDJPY: broken the top of a recent range and broke above the 79.00 figure.
Bottom line - QE3 or not it won't change the current positive EUR situation materially.
Buy the dips if they are there. You can also sell the tops, but be aware that the train is going UP.
I think there is still a lot negativity in the Euro that needs to be priced out. We are not returning soon to mid-low 1.20s, maybe mid-high 1.20s but more likely we settle above 1.30.

Median grid
EURUSD GRID 1.2400-1.3000, north bias
USDJPY GRID 76.00-80.00, neutral bias

Currency	Short term view(technical)	Long term view (fundamentals)
USD	Long	Short
JPY	Neutral	Short
AUD	Short	Long
EUR	Long	Long

"Market dynamics”
Post the QE3 announcement the dollar is looking extremely oversold, so a pullback in risky assets in the coming days would not be unusual. However, we believe that the sell-off, especially in EURUSD could be fairly shallow due to the ECB action to reduce credit risk in the currency bloc (see more below). We believe this pair could trade in a 1.28- 1.35 range until the end of the year
EURUSD
GBPUSD: GDP reading: But if the data follows retail sales and the labour market higher then we could see sterling have another stab at 1.5740.
USDJPY: It is natural for USDJPY to react to a move in Treasury yields, also as market and sovereign risk levels have dropped then the yen tends to get sold off. Thus, the move higher in USDJPY is perfectly normal at this stage..
Key events:
Monday
Tuesday: EUR German ZEW Economic Sentiment -19.4 -25.5
Wednesday: USD Building Permits 0.79M 0.81M, CNY HSBC Flash Manufacturing PMI 47.6
Thursday: EUR German Flash Manufacturing PMI 45.4 44.7, USD Philly Fed Manufacturing Index -4.1 -7.1
Friday:
Saturday:
Sunday:

Prices and Risk on/off view

RORO (30): +1.21 (0.63)

Weekly Briefing 120819

1.  Review.

EURUSD in a tight range, nothing much happened.
Sell-off in US Treasury securities and USDJPY from advancing. Crucially, the 10y yield has yet to break above 1.86% and so the yen may find a near-term foothold at these levels.
Next week things will probably pick up a bit with Greece / German heads of state meeting
Trades
None

2.  Analysis.

"Fundamental analysis"
Monday:
Tuesday: USD Core Retail Sales m/m 0.8% 0.4% -0.8%; USD PPI m/m 0.3% 0.3% 0.1%:
Wednesday : USD Core CPI m/m 0.1% 0.2% 0.2%
Thursday: USD Unemployment Claims 366K 365K 364K
Friday: USD Prelim UoM Consumer Sentiment 73.6 72.5 72.3
Saturday:
Sunday:
For a big EUR south move you need EU trouble and US economic growth and normality. If you don't have both, no big euro south side and potential for euro upside due to the structural improvements and the long term USD diversification
Fed: The Fed will release its meeting minutes from the July 30/Aug; changing its language to suggest it is moving closer towards providing more accommodation. With the improvement in economic data since the FOMC meeting concluded, markets have reduced expectations of action at the September Fed policy meeting. Data: job growth has surprised to the upside, retail sales grew significantly, and housing data continues to improve, Treasury yields have backed up.
EUR: Eurozone crisis continued to show signs of stabilization. , as long as their bond yields are falling it is unlikely that Madrid will pre-emptively apply for bailout funds when it can still fund itself in the capital markets. While stocks have staged a sharp recovery the euro, although off its recent lows, hasn’t shared the stellar gains and still looks vulnerable. But if the Eurozone crisis flares up again then it is unlikely that stocks will be able to sustain their current rally
GBP: Bank of England has put QE on hold for now. the labour market data for June and July showed that 201,000 extra people were in employment in Q2 compared with Q1. Retail sales also surprised on the upside for July, adding to the good run of economic data for the UK.
JPY: Climbing US Treasury yields on the back of improving economic data and reduced monetary easing expectations from the Federal Reserve have been a boon for the USD/JPY
CNY:

Id	Driver	Comments	Immanency
1	On-going global recovery	Germany slow down. EZ growth low. US growth may be picking up	Yes
2	FED and BCE	FED will be on hold for until 2015;	No
3	EZ break up	EU dynamic is a longer term dynamic of "putting the structures in place”; Greece exit	No
4	PIIGS	Greece government and Spain banks in focus	Many Yes!
5	QE3	Not off the table	Yes
6	Commodity rise	Falling prices are confirming slowdown	No

"Technical analysis"
EURUSD we are stuck in a range between 1.2250 and 1.2450 although a surprise reading for the August’s PMIs or if the German Finance Ministry’s monthly report suggests that the German economy is deteriorating then we may break out of this range.
GBPUSD managed to get above 1.57 and even test 1.5740– its 200 day moving average.
USDJPY: broken the top of a recent range and broke above the 79.00 figure.
Dollar index:

Median grid
EURUSD GRID 1.2400-1.3000, south bias
USDJPY GRID 76.00-80.00, neutral bias

Currency	Short term view(technical)	Long term view (fundamentals)
USD	Long	Short
JPY	Neutral	Short
AUD	Short	Long
EUR	Short	Long

"Market dynamics”
EURUSD: brings the initial estimates of August PMI surveys for the currency bloc. Although they are likely to remain mired in negative territory they are expected to come off their recent lows. Any positive surprises could unleash another leg higher in European asset markets that could even push the euro higher
GBPUSD: GDP reading: But if the data follows retail sales and the labour market higher then we could see sterling have another stab at 1.5740.
USDJPY: we expect the USD/JPY to remain within the top around 80.45 and base around 78.40. A pending break out is expected at the end of September. Until this occurs and while US yields continue to grind higher, we favor a move higher in USD/JPY and look for a potential retest of the 80.45 top.
Key events:
Monday
Tuesday:
Wednesday: USD FOMC Meeting Minutes
Thursday: CNY HSBC Flash Manufacturing PMI 49.3, EUR German Flash Manufacturing PMI 43.6 43.0, USD Unemployment Claims 365K 366K, USD New Home Sales 362K 350K
Friday: USD Core Durable Goods Orders m/m 0.5% -1.4%
Saturday:
Sunday:

Prices and Risk on/off view

RORO (30): +0.63 (1.06)