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FXstreet.com (Edinburgh) - The EUR/USD continues to flirt with 1.3400 the figure on Wednesday, as markets get closer to the FOMC statement and the subsequent press conference by Chief Bernanke.
EUR/USD vs. B.Bernanke
According to the research team at BBH, the FOMC statement would be the least relevant release, as the evaluation of the economy would remain pretty much the same. “We expect the Chairman to help investors differentiate between tapering and tightening and to try to drive home the point that current conditions are not sufficient to slow down the long-term asset purchases ($85 bln a month)… The Fed exited QE1 and QE2 too early and needs to avoid making the same mistake for a third time”, concluded the analysts.
EUR/USD key levels
At the moment the pair is up 0.08% at 1.3403 and a break above 1.3411 (high Jun.19) would target 1.3416 (high Jun.18) en route to 1.3456 (high Feb.14). On the downside, support levels align at 1.3338 (hourly low Jun.18) ahead of 1.3326 (MA10d) and finally 1.3325 (low Jun.18).
June 19, 15:17 (FXStreet)
Flash: USD/JPY could face tumble towards key support – UBS
FXstreet.com (New York) - UBS Strategists, Gareth Berry and Geoffrey Yu take a technical perspective at today's majors and outline the technical positions.
Beginning with the USD/JPY, “The weakness since mid-May is approaching the significant support at 93.57. A closing break below this would be further negative opening 90.43 – resistance is at 96.10, suggesting a bearish intraday outlook.”
As for the GBP/USD, as the bull trend persists any downside will be limited with a strong support at 1.5468. Broader focus is on the strong resistance at 1.5789; a closing break above this would be further positive opening 1.5879. Finally, regarding the USD/CHF, the pair is consolidating to unwind the sharp overextended downside conditions with resistance at 0.9309. Support is at 0.9130 ahead of 0.9022.
June 19, 15:00 (FXStreet)
Flash: Key questions lie ahead at FOMC meeting – Deutsche Bank
FXstreet.com (New York) - According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “Ahead of the meeting later today, if the Fed does hint towards imminent tapering then they will stress that fed funds rate hikes are still a long way off and well into 2015 under the FOMC's projections.”
Regarding the Fed's Summary of Economic Projections (SEP) which are scheduled to be released with today's policy statement, Deutsche Bank's Joe Lavorgna thinks that the Fed's forecast ranges for real GDP growth (2.3%-2.8%) and unemployment (7.3%-7.5%) remain tenable, and thus are not likely to change meaningfully. Changes may occur in inflation forecasts given recent softening inflation indicators.
In the last SEP, the year-end core inflation range was 1.5%-1.6% - currently, the core PCE deflator is running at 1.1%. As a result, our US economists would not be surprised to see the lower end of policymakers' 2013 core inflation range be reduced by 20-30 basis points. “We suspect Bernanke's thoughts regarding the recent market volatility will also be closely watched and keenly interpreted. Finally, there will probably be some questioning around the Chairman's plans when his tenure ends in January 2014.” they add.
FXstreet.com (New York) - The GBP/JPY technical cross bottomed out at the 148.28 region earlier today, only to recover steadfastly during US trading Wednesday.
GBP/JPY in for a bullish rebound
According to the Technical Analyst Team at ICN.com, “The GBP/JPY pair recorded a low just above 148.15-support level, to retrace its losses. We remain on the bullish side of the trade, anticipating a bullish rebound so long as 149.90-resistance area is holding.”
Following the recent recovery, the GBP/JPY foreign exchange rate is still residing in negative territory at 148.81, still off -0.20% in these moments. The Mataf.net analyst team has identified supports at 148.66, then 148.12, and finally 147.65
FXstreet.com (London) - Brown Brother Harriman Global Currency Strategy Team say that while all eyes are on the Federal Reserve today as the market awaits clues into when the central bank will begin slowing its liquidity provisions, China's central bank continues its own snugging operation, keeping the money market rates at lofty levels.
They said that rather than inject liquidity into the money markets, as the banks were clamouring for, the PBOC drained CNY2 bln yesterday, which continued the cash crunch and ensured that today's 10-year bond auction would see lukewarm demand. Sure enough, as they note, today's CNY30 bln 10-year bond offering saw its lowest bid-cover ratio in a year while the 7-day repo rate, which is an indicator of interbank liquidity rose 144 bp today to 8.26%, which is the highest rate since in two years.
FXstreet.com (Córdoba) - The USD/CAD dipped below the 1.0200 mark at the beginning of the New York session after data showed Canadian wholesales grew in line with expectations in April.
USD/CAD resumes the decline
Despite USD/CAD attempted to recover, it failed to regain the 1.0200 level and came under renewed pressure, resuming the downside to a new low of 1.0180. At time of writing, USD/CAD is trading at the 1.0185 area, where it records a 0.3% loss.
In terms of technical levels, immediate supports are seen at 1.0150 (Jun 17 low) and 1.0135 (Jun 14 low), while resistances are seen at 1.0237 (daily high) and 1.0265 (20-day SMA).
June 19, 14:26 (FXStreet)
Flash: EUR/USD still bullish after posting fresh high – UBS
FXstreet.com (New York) - UBS Strategists, Gareth Berry and Geoffrey Yu take a technical perspective at today's EUR crosses and note that there is a generally neutral-trending bias ahead.
“The EUR/USD posted a new high and is approaching the resistance at 1.3520 ahead of 1.3711 – support is at 1.3319, indicating a bullish outlook.” the analysts note. In terms of the EUR/CHF, the sharp sell-off is held by the support at 1.2267. A closing break would trigger deeper sell-off to1.2196. Upside should be limited with strong resistance at 1.2386.
Moving to the EUR/GBP, a sharp advance seen yesterday is approaching the critical resistance at 0.8607. A closing break above this would be positive opening 0.8656, while support is at 0.8470. Finally, concerning the EUR/JPY, the cross is consolidating ahead of the strong support at 124.72; a closing break below this would be further negative opening 119.11. Upside should be limited with resistance at 128.34.
FXstreet.com (New York) - The AUD/USD foreign exchange rate has rebounded Wednesday, having managed to sustain some manner of recovery attempt during US trading ahead of the FOMC.
AUD/USD stochastic remains negative
According to the Technical Analyst team at ICN.com, “The AUD/USD's downtrend has stopped without breaking Linear Regression Indicator 34 – a positive event on intraday basis. Simultaneously however, the pair resides below 0.9535 and the stochastic maintains its negative momentum therefore, we prefer to maintain neutrality in the US Session.”
Following a stabilization during US trading, the AUD/USD has pared its earlier losses to trade at to 0.9524, or a robust +0.38% above its opening at the time of writing. “The recent sell-off has put our focus on the momentum tools to cross lower to indicate resumption of downside. Support is at 0.9416 ahead of 0.9326. Resistance is at 0.9574, suggesting a bearish outlook.” notes Geoffrey Yu, a Research Analyst at UBS.
FXstreet.com (London) - EUR/GBP had spiked up higher towards the top of the daily cloud (0.8600) but falling short at 0.8573 after the release of the BoE minutes this morning.
The vote was unanimous with regards to rates being left on hold, 9-0. However, there was a 6-3 split with regards to their bond purchasing programme and QE, essentially echoing previous months. Research teams at TD Securitres explain that the next meeting becomes much more interesting as the new BoE Governor Carney takes the helm. After reaching above 1.5700 at the start of the week, GBPUSD has topped out for the time being.
EUR/GBP dependent on USD outcome
A stronger USD today would reinforce the turn, and an extension lower targets 1.55 in the coming week. This in turn would of course see EUR/GBP to the top of the cloud again – if breached on a close then the April highs would be the next objective. Daily momentum is leaning to the upside and supported by EMA50 at 0.8545 with key support coming in from SMA200 at 0.8514.
FXstreet.com (New York) - The US stock market tepidly opened to the downside, with the FOMC on tap later this afternoon at 18:30 GMT.
Beginning with the indices and composites, the NASDAQ fell -0.10% as it settles in region of 3478.65, down -3.40 points in these moments. In addition, the S&P 500 is trading in negative territory, operating at 1648.35, descending -3.29 points or -0.20% at the time of writing. Finally, the Dow Jones has moved lower at the opening, trading in the zone of 15282.41, presently -0.18% after a movement of -35.82 points.
Sectors are mostly lower at the opening, however the Telecommunications and Energy sectors have distinguished themselves as the losers thus far, falling -0.62% and -0.24% respectively. Moreover, the price of gold has settled at $1374.58 per oz., while silver is now negotiating a spot price of $21.73 per oz.
FXstreet.com (London) - Strategists at Nomura, Jens Nordvig and Ankit Sahni, said that they are observing an unusual type of dollar schizophrenia.
They said this is involving it's significant strength versus most emerging market currencies and sizeable USD losses versus major currencies. For example, they note that the dollar is 3.8% weaker in the Fed‟s major currency index (G10) and about 2% stronger in the EM index over the past two weeks.
They continued to mention that inflows into EM fixed income had reached a very high level, making these markets vulnerable to a reversal. They said that looking at country allocations within high frequency EPFR data, we see that bond flows from the eurozone to EM bonds reached their highest level in history by mid-May.
By their estimates, total fixed income flows from the eurozone to EM between September 2012 and mid-May were about $90bn. They note the reversal over the past three weeks has been small relative to the inflow (~$10bn), indicating that the unwind could have more room to run. “This continued unwind of short EUR/EM positions could also help explain the price action in EURUSD ”.
FXstreet.com (Córdoba) - As most pairs in the FX market, NZD/USD trades within a narrow range as investors remain on the sidelines ahead of Bernanke conference.
NZD/USD consolidates between MA's
NZD/USD has been oscillating between the 200- and 100-hour SMA's over the last hours, having hit a high of 0.8025 in recent dealings. At time of writing, NZD/USD is threatening the top-side of the range around 0.8020, posting a 0.5% gain on the day.
In terms of technical levels, if NZD/USD breaks above the 100-hour SMA at 0.8025, next resistance could be found at 0.8070 (Jun 17 high). On the downside, immediate support lies at 0.7995 (200-hour SMA) and 0.7975 (10-day SMA).
FXstreet.com (London) - There are three parts to the Fed story today, according to Brown Brother Harriman Global Currency Strategy Team: The FOMC statement, the forecasts and Bernanke's press conference.
They said the statement itself is likely to be the least important as the general assessment of the economy is unlikely to change significantly. The description of price pressures and the labour market may be tweaked to recognize the lower core inflation and continued modest improvement in labour market conditions. They do however say that the Fed's forecasts are important. They are part of the forward guidance and the bar against which the actual economic data needs to be measured against for policy implications.
“Here the Fed is likely to revise down its growth forecasts and, probably, its inflation forecasts. The mid-point in the March forecasts for GDP growth was 2.6%. This is well above market expectations, which are closer to 2% for this year.” They suggest the Fed may also shave next year's forecast from the current 3.2% and the 2015 projection of 3.3% (mid-point) may not be changed and is actually closer to market forecasts. They note that the US economy has not grown by more than 3% for a full calendar year in 8 years.
June 19, 13:07 (FXStreet)
Flash: Structural rebalancing of global economy would affect USD – UBS
FXstreet.com (New York) - A simple sensitivity analysis for all daily returns in 2013 will reveal that the dollar is largely 'risk neutral' at present, but this masks the changes (nominal values and trend) seen throughout the year.
Moreover, a simple internet keyword search trends analysis will show a marked rise in interest in the word 'tapering' in Q2. Unsurprisingly, in Q1 the DXY stuck to its 'haven' status before an upward move in its equity beta in April, and it even turned positive in May. According to Research Analyst Geoffrey Yu at UBS, “The story was broadly similar in fixed income (which should be expected): Q1 saw the DXY and bond prices move in the same direction (i.e. higher dollar but lower yields); in Q2 this relationship totally flipped and for a brief moment, it seemed as if the dollar carry trade was back after a long absence.”
Similar to the DXY's equity beta though, June was a month where the 'new relationship' was suddenly at risk again. We see two reasons: Firstly, markets were pricing in Fed changes but unable to digest the consequences. The dollar fell as liquidity-driven risk appetite was threatened, but once positioning cleared it became harder to justify sustained dollar weakness amid global risk aversion. This segues into the second point, i.e. if the Fed's next policy step will be 'stimulus withdrawal', structural rebalancing in the global economy will intensify.
FXstreet.com (London) - TD Securities research teams remind us that BoC Governor Poloz makes his maiden public speech this afternoon/ early eve.
Mr. Poloz speaks at 12.40ET and his comments will hit the wires just before at 12.25ET. There is an audience Q&A at the event and there will be a press conference after at 14.15ET. At his recent parliamentary appearance, the new BoC Governor’s position on many things sounded just like his predecessor’s so locals may be excused for focusing more on developments in Washington if a similar tone is struck today, explains the teams at TD Securities.
FXstreet.com (Córdoba) - The USD/CHF continues to waver without a clear direction at the beginning of the American session as traders show little interest ahead of the risk event of the week, the FOMC decision.
USD/CHF uninspired as focus remains on the Fed
USD/CHF has spent most of the day within a slim range centered at 0.9200, with the 100-hour SMA at the 0.9220 area keeping the upside limited. At time of writing, USD/CHF is trading at 0.9195, virtually unchanged on the day, with the Swiss ZEW survey offering little inspiration to the franc.
FXstreet.com (New York) - The GBP/USD foreign exchange rate has jumped to session highs Wednesday, mounting gains during the US session ahead of the FOMC.
GBP/USD still bullish
Presently, the GBP/USD is still growing at a rate of +0.19% above its opening Wednesday, having settled at 1.5674. “As the bull trend persists any downside for the GBP/USD will be limited with a strong support at 1.5468. Broader focus is on the strong resistance at 1.5789; a closing break above this would be further positive opening 1.5879, suggesting a bullish intraday outlook.” notes Geoffrey Yu, a Research Analyst at UBS.
GBP/USD must sustain 1.5605 for upside
According to the Technical Analyst Team at ICN.com, “The GBP/USD consolidated on the support level around 1.5605 then moved to the upside again. We count on the 1.5605 level and expect an upside move during the U.S. session, pointing out the importance of trading again above 1.5685 to prove this outlook.”
FXstreet.com (London) - GBP/JPY has started descending into what may form as yet another wave, meeting resistance at 148.80 and rejected before the pivot at 149.06.
Overnight, Japan's trade balance figures for the month of May came in at Y993.9 billion vs estimates of Y1200.0 billion and a previous trade balance of Y362.4 billion. Meanwhile, Japan's adjusted trade balance (May) stood at Y821.045 billion vs Y892.8 billion expected. May imports y/y came in at +10.0% vs +10.8% expected, with exports better than expected, up at +10.1% in May vs +6.5%% expected. In the UK, we have seen a raft of slightly more up beat data in from the economy and this morning we got the BoE Minutes. The vote was unanimous with regards to rates being left on hold, 9 - 0. However, there was a 6-3 split with regards to their bond purchasing programme and QE, essentially echoing previous months.
GBP/JPY has been trapped in a100 pip range and sideways channel. The pair is torn between USD, GBP and Yen focus, with the Yen the worst performer and GBP slightly more bid. Resistance remains as 149.50 with a slightly bearish formation now appearing on the hourly charts supported 148.20.
FXstreet.com (New York) - The EUR/CAD foreign exchange rate has inched lower during US trading, falling to intraday depths in these moments Wednesday
EUR/CAD unable to avert downturn
In Canada, Wholesale Sales (MoM) grew by +0.2% in April, against consensus expectations of +0.3%, and compared with a figure of +0.1% previously.
At the time of writing, the EUR/CAD technical pair is trading at 1.3660, down a modest -0.09% during US trading. The Mataf.net analyst team points to the propensity for short-term supports at 1.3614, then 1.3529, and 1.3479. On the ascension, resistive measures are found at 1.3749, then 1.3799, and ultimately 1.3884.
FXstreet.com (Edinburgh) - The EUR/USD is prolonging its congestion pattern on Wednesday, against the backdrop of the prevailing dullness pre-FOMC.
EUR/USD vs. Fed’s ‘tapering’
Lack of direction continues to prevail amongst traders as any attempt of setting a trade would be tilted as adventurous ahead of the Fed gathering and press conference by Chairman Bernanke. In the view of G.Moore and S.Osborne, Strategists at TD Securities, “We expect the Fed message to embrace the idea that tapering is likely in the not-too-distant future (if the data supports this) but to stress that tapering is not tightening. This is perhaps a distinction without much of a difference for the markets, however. We look for the USD to gain traction on a tapering message”.
EUR/USD levels to watch
At the moment the pair is up 0.08% at 1.3403 and a break above 1.3411 (high Jun.19) would target 1.3416 (high Jun.18) en route to 1.3456 (high Feb.14). On the downside, support levels align at 1.3338 (hourly low Jun.18) ahead of 1.3326 (MA10d) and finally 1.3325 (low Jun.18).
June 19, 12:32 (FXStreet)
Canada Wholesale Sales (MoM) improves 0.2% in April from 0.1% in March
FXstreet.com (New York) - The USD/CAD technical pair drifted lower to session lows during US trading Wednesday. In Canada, Wholesale Sales (MoM) grew by +0.2% in April, against consensus expectations of +0.3%, and compared with a figure of +0.1% previously.
USD/CAD hinges on FOMC
“The USD/CAD made a little progress higher overnight, pushing up to a little shy of the 1.0250/80 area that we had thought was reachable. Consolidation is the order of the day now, given the event risk ahead. Meanwhile, support at 1.0200/10 (40-day MA at 1.0208) is under a little pressure in early dealing but we look for the USD to remain supported broadly if the Fed pushes a less dovish line.” suggests the TD Securities Team.
Technically speaking, the pair is operating at 1.0198, or -0.17% in these moments. The USD/CAD will look towards supports at 1.0188 followed by 1.0150, and finally 1.0124. Alternatively, a movement to the upside and a paring of losses will usher in resistances at 1.0252, then 1.0278, and eventually 1.0316, calculates the Mataf.net analyst team.
June 19, 12:12 (FXStreet)
IMF urges Spain to implement employment-boosting measures
FXstreet.com (Barcelona) - The International Monetary Fund released a report on the state of the Spanish economy today in which it called for urgent action to spur growth and employment, additional to the previously implemented measures.
The IMF believes that despite the reforms carried out until now the unemployment level is unacceptably elevated and the perspectives for improvement are weak. That's why the organization is urging Spain to stimulate employment growth further.
It suggests that Rajoy's government should take several actions: improve training and placement services, reduce hiring costs, introduce tax breaks and wage moderation, facilitate access to credit for companies and promote the deleveraging process in the private sector.
June 19, 12:10 (FXStreet)
Flash: Will market be risk-on or risk-off post FOMC? – UBS
FXstreet.com (New York) - Market participants have agonized over the past few sessions on how the dollar is going to react after Wednesday's Fed meeting.
Of course, opinions differ on what the Fed will actually say, so the market's dollar view is hardly uniform either. According to Research Analyst Geoffrey Yu at UBS, “To simplify things, we believe that whatever the Fed will say, the key determination to make in identifying dollar's reaction function will be whether the market will be in a risk-on or risk-off mode ex-post. Bond yields and stock indices will move accordingly, accompanied by commensurate currency moves. As of June, the dollar is a 'positive risk-beta' currency, but its status is still evolving.”
June 19, 12:06 (FXStreet)
Commodities Brief – Precious metals jump to session highs ahead of FOMC, gold at resistance
FXstreet.com (New York) - Precious metals have been uneven this week with the FOMC on tap, however as of Wednesday commodities have managed to notch some manner of gains.
Gold could escape bearish scenario above 1374
Gold prices continued to consolidate within a narrow range around the key 1365.00 support level, and as such a bearish prevalence remains so long as the price holds below the 1374.00 intraday resistance. Ultimately, the fortunes of the yellow metal could shift in the near-term on news surrounding the FOMC. At the time of writing, gold prices has settled at USD $1373.04 per oz. during US trading, operating near its intraday highs.
Silver jumps to session highs
Silver spot prices moved slightly higher during the European session, approaching the broken minor ascending support, which should turn into resistance around 21.75 -21.80 level. This will in turn push price to resume the bearish bias. The bearish scenario ultimately requires 22.10 to halt any upside rally. At the current levels, the price of silver has now moved to USD $21.77 per oz. Wednesday, having moved to daily highs.
FXstreet.com (Córdoba) - The GBP/USD managed to reverse intraday losses at the beginning of the American session as the pound shrugged off BoE minutes and attention turns to the Fed statement.
GBP/USD found support just above 1.5600 and bounced, turning back positive for the day. GBP/USD is currently trading at the 1.5650/55 area, 0.1% above its opening price.
GBP/USD holds a bearish tone
From a technical view, Valeria Bednarik, chief analyst at FXstreet.com notes that GBP/USD holds a bearish tone in short term charts, supporting a downward movement, yet "it is all in FED's hands, so there's a chance price will keep ranging until the news".
"Price needs either to break below the 1.5600 mark or above 1.5670 to set a clearer intraday tone, with 1.5520 and 1.5770 as main bearish and bullish targets for today", Bednarik says.
FXstreet.com (New York) - The USD/JPY foreign exchange rate fell off the 95.20 handle ahead of US trading, testing the key 95.00 barrier ahead of the FOMC later.
USD/JPY trading above support
At the time of writing, the USD/JPY technical pair is operating at the 95.00 level, down -0.34% Wednesday. Despite the drop, the pair has yet to breach support, which lies at 94.84, followed by 94.19, and 93.73. Alternatively, resistance lies ahead at 95.95, onto 96.41, and 97.06.
USD/JPY cannot escape negative expectations
According to the technical analyst team at ICN.com, “Linear Regression Indicators are positively affecting the USD/JPY; however but we find the pair trading within the overall bearish bias we suggested to manage the downside wave shown on graph. Prolonged stability below 95.50 forces us to hold on to our negative expectations today.”
FXstreet.com (London) - USD/CAD defended 1.0200 the figure but struggles to break out of a 10 pip range.
USD/CAD has some third tier data coming up at 12.30 GMT in the form of wholesales Sales (MoM) (Apr) expected at a modest 0.3% to mirror the previous month. However, the market will be reacting to FOMC a little later on this evening as well as Bank of Canada’s new Govener, Mr.Poloz who is talking tonight on the topic of “Recovery: Rebuilding Business Confidence in Canada.” Markets will be watching closely to see if he sticks to the same script that he did during his appearance before Parliament a couple of weeks ago, which was very much in line with Carney’s tone, according to Alvin Pontoh at TD Securities
USD/CAD applying the pressure
USD/CAD is applying more pressure as the day moves on having now moved some distance away from the key resistance at 1.2070. In the short term, the upside trend remains. The pair now struggle to inch higher above the EMA20 at 1.0215, oscillating around the pivot with EMA50 at 1.0202 still acting as support.
FXstreet.com (New York) - The price of Gilts is poised for a recovery, as the MACD has turned bullish and candlestick’s Dragonfly Doji followed by a bullish engulfing marked a local bottom.
According to Technical Strategist Dmytro Bondar at RBS, “There is however a strong obstacle in the way – 20-day MA, which proved to be a trailing support/resistance. A break above is required to see a recovery to 116.26 and potentially 116.87.”
Yield’s negative divergence with the slow stochastic confirms the market is likely to see a bullish correction to 1.94%, which is the 38.2% retracement from the same move and the level of 100-day MA. However, after the correction is completed, the long-term bearish view would come into play again with 2.27% in focus.
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