FOREX-Signals                       EUR/USD LONG     EUR/GBP LONG                 Entry-Limit Buy 1,3345   Entry-Limit Buy 0,8352 Limit SELL 1,3385   Limit SELL 0,8392 … Continue reading →

The RBA’s quarterly Statement on Monetary Policy provided further colour on the decision to cut the cash rate by 50 bp on Tuesday. End-2012 forecasts for both core inflation and GDP were modestly downgraded. This came as a minor relief to FX investors, some of whom had feared such a large rate reduction might need substantial forecast downgrades in order to justify it. Continue reading →

FUNDAMENTAL OUTLOOK at 0800 GMT (EDT +0400) WORLD Expectations are building that today’s ECB press conference could see the central bank turn significantly more dovish., with euro negative consequences. Wednesday’s series of worrisome Eurozone data prints would certainly seem to … Continue reading →

The RBNZ kept its policy rate unchanged at 2.5%, but implicitly raised the prospect of a future interest rate cut. The short overnight policy statement warned that continued strength of the New Zealand dollar may force the bank “to reassess the outlook for monetary policy”. Continue reading →

Surprisingly-strong US earnings reports released after the NY close generated an upbeat tone in Asia, allowing the Australian dollar to claw back all losses it has suffered since Tuesday’s soft CPI reading. Asian equities also got a boost, and USDJPY is still looking firm ahead of tonight’s Fed policy announcements. There are three FOMC-related events to watch out for. Continue reading →

The Australian dollar suffered after Australia’s Q1 CPI inflation report came in much weaker than expected. Headline inflation fell sharply to +1.6% y/y (cons. 2.2%, prev. 3.1%). Market expectations had already been lowered by yesterday’s PPI report, but the scale of the miss was still surprising, and AUD promptly dropped 70pips. Continue reading →

USDJPY consolidated overnight with FOMC and BoJ policy meetings drawing closer. Our analysts are not concerned about yesterday’s higher-than-expected initial jobless claims data. Instead, they point to distortions associated with Easter holidays and the cross over to a new quarter, which led to volatility and an upside bias. Economic data elsewhere also disappointed: existing home sales fell to an annual rate of 4.48 mn and April Philly Fed manufacturing index down to 8.5. Continue reading →

Trading was subdued in Asia overnight given a light economic data calendar, but investor attention is noticeably turning to what next week’s two policy meetings will bring. The FOMC and the BoJ policy decisions are likely to set the tone for USDJPY for months to come, and USDJPY is already creeping higher in anticipation. BoJ Governor Shirakawa fanned expectations overnight by saying he is ‘committed’ to continued monetary easing in order to meet the 1% inflation goal. Continue reading →

The yen weakened overnight despite a press report indicating that the Bank of Japan’s inflation forecasts may be raised. It seems some FX investors are already positioning themselves for USDJPY upside ahead of next week’s FOMC and BoJ meetings – both of which are likely to push the pair higher towards our 3m forecast of 85. Continue reading →

Asian equity markets slipped into negative territory overnight, helping set the scene for a modest dollar recovery after Monday’s weakness. The minutes from the RBA’s April 3 policy meeting sounded slightly more dovish than the policy statement itself, and more overtly signaled the possibility of a future rate cut – inflationary pressures permitting. Investor focus is likely to shift quickly back to Europe now, and to Eurozone bond markets in particular. Continue reading →

Risk appetite suffered overnight after the Wall Street Journal reminded investors that Moody’s has the ratings of 114 European banks on review for a possible downgrade. We note that this review was announced in mid-February and that the article contained little new information. Elsewhere, China’s weekend decision to widen the USDCNY trading band from ?0.5% to ?1%, effective today, had very little effect on G10 currencies. Continue reading →