Author: FX

Go with the break is the message from MUFG Research’s first trade of the week for 2023. They suggest buying EUR/CHF from spot (reference 1.0045) with a target of 1.0470 and a stop at 0.9830.”We are recommending a new long EUR/CHF trade idea. Given the CHF’s role as a regional safe haven currency, the CHF should weaken as downside risks in the eurozone continue to ease,” MUFG notes.”We also believe there is room for EUR/CHF to play catch up with the move higher in EUR/USD since late last year,” MUFG adds.For bank trade ideas, check out eFX Plus. For a…

Jeff Weniger from WisdomTree put together a nice graphic emphasizing that US inflation is about to begin lapping some seriously high year-over-year comparative numbers. With that, the old numbers will ‘fall out’ of the year-over-year reading and that will cause inflation readings to fall.How far will they fall?If CPI were to run at 0.3% m/m for the next six months, we would be looking at 2.7% y/y in June and if it’s 0.2% the Fed would reach its target.What will make it tougher than it might seem is that commodity (especially gasoline) prices have stopped falling and that’s been a…

Consumer Sentiment in the United States improved and capped AUD/USD rally. The US last inflation report, spurred speculation that the Fed would decelerate the pace of interest rate increases. Improvement in Australia – China relations is a tailwind for the Australian Dollar. The Australian Dollar (AUD) hit a fresh six-month high against the US Dollar (USD) on Friday, though it has paired some of its earlier gains, albeit Thursday’s US data showed that inflation continued to grind lower. Therefore, the AUD/USD is trading at 0.6964, almost flat at the time of typing. Investors’ mood is mixed as US equities fluctuate…

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The US 10 year yield moved to a new year low at 3.417%. That took the yield just below the 50% of the move up from the August 2022 low at 3.426%, but remained above the December low yield of 3.404%.US 10 year yields ping ponging in a 50 bp rangeThe combination is forming a nice floor for the 10 year yield at the 3.40% area. Having said that, looking at the chart above, the high that we saw in December stalled near the November 14 high at 3.904%. So since November 14 high yield at 3.904%, the yield has…

You don’t need to look around markets for long to see signs that sentiment around Europe has improved and now Deutsche Bank is quantifying it. Economists there have boosted their 2023 eurozone GDP forecast to 0% from -1.0% at year end.They note that Germany performed surprisingly well in 2022, growing 1.9% despite the industrial and energy headwinds.”The major growth engine was private consumption surging by 4.6%, supported by the end of COVID restrictions, pent-up savings and fiscal policy measures to cushion the real income losses provided by surging inflation. The stable labor market was also a supporting factor,” DB economists…

The S&P index on the daily chart moved to and through the 200 day MA on Thursday. It moved above the same MA today too. The MA comes in at 3967.17. The high today reached 3980.98. The high yesterday reached 3997.76. S&P faiis above the 200 day MA againThe price closed just below the MA yesterday. It is currently trading below that MA today at 3972.80. Visions of December are dancing in my head. The day of the CPI last month, the price moved above the 200 day MA but closed below that MA level. Failed break. The next day…

Analysts at MUFG Bank have a bullish outlook for the EUR/CHF cross, considering it could benefit from a further scaling back of fears over recession in the Eurozone. Key quotes: “After trading within a narrow range between 0.9800 and 0.9950 throughout most of Q4, the pair has broken higher in recent days as it first climbed above the 200-day moving average at 0.9940 and then above parity for the first time since the middle of last year. We expect a further move higher back towards levels that were in place during Q2 of last year between 1.0200 and 1.0500.” “The…

According to analysts at MUFG Bank, the Japanese Yen is set to gain further ground on the back of monetary policy expectations from the Bank of Japan. They consider possible a slide under 120.00 for later in 2023. Key quotes: “USD/JPY has fallen further still today and is now 15.5% down from the peak on 21st October – each of the three months in Q4 brought reason to buy the yen – intervention by the BoJ in October and November and the YCC change in December. On top of that US inflation has fallen faster than expected. Will we get…

Data released on Friday showed a significant increase in Consumer Confidence in January according to the preliminary report from the University of Michigan. Analysts at Wells Fargo point out the 64.6 reading for consumer sentiment in January marks the top print in the past year. The see that the relief on the inflation front and wage growth are lifting spirits, but warn the still-sour buying conditions suggest the good vibes in this report may not translate into a spending surge. Key quotes: “Consumers may not feel awesome about their finances, but they are undoubtedly less worried than they were when…