GBP/USD: Cable's Stable Floor Around 1.28 But Uncertainty Is Acute - TD
TD Research discusses GBP outlook and sees GBP/USD making a stable floor around 1.28 in the near-term.
"A deal remains our baseline scenario. A No-Deal outcome is still possible, however. With the 31 December deadline approaching, chances of an accident have likely risen, though sit around 20%." TD notes.
"Brexit remains a major risk, but we now see this more in tactical than strategic terms. The range of outcomes has narrowed and the “Deal” on the table represents a very hard Brexit...At current levels, most of Brexit’s damage may already be priced, but the situation remains highly fluid, and uncertainty is acute," TD adds.
TD Research discusses GBP outlook and sees GBP/USD making a stable floor around 1.28 in the near-term.
"A deal remains our baseline scenario. A No-Deal outcome is still possible, however. With the 31 December deadline approaching, chances of an accident have likely risen, though sit around 20%." TD notes.
"Brexit remains a major risk, but we now see this more in tactical than strategic terms. The range of outcomes has narrowed and the “Deal” on the table represents a very hard Brexit...At current levels, most of Brexit’s damage may already be priced, but the situation remains highly fluid, and uncertainty is acute," TD adds.
Pair: GBPUSD
Type: Sell
Price: 1.3070 (Market price)
Take Profit: 1.2880
Stop Loss: 1.3140
Type: Sell
Price: 1.3070 (Market price)
Take Profit: 1.2880
Stop Loss: 1.3140
Sarowar Jahan - Professional Forex Trader
Pair: GBPUSD Type: Sell Price: 1.3070 (Market price) Take Profit: 1.2880 Stop Loss: 1.3140
😎😎😎 GBPUSD 😎😎😎
TP Hit - 190 Pips ❤️❤️❤️
TP Hit - 190 Pips ❤️❤️❤️
Pair: GBPUSD
Type: Sell
Price: 1.3135 (Market price)
Take Profit: 1.3010
Stop Loss: 1.3180
Type: Sell
Price: 1.3135 (Market price)
Take Profit: 1.3010
Stop Loss: 1.3180
GBP/USD: Brexit A Sideshow For Building COVID Risks; Staying Short - MUFG
MUFG Research maintains a bearish bias on GBP/USD, expressing that via holding a short position targeting a move towards 1.2630.
"The rates market is slowly pricing in a greater chance of negative rates in 2021. By the August 2021 MPC meeting, OIS market pricing implies a 90% probability of Bank Rate falling to -0.10%. First to come is likely to be more QE highlighted yesterday in comments by Gertjan Vlieghe that the outlook for monetary policy was “skewed towards adding further stimulus”. Indeed, more QE in November is looking likely now," MUFG notes.
"In many ways, Brexit is somewhat of a side-show to the building risks as COVID spreads that clearly will increasingly undermine GBP performance. We continue to see downside risks, reflected in our FX trade idea from last Friday," MUFG adds.
MUFG Research maintains a bearish bias on GBP/USD, expressing that via holding a short position targeting a move towards 1.2630.
"The rates market is slowly pricing in a greater chance of negative rates in 2021. By the August 2021 MPC meeting, OIS market pricing implies a 90% probability of Bank Rate falling to -0.10%. First to come is likely to be more QE highlighted yesterday in comments by Gertjan Vlieghe that the outlook for monetary policy was “skewed towards adding further stimulus”. Indeed, more QE in November is looking likely now," MUFG notes.
"In many ways, Brexit is somewhat of a side-show to the building risks as COVID spreads that clearly will increasingly undermine GBP performance. We continue to see downside risks, reflected in our FX trade idea from last Friday," MUFG adds.
GBP: Cable Still A Sell Above 1.30; EUR/GBP Likely Heading Towards 0.92 N-Term - Credit Suisse
Credit Suisse likes selling GBP against the USD and the EUR in the near-term.
"We still see no reason to change our view that EURGBP should gravitate to 0.9200 while Brexit talks proceed, with GBPUSD still a sell above 1.3000. Given the government’s general approach to emotive talks, the odds of talks being concluded in a manner that rules out more apprehension and misunderstandings before a conclusion seem slim still," CS notes.
"We note that the EU parliament, which would need to vote through any agreed deal, does not next month till 23-26 Nov, suggesting that the level of urgency to reach a conclusion will stay relatively low for some weeks to come," CS adds.
Credit Suisse likes selling GBP against the USD and the EUR in the near-term.
"We still see no reason to change our view that EURGBP should gravitate to 0.9200 while Brexit talks proceed, with GBPUSD still a sell above 1.3000. Given the government’s general approach to emotive talks, the odds of talks being concluded in a manner that rules out more apprehension and misunderstandings before a conclusion seem slim still," CS notes.
"We note that the EU parliament, which would need to vote through any agreed deal, does not next month till 23-26 Nov, suggesting that the level of urgency to reach a conclusion will stay relatively low for some weeks to come," CS adds.
Sarowar Jahan - Professional Forex Trader
Pair: GBPUSD Type: Sell Price: 1.3135 (Market price) Take Profit: 1.3010 Stop Loss: 1.3180
TP ❤️❤️❤️ 105 pips 💪💪💪
Because of weekend please close this trade now at 1.3030
Because of weekend please close this trade now at 1.3030
EUR/USD: On The Defensive Ahead Of A Volatile Week; What's Next? - Credit Agricole
Credit Agricole CIB Research discusses the EUR/USD outlook into next week's US elections.
"We assume that postelection uncertainty in the US would drag on for a while longer after Election Day, with investors maintaining their defensive stance across the board. This could help the USD and weigh on the EUR," CACIB notes.
"That said, evidence of a decisive Democratic victory next week could weigh on the USD and propel EUR/USD back to the highs of its recent 1.17-1.1950 trading range.
Equally, evidence that the status quo may be preserved – eg, surprise re-election of President Trump and Republican control of the Senate – could push EUR/USD closer to its recent lows around 1.1600," CACIB adds.
Credit Agricole CIB Research discusses the EUR/USD outlook into next week's US elections.
"We assume that postelection uncertainty in the US would drag on for a while longer after Election Day, with investors maintaining their defensive stance across the board. This could help the USD and weigh on the EUR," CACIB notes.
"That said, evidence of a decisive Democratic victory next week could weigh on the USD and propel EUR/USD back to the highs of its recent 1.17-1.1950 trading range.
Equally, evidence that the status quo may be preserved – eg, surprise re-election of President Trump and Republican control of the Senate – could push EUR/USD closer to its recent lows around 1.1600," CACIB adds.
Sell USD/JPY - TD trade of the week.
TD recommends selling USD/JPY with a target of 103.00 and a stop at 106.00. The Spot is at 104.85
"Mobility has slowed in the US and Asian but not at the European pace in the past two weeks. Our mapping of the global mobility data shows the USD trading at a 2.15% discount, which becomes problematic if election uncertainty mounts," TD notes.
"As a result, we sell USD/JPY as our Trade of the Week, anticipating more election tricks than treats."
TD recommends selling USD/JPY with a target of 103.00 and a stop at 106.00. The Spot is at 104.85
"Mobility has slowed in the US and Asian but not at the European pace in the past two weeks. Our mapping of the global mobility data shows the USD trading at a 2.15% discount, which becomes problematic if election uncertainty mounts," TD notes.
"As a result, we sell USD/JPY as our Trade of the Week, anticipating more election tricks than treats."
EUR/USD: Scope For A Move To 1.20 N-Term - Danske
Danske Research flags a scope for EUR/USD to move towards 1.20 in the near-term.
"Upside risks to take us above 1.20 include the EU proving to be an engine of world growth and/or the Fed credibly committing to inflation overshooting (which it has not as of today). The combination of positive progress across US fiscal policy, Brexit, the coronavirus situation and global growth may culminate by year end. If so, we could see a new test of 1.20," Danske notes.
"We see scope for a move to 1.20 near term, if the stars align as discussed above...Note that December holds an unusual number of events that we expect to define risks and direction for EUR/USD as we go in to 2021," Danske adds.
Danske Research flags a scope for EUR/USD to move towards 1.20 in the near-term.
"Upside risks to take us above 1.20 include the EU proving to be an engine of world growth and/or the Fed credibly committing to inflation overshooting (which it has not as of today). The combination of positive progress across US fiscal policy, Brexit, the coronavirus situation and global growth may culminate by year end. If so, we could see a new test of 1.20," Danske notes.
"We see scope for a move to 1.20 near term, if the stars align as discussed above...Note that December holds an unusual number of events that we expect to define risks and direction for EUR/USD as we go in to 2021," Danske adds.
XAU/USD update:
* Coronavirus vaccine optimism continues to weigh on gold.
* XAU/USD could extend its slide with a daily close below $1,850.
* Sellers could look to remain in control if gold fails to climb beyond $1,900.
* Coronavirus vaccine optimism continues to weigh on gold.
* XAU/USD could extend its slide with a daily close below $1,850.
* Sellers could look to remain in control if gold fails to climb beyond $1,900.
The first BOE meeting for the year is scheduled for Thursday and is set to be a very interesting event as the bank will finally reveal its long-awaited study on the impact of negative interest rates.
Recently we’ve taking a bullish bias on the GBP as there has been more positive drivers than negative ones. The first positive took place on the 12th of January after Governor Bailey pushed back against negative interest rates, which saw the markets pushing back their expectations for the bank taking rates to negative territory later this year.
After that we’ve also seen a remarkable reduction in new virus cases across the UK as the extended lockdown measures have started to do their job. We’ve also had a huge cloud of uncertainty removed after the EU and the UK agreed on a trade deal at the end of the last year.
Arguably, one of the most positive developments has been the UK’s vaccination program, which is currently well ahead of the EU and US by getting the population towards herd immunity. There is still a long way to go of course but a good start, nonetheless.
Thus, we believe there are more positives for the GBP right now, and this week’s upcoming BOE meeting might just be the cherry on top of the cake to seal the deal for more GBP strength to come.
#GBP #FUNDAMENTAL
Recently we’ve taking a bullish bias on the GBP as there has been more positive drivers than negative ones. The first positive took place on the 12th of January after Governor Bailey pushed back against negative interest rates, which saw the markets pushing back their expectations for the bank taking rates to negative territory later this year.
After that we’ve also seen a remarkable reduction in new virus cases across the UK as the extended lockdown measures have started to do their job. We’ve also had a huge cloud of uncertainty removed after the EU and the UK agreed on a trade deal at the end of the last year.
Arguably, one of the most positive developments has been the UK’s vaccination program, which is currently well ahead of the EU and US by getting the population towards herd immunity. There is still a long way to go of course but a good start, nonetheless.
Thus, we believe there are more positives for the GBP right now, and this week’s upcoming BOE meeting might just be the cherry on top of the cake to seal the deal for more GBP strength to come.
#GBP #FUNDAMENTAL
USD/CAD: Maintains A Bullish Wedge As Long As It Stays Above 1.2760 - Credit Suisse
Credit Suisse discusses USD/CAD technical outlook and highlights the importance of the 1.2760 for near-term directional bias.
"Whilst above 1.2771/60 and more importantly above the upper end of the “wedge” base currently at 1.2689, we keep our bias for further near -term strength in place, reinforced by daily MACD momentum also continuing to move higher. Above 1.2812, we look for another test of 1.2870/81 and 1.2896/2907. Removal of here would see a test of the late December 2020 high at 1.2957, where we expect to see a more concerted effort to cap, although the “wedge measured objective” is at 1.3004," CS notes.
"Beneath 1.2689 would instead negate the base and suggest a more direct resumption of the core bear trend, with support seen initially at 1.2686/82," CS adds.
Credit Suisse discusses USD/CAD technical outlook and highlights the importance of the 1.2760 for near-term directional bias.
"Whilst above 1.2771/60 and more importantly above the upper end of the “wedge” base currently at 1.2689, we keep our bias for further near -term strength in place, reinforced by daily MACD momentum also continuing to move higher. Above 1.2812, we look for another test of 1.2870/81 and 1.2896/2907. Removal of here would see a test of the late December 2020 high at 1.2957, where we expect to see a more concerted effort to cap, although the “wedge measured objective” is at 1.3004," CS notes.
"Beneath 1.2689 would instead negate the base and suggest a more direct resumption of the core bear trend, with support seen initially at 1.2686/82," CS adds.
GBP: Staying Core Bullish GBP Vs USD & EUR M-Term - MUFG
MUFG Research maintains a constructive bias on GBP into year-end.
"We remain bullish over the forecast horizon on the pound but given the USD upgrades to forecasts, more of our bullish view is now reflected versus EUR compared to a month ago," MUFG notes.
"We are also more mindful of COVID risks than a month ago with 26,068 cases reported on 30th June – the highest total since January. The Delta variant is driving the spread...If disruption is limited, we believe the BoE will be in a much more confident position to signal to the markets a more dramatic shift in guidance. A rate increase is about 75% priced by the end of 2022 and if the Job Retention Scheme ends relatively smoothly, rates will have moved further higher and the BoE would then be in a position by November to at least endorse the higher market rates," MUFG adds.
MUFG Research maintains a constructive bias on GBP into year-end.
"We remain bullish over the forecast horizon on the pound but given the USD upgrades to forecasts, more of our bullish view is now reflected versus EUR compared to a month ago," MUFG notes.
"We are also more mindful of COVID risks than a month ago with 26,068 cases reported on 30th June – the highest total since January. The Delta variant is driving the spread...If disruption is limited, we believe the BoE will be in a much more confident position to signal to the markets a more dramatic shift in guidance. A rate increase is about 75% priced by the end of 2022 and if the Job Retention Scheme ends relatively smoothly, rates will have moved further higher and the BoE would then be in a position by November to at least endorse the higher market rates," MUFG adds.
USD/JPY: 8 Reasons To Stay Bullish Targeting 112.20 Ahead Of 114s - BofA
Bank of America Global Research outlines 8 reasons for maintaining a bullish bias on USD/JPY into year-end.
"1. JPY’s cyclical bottom has depreciated over time
2. Economic recovery is negative for JPY
3. Commodity bull market
4. Inflation = higher US real yield vs lower JP real yield
5. JPY’s weakness hasn’t been excessive vs other markets
6. Outward FDI could accelerate in 2H21
7. Positioning is not stretched JPY short positioning is not stretched.
8. Chart technical is bearish JPY," BofA note.
"We estimate USD/JPY’s upside targets at 112.20, the 114s and possibly 115.86. Late-2016/early-2017 highs in the 118s can’t be ruled out," BofA adds.
Bank of America Global Research outlines 8 reasons for maintaining a bullish bias on USD/JPY into year-end.
"1. JPY’s cyclical bottom has depreciated over time
2. Economic recovery is negative for JPY
3. Commodity bull market
4. Inflation = higher US real yield vs lower JP real yield
5. JPY’s weakness hasn’t been excessive vs other markets
6. Outward FDI could accelerate in 2H21
7. Positioning is not stretched JPY short positioning is not stretched.
8. Chart technical is bearish JPY," BofA note.
"We estimate USD/JPY’s upside targets at 112.20, the 114s and possibly 115.86. Late-2016/early-2017 highs in the 118s can’t be ruled out," BofA adds.
NZD/USD: A Move Below 0.6923 Would Confirm A Broader Trend Change - Credit Suisse
Credit Suisse discusses NZD/USD technical outlook and highlights the importance of the 0.6923 level for near-term directional bias.
"A move below the 2021 lows at .6945/23 would confirm a broader trend change, opening up .6875/61 next, with the next initial support then seen at .6810/00," CS notes.
"Key resistance is seen at .7115/30, which is the “neckline” to the previously highlighted short-term top, as well as a key retracement level, which we look to hold if reached. Above here the next level is seen at .7155 /61, above which would turn the short-term risks back higher for a move to .7244/58," CS adds.
Credit Suisse discusses NZD/USD technical outlook and highlights the importance of the 0.6923 level for near-term directional bias.
"A move below the 2021 lows at .6945/23 would confirm a broader trend change, opening up .6875/61 next, with the next initial support then seen at .6810/00," CS notes.
"Key resistance is seen at .7115/30, which is the “neckline” to the previously highlighted short-term top, as well as a key retracement level, which we look to hold if reached. Above here the next level is seen at .7155 /61, above which would turn the short-term risks back higher for a move to .7244/58," CS adds.
Gold: Three main ways to get exposure to XAU/USD – Morgan Stanley
After years of trading in a narrow range of around $1,200 an ounce, gold has been trading above $1,700 for the past year. While the yellow metal is not a strategic asset class, there are tactical reasons to consider adding it now. The Morgan Stanley analyst team lays out three ways to go about it.
Physical gold
“Investors may pay a premium over the spot price of gold. The gold is physically held by a third party, not Morgan Stanley. Storage fees usually apply. Investors can also take delivery of physical gold if they want to store it themselves. In such cases, delivery fees would apply.”
Gold funds that own the metal
Some mutual funds and exchange-traded funds also offer investors exposure to gold. For those that are pure-play, their value tracks the price of gold. The fund shoulders the cost of holding physical supply and passes it along to the investors in the expense ratio. There are some drawbacks: Some gold funds are taxed as collectibles, so they don’t benefit from the lower long-term capital gains rates for which stocks may qualify. Plus, they don’t produce any income, so the expense ratio can eat into principal every year.”
Mining companies
“Investors can get exposure through equity in companies that mine for gold, including the purchase of individual stocks or as part of a fund. ‘The mining companies tend to be more volatile than physical gold,’ says Michael Jabara, a Managing Director of Wealth Management’s fund due to diligence group. Typically, the mining sector correlates with the price of gold, but individual stocks may face company-specific risks, Jabara says.”
After years of trading in a narrow range of around $1,200 an ounce, gold has been trading above $1,700 for the past year. While the yellow metal is not a strategic asset class, there are tactical reasons to consider adding it now. The Morgan Stanley analyst team lays out three ways to go about it.
Physical gold
“Investors may pay a premium over the spot price of gold. The gold is physically held by a third party, not Morgan Stanley. Storage fees usually apply. Investors can also take delivery of physical gold if they want to store it themselves. In such cases, delivery fees would apply.”
Gold funds that own the metal
Some mutual funds and exchange-traded funds also offer investors exposure to gold. For those that are pure-play, their value tracks the price of gold. The fund shoulders the cost of holding physical supply and passes it along to the investors in the expense ratio. There are some drawbacks: Some gold funds are taxed as collectibles, so they don’t benefit from the lower long-term capital gains rates for which stocks may qualify. Plus, they don’t produce any income, so the expense ratio can eat into principal every year.”
Mining companies
“Investors can get exposure through equity in companies that mine for gold, including the purchase of individual stocks or as part of a fund. ‘The mining companies tend to be more volatile than physical gold,’ says Michael Jabara, a Managing Director of Wealth Management’s fund due to diligence group. Typically, the mining sector correlates with the price of gold, but individual stocks may face company-specific risks, Jabara says.”
EUR/USD: 3 Downside Risks On The Rise - Credit Agricole
Credit Agricole CIB Research discusses EUR/USD outlook and outlines 3 downside risks in the near term.
" 1. Global supply chain disruptions (due to shortages of chips and other auto parts, for example) and trade barriers have hurt global manufacturing output and trade.
2. The ECB has recently adopted a more dovish policy stance that could keep its policy divergence with the Fed in place for longer once the Fed starts QE tapering," CACIB notes.
"3. If President Biden’s spending plans are successful, their positive economic impact may be less pronounced compared to their predecessors. The fiscal package will nevertheless contrast with the lack of policy activism on the other side of the Atlantic where the appetite for more government spending has waned following the creation of the EU recovery fund," CACIB adds.
Credit Agricole CIB Research discusses EUR/USD outlook and outlines 3 downside risks in the near term.
" 1. Global supply chain disruptions (due to shortages of chips and other auto parts, for example) and trade barriers have hurt global manufacturing output and trade.
2. The ECB has recently adopted a more dovish policy stance that could keep its policy divergence with the Fed in place for longer once the Fed starts QE tapering," CACIB notes.
"3. If President Biden’s spending plans are successful, their positive economic impact may be less pronounced compared to their predecessors. The fiscal package will nevertheless contrast with the lack of policy activism on the other side of the Atlantic where the appetite for more government spending has waned following the creation of the EU recovery fund," CACIB adds.
CHF: Upside Corrective; Staying Long EUR/CHF - Credit Agricole
Credit Agricole CIB Research discusses CHF outlook and maintains a bearish bias and a long exposure in EUR/CHF as a long-term trade.
"With the CHF not far from levels where it may increase downside risks to price growth more meaningfully again, and when considering that core inflation remains weak, it appears unlikely that the CHF faces strongly rising upside risks from here," CACIB notes.
"After all, the SNB has been reiterating of late that a policy mix consisting of negative rates and currency intervention as needed will stay in place for longer, with all its implications for the CHF. That said, we remain in favor of fading currency strength while staying long EUR/CHF as a trade recommendation," CACIB adds.
Credit Agricole CIB Research discusses CHF outlook and maintains a bearish bias and a long exposure in EUR/CHF as a long-term trade.
"With the CHF not far from levels where it may increase downside risks to price growth more meaningfully again, and when considering that core inflation remains weak, it appears unlikely that the CHF faces strongly rising upside risks from here," CACIB notes.
"After all, the SNB has been reiterating of late that a policy mix consisting of negative rates and currency intervention as needed will stay in place for longer, with all its implications for the CHF. That said, we remain in favor of fading currency strength while staying long EUR/CHF as a trade recommendation," CACIB adds.
JPY: Sell USD/JPY Bounce - Citi
CitiFX Strategy likes going short USD/JPY FOR 107.50.
"JPY was the weakest currency in the G10 space in the first half of this year, but it is performing well in July. We think this changing of performance reflects shifts in the JPY flow environment and believe USDJPY now has scope for further downside in the medium term," Citi notes.
"The pair has rebounded after dropping close to 109 on Tuesday; we think this bounce provides a nice entry point to get into USDJPY shorts," Citi adds.
CitiFX Strategy likes going short USD/JPY FOR 107.50.
"JPY was the weakest currency in the G10 space in the first half of this year, but it is performing well in July. We think this changing of performance reflects shifts in the JPY flow environment and believe USDJPY now has scope for further downside in the medium term," Citi notes.
"The pair has rebounded after dropping close to 109 on Tuesday; we think this bounce provides a nice entry point to get into USDJPY shorts," Citi adds.