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The Australian Dollar has been one of the most fragile currencies in Sept, which when combined with the resumption of the USD strength, makes for some clearly definable directional move, taking the rate to its lowest levels in years. Judging by the close on Friday, there is no indication whatsoever that sellers are willing to take profits off the table just yet,...

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Checking the Sterling vs US Dollar chart is to admire a story of recent fortitude by the two best-performing currencies in FX in recent days. At the same time, is about a story of a market plagued with mine fields with participants trapped in both sides of the market. To start with, one must understand the state of play in GBP first, with the 25-delta 3m RR +...

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The outlook in the pair has turned substantially more bearish as technicals and fundamentals align in favour of further sell-side campaigns. The rise in wage growth in the US above the 2.8% ceiling (held for the last 2y), coupled with a decent US NFP payrolls number of 201k was enough ammunition to see aggressive USD buying. The late Friday remarks by Trump that...

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The Australian Dollar remains one of the most vulnerable currencies as a proxy to EM and China. With the latter about to face additional tariffs by the US (it may happen anytime), the vulnerability of the aussie, notwithstanding the positive Q2 GDP (backward looking), it's a function of the dominant risk sentiment dynamics. In the chart, one can observe our prop...

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The intense deterioration in our prop risk-weighted index, a reflection of the global strains as a full-blown US vs China trade war nears, was fully manifested in the USD/JPY exchange rate. The depressed close of the rate by 5pm NY, and the falling yield spread differentials in the US vs JP 2/10y is also underpinning the price of the yen. The upcoming US NFP...

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Trading the GBP carries heightened risks of being whipsawed as the erratic and unpredictable ebbs and flows continue, a reflection of the uncertain state of play in the Brexit negotiations. The latest elongated spike on Sept 5 marks the 2nd time in over a week in which an overly short GBP market (as pe CoT positioning) got topsy-turvy running for the exits. The...

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On the back of an impulsive recovery on Sept 5th, the value of the exchange rate has adjusted higher, with the market finding equilibrium above 1.16 as the pressure on Italian bonds recently cames off a few notches and the German vs US yield spreads, most notably the short-end, edge higher this week. Today's resolution of the range will come as a function of the...

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The resilience exhibited by the EUR should continue judging by the renewed demand in Italian bonds, leading to a reduction of the Italian vs German yield premium, or the spikes higher in both the short and long-dated German vs US yield spreads, which as one can notice via the red an blue overlayed lines, found new bullish legs in what remains a constructive...

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After cracking the 100-hourly MA, the risk-weighted index is clearly communicating that the dynamics may favor a re-adjustment higher in the value of the US dollar and the Japanese yen, given the depressed level both currencies ended at on Wednesday. The latest impulsive leg in risk FX, led by the renewed optimism over the Brexit negotiations, distorted what...

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Judging by the state of play in the emerging market currencies, it's little wonder that the AUD/JPY has been performing so badly. Brushing aside the domestic affairs in the Australian economy and its implications for a more dovish RBA, this chart, which factors in equally weighted proportion the IND, IDR, ASR, TRY, RUB, CNY and ZAR as a rough indicator of the...

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Last week, when scoping out the latest movements in the US yield curve, a noticeable pattern arose. It came to our attention, via a report by Morgan Stanley, that it was the first time this year that the US Dollar index had been depreciating during a flattening of the curve, represented by a blue rectangle (yellow rectangles show the flattening of the curve not...

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3d performance on a 20-period correlation (favourite measure by the bank researchers at Nomura) clearly shows AUD a function of Gold, CNH, AU vs US yield spread, less so CRB and DXY now. Also note, AU vs US yield spreads (10y) on a daily chart adjusting its longer-term positive correlation again, reinforcing domestic factors and point made in last idea shared in...

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As the trading war between the US and China edges closer, as Canada and the US struggle to hash out a NAFTA deal, as emerging currency markets implode, the markets are taking note of such fractious times by behaving based on risk sentiment. What this means is that in the short-term, if one monitors our risk-weighted index, which takes into account 9 risk-sensitive...

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As the trading war between the US and China edges closer, as Canada and the US struggle to hash out a NAFTA deal, as emerging currency markets implode, the markets are taking note of such fractious times by behaving based on risk sentiment. What this means is that in the short-term, if one monitors our risk-weighted index, which takes into account 9 risk-sensitive...

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It's worth noting that the last 3 episodes of a flatter yield curve in Australia have led to a depreciation of the Australian Dollar. There are a few conclusions one can draw from this observation: 1. It suggests AUD traders have been, as of late, factoring more aggressively into the price domestic factors such as a more dovish RBA outlook. 2. The market is...

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The Australian Dollar depicts a negative picture, with an extension of the downtrend into fresh year lows confirmed via an elongated bearish bar closing with barely any profit-taking and to make matters worse, it carries significant tick volume, highest since Aug 10. It's interesting to see the Aussie losing value despite the steadiness in its correlated assets,...

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By analyzing the most correlated assets against the EUR/USD, it suggests that the outlook should remain negative early in the week. To start with, the market is not buying into Italy's pledge of respecting the 3% ceiling on their yet to be approved new budget, as seen by the widening of the premium against the German yields. Meanwhile, fears of contagion between...

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On the hourly chart below one can observe the impulsive move in the pair now holding just ahead of bids parked at a demand area. For those looking to play long off this level, note that at the moment, the correlation against related instruments such as the risk sentiment index or the yield spreads heralds a rather negative outlook to see a sustained rebound....