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BMO Capital Markets - FX Morning Commentary

本文发表在 rolia.net 枫下论坛The price action that has been seen in the FX market (as well as others) over the past couple of weeks violently reversed itself yesterday with the USD and JPY losing ground against the major currencies. Even with the dramatic moves, from a technical viewpoint it is still too early to suggest that a major reversal in the USD has taken place. The daily EURUSD charts show some bearish divergence with the MACD having converged suggesting that the break above 1.3100 and the overnight move to 1.3300 is unlikely to be sustained and that selling should re emerge. The same holds true for most of the other major pairs. Although there is going to be a lot of speculation as to the cause of the move, it is probably little more than speculation. For the most part, it seems that the USD’s decline can be linked to the ongoing selloff in equities and more importantly the significant hedging requirements. With it happening relatively close to month end, the hedging requirements may have been exaggerated. What does seem apparent is that with all the volatility and lack of liquidity, these markets are nowhere nears normal market conditions, and the lack of normalization looks like it will continue. The risk is that as the markets heads into calendar year end liquidity is likely to get worse. Overall I would suggest that the selloff in the big dollar is more a pause than a reversal in the short/medium term.

Turning to North America, the US gets the Q3 GDP data with the market consensus looking for an annualized decline of 0.5% while BMO Economics looking for a decline of 1.5%. In addition the US gets the weekly jobless claims which are expected to highlight the ongoing softening of the US labour market. North of the border the market gets secondary data in the form of raw material and industrial prices. As for the currency, the C$ continues to rebound this morning, now back below $1.20 cents) on broad-based US$ weakness (yen excluded) and another day of firm commodity prices. Yesterday’s price action seemed to be the largest one day C$ appreciation (against the USD) since at least the early 70’s. For those keeping track, that’s roughly a 9% turnaround from trading over 1.30 just two days ago. As noted above, it is still too early to suggest that a major reversal is underway. Like most of the other majors, the daily USDCAD charts is showing the MACD converging while both the stochastics and (to a lesser degree) the RSI are moving into oversold territory. In order to suggest that a major reversal has taken place, I would rather see USDCAD through the 1.1725/50 area. The shorter term charts are more neutral, although they are slightly skewed to the downside. Overall I would suggest that the shorter term risk for USDCAD remain to the topside.

Expected range: 1.1890 – 1.2120.更多精彩文章及讨论,请光临枫下论坛 rolia.net
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  • USD/CAD Morning Update (SC FX)
    本文发表在 rolia.net 枫下论坛USDCAD (1.1950) Policymaker activism has helped to sustain the optimism that was renewed earlier this week, with predictable implications for the carry trade. Following its widely-expected 50bp rate cut, the Fed announced it was establishing $30bn swap facilities with central banks in Brazil, Mexico, South Korea and Singapore in order to obviate the difficulties in obtaining USD funding in those jurisdictions. Separately, the IMF unveiled the Short-Term Liquidity Facility (STLF...yes, we are now officially in acronym hell), which will offer financing on an unconditional basis to countries “with a good track record of sound policies, access to capital markets and sustainable debt burdens” (loans can be up to 5x normal quota). Both measures are designed to aid emerging markets that have been ensnared by the credit crisis that has spread “beyond the advanced economies where it originated” (in the IMF’s words). Finally, Japan announced a $51bn stimulus package that will include tax relief, a bank rescue scheme and relief for small companies (there are also rumours South Korea is set to announce stimulus measures). Asian shares moved sharply higher today (the Nikkei was up almost 10% and the Kospi rallied 12%) and commodities continued to rally, keeping AUD, NZD and CAD atop the G10 list and helping besieged EM currencies regain further ground (KRW has soared 14%). Commodity currencies have mounted breathtaking rallies over the past three days, with AUD leading the way with a 14% gain, NZD up 10% and CAD rising 8%. In fact, the 4% rally CAD recorded against the USD yesterday was the largest 1-day gain in the era of floating exchange rates. USDCAD has dropped more than 10 big figures since Tuesday, which has made a mockery of our observation in Friday’s Weekly that the risk skew in USDCAD was higher, although in our defense we also observed that the USD was overbought and a pullback would happen at some point. Timing of course is everything, and getting it right is difficult when liquidity is so thin and policymakers are unveiling market stabilization measures on a daily basis. In terms of where we go from here, it is important to put the events of the past few days into proper context. The aforementioned measures are welcome steps that should reduce the severity of the global economic downturn. However, it is too late to avert a US recession (indeed, today’s Q3 US GDP numbers are expected to show a contraction), or forestall it spreading to many other regions. So, while it would be foolish to say the carry trade/commodity currency rebound cannot proceed significantly further in the near-term given the magnitude of the moves over the past three days, the volatility in the market and the likelihood of rate cuts from the other major central banks (the BoJ tomorrow and the BoE and ECB next Thursday), we still doubt its sustainability beyond the next few weeks. In terms of technical levels for USDCAD, we see potential support at 1.1750, followed by 1.1500 (38.2% Fibonacci retracement of the appreciation since November 2007) and then 1.1350 (61.8% retracement of the rally over the past month).更多精彩文章及讨论,请光临枫下论坛 rolia.net
    • BMO Capital Markets - FX Morning Commentary
      本文发表在 rolia.net 枫下论坛The price action that has been seen in the FX market (as well as others) over the past couple of weeks violently reversed itself yesterday with the USD and JPY losing ground against the major currencies. Even with the dramatic moves, from a technical viewpoint it is still too early to suggest that a major reversal in the USD has taken place. The daily EURUSD charts show some bearish divergence with the MACD having converged suggesting that the break above 1.3100 and the overnight move to 1.3300 is unlikely to be sustained and that selling should re emerge. The same holds true for most of the other major pairs. Although there is going to be a lot of speculation as to the cause of the move, it is probably little more than speculation. For the most part, it seems that the USD’s decline can be linked to the ongoing selloff in equities and more importantly the significant hedging requirements. With it happening relatively close to month end, the hedging requirements may have been exaggerated. What does seem apparent is that with all the volatility and lack of liquidity, these markets are nowhere nears normal market conditions, and the lack of normalization looks like it will continue. The risk is that as the markets heads into calendar year end liquidity is likely to get worse. Overall I would suggest that the selloff in the big dollar is more a pause than a reversal in the short/medium term.

      Turning to North America, the US gets the Q3 GDP data with the market consensus looking for an annualized decline of 0.5% while BMO Economics looking for a decline of 1.5%. In addition the US gets the weekly jobless claims which are expected to highlight the ongoing softening of the US labour market. North of the border the market gets secondary data in the form of raw material and industrial prices. As for the currency, the C$ continues to rebound this morning, now back below $1.20 cents) on broad-based US$ weakness (yen excluded) and another day of firm commodity prices. Yesterday’s price action seemed to be the largest one day C$ appreciation (against the USD) since at least the early 70’s. For those keeping track, that’s roughly a 9% turnaround from trading over 1.30 just two days ago. As noted above, it is still too early to suggest that a major reversal is underway. Like most of the other majors, the daily USDCAD charts is showing the MACD converging while both the stochastics and (to a lesser degree) the RSI are moving into oversold territory. In order to suggest that a major reversal has taken place, I would rather see USDCAD through the 1.1725/50 area. The shorter term charts are more neutral, although they are slightly skewed to the downside. Overall I would suggest that the shorter term risk for USDCAD remain to the topside.

      Expected range: 1.1890 – 1.2120.更多精彩文章及讨论,请光临枫下论坛 rolia.net
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          • TD Economics is good. Thanks.
            • 万事俱备,欠扁? haha, let us know if you need some help! :)
              • Thanks for the "kind words".
              • 嗯,人手不够叫上我,我最喜欢为人民服务了 :)