Don’t count Peter Tchir, head of market strategy at Academy Securities, in the markets-are-irrational camp. “You’ve labeled one country that you’re most likely to have some degree of friction with, and you’re getting your most important stuff from them,” he said.
(Bloomberg) -- The longest euro rally in almost a decade is on shaky grounds even as investors’ appetite for risk makes a comeback.Europe’s shared-currency halted an eight-day rally Friday - which was its best since 2011. It earlier reached an almost three-month high of $1.1384, more than 4.5% above its May 25 low, before reversing gains in London.The euro gained a fresh boost Thursday after the European Central Bank expanded its emergency bond-buying program to counter the economic impact of the coronavirus pandemic. Yet while it’s surge against the dollar and other peers took it past key resistance levels, some strategists are urging caution and technical gauges are flashing warning signs.“The ECB-induced euro rally is running out of steam,” Petr Krpata, a strategist at ING Bank said by email. Any “meaningful” euro gains should stem more from the dollar’s bear trend, rather than additional ECB impact, he said.The euro currently appears to be overbought against the greenback, based on a relative strength index -- an indicator that measures the speed and size of price movements. A stochastic gauge, meanwhile, suggests that upward momentum may dwindle in coming sessions as the pair nears its year-to-date high of $1.1495.Citigroup’s global head of foreign-exchange analysis Ebrahim Rahbari reckons now is a good time to take some profits even though he remains bullish on the currency. And ABN Amro’s Georgette Boele says it is premature to expect a “continued strong rally” in the currency as “difficult discussions” are ahead on the European Commission’s stimulus program.The euro largely traded in lockstep with surging equity markets amid optimism about the prospects for a global economic recovery. Some are concerned that the recent surge in appetite for riskier assets may have gone too far, though, and that could also weigh on the common currency.There are echoes in the current move of the euro’s rebound in late March, when it recovered from its pandemic lows. Back then, a rally of around 5% in just over a week was followed by a 3.5% slide in a matter of days.Many observers nevertheless remain solid in their bullish calls for the euro. A trio of Societe Generale SA’s quantitative models are signaling that the euro is the top Group-of-10 currency that investors should wager on to rally.Nomura’s Jordan Rochester has a “high conviction” on the euro-dollar pair after last week flipping to a long position from a short one. And Standard Chartered’s Steven Englander says the euro region is looking more attractive.Yen CrossThe currency earlier busted through several key technical resistance levels against its Japanese peer. The euro reached 124.43 on Friday, the highest since May 2019.The technical significance of the move was further bolstered by the fact that the pair has breached its 55-week and 100-week moving averages.But, as with the euro-dollar pair, further gains may be difficult to muster. The euro-yen cross has struggled in the past to breach its 200-week moving average -- currently 124.50 -- and RSI gauges are also signaling that it’s getting stretched.That, combined with concern about waning fundamental factors, could well provide fodder for euro bears.(Updates prices; a previous version of this story was corrected to show that the length of the euro’s rally was eight days)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
European stocks were poised for a strong finish to the week on Friday, as investors appeared ready to shake concerns over a powerful rally since the March lows with hopes for more stimulus.
GBP/USD got strong support at 1.2500, gained upside momentum and is trying to settle above the high end of the current trading range.
(Bloomberg) -- Australia’s dollar broke through the key 70 U.S. cents mark on expectations that markets have witnessed the worst of the coronavirus’ carnage on the global economy.The Aussie jumped as much 0.9% on Friday to 70.04 U.S. cents, the highest level since early January when the virus outbreak had yet to explode into a pandemic. It has risen 27% after sliding to a near 18-year low in March, and is seen as a favored asset to buy among investors cheering the re-opening of economies from Singapore to Germany.“The Aussie is on a tear, and with markets undergoing a massive reappraisal of risk, it’s hard to rule out the currency rallying even more,” said Janu Chan, senior economist at St. George Bank Ltd. in Sydney. “The currency is one of the easiest ways for investors to express their risk sentiment, and Australia’s containment of the virus, the RBA’s refraining from going down the path of negative interest rates are certainly helping.”The Aussie could rise to 75 U.S. cents next year as it benefits from a cocktail of supportive monetary and fiscal policies, improving risk sentiment and the nation’s record trade surplus, Thomas Nash, a strategist at HSBC Bank Australia, wrote in a note. “Buying AUD in the depths of recession has been profitable in the past -- this time should be no different.”It was trading back below the key level at 69.92 cents at 5:05 p.m. Sydney time.The rebound in risk sentiment comes as a set of daily gauges from Bloomberg Economics showed almost all of the economies it monitored witnessed a pick-up in activity in the past two months. The Aussie has been particularly sensitive to these changes given the country’s position as a major commodities exporter and the developed economy with the most direct exposure to China.The currency also received an inadvertent boost from Reserve Bank of Australia Governor Philip Lowe, who refrained from talking down the currency’s strength at a recent policy meeting.Risks AboundTo be sure, there are risks to the Aussie’s gains.Rising U.S.-China trade tensions could spur fresh selloffs. Data Wednesday also showed that the Australian economy contracted in the first three months of the year, virtually guaranteeing an end to its nearly 29-year recession-free run.Economists expect the current quarter to be the most damaging for Australia.“The recent price action is an exaggerated rendition of the global economy’s normalization in the wake of the Covid-19 shock,” said Valentin Marinov, head of G-10 currency research at Credit Agricole in London. “The rally in risk-correlated and commodity currencies may start losing momentum going forward.”(Adds quotes from St. George Bank and Credit Agricole)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
U.S. stocks are set to open higher Friday, continuing the recent bullish rally ahead of the release of the official monthly employment report. At 7 AM ET (1100 GMT), S&P 500 Futures traded 24 points, or 0.8%, higher, Nasdaq Futures up 32 points, or 0.3%. The Dow Futures contract rose 307 points, or 1.2%.
New Zealand once boasted one of the world's highest-yielding currencies, making it a favourite for investors chasing income - now, growing prospects of negative interest rates at home have lumped the kiwi with Japan's safe and boring yen. The Reserve Bank of New Zealand's policy rates have already plunged from 8.25% before the 2008 financial crisis to a mere 0.25% now. The central bank seems set to take them negative, to lower borrowing costs for banks and businesses and stimulate an economy reeling from the coronavirus.
Asian stocks were poised for their biggest weekly rise in over eight years while the euro hovered near a 1-1/2 month high as Europe's central bank surprised with more stimulus, fuelling hopes for a global rebound. The equities rally prompted investors to take winnings ahead of Friday's nonfarm payrolls data, which is expected to show further deterioration in the U.S. jobs market. As a result, MSCI's broadest index of Asia-Pacific shares outside of Japan slipped 0.2% from a 12-week top with China's blue-chip index off 0.2%.
It’s all about the U.S labor statistics later today. How’s Trump going to spin this one? Perhaps more attacks on China…
The euro consolidated its gains on Friday after receiving a boost from the European Central Bank's announcement a day earlier that it was expanding its stimulus programme, putting the single currency on course to rise for a third straight week. "The rotation out of U.S. dollar generally continued unabated overnight," said Jeffrey Halley, an analyst at OANDA.
Posted by OFX AUD - Australian Dollar The Australian dollar made fresh multi-month highs on Thursday, extending gains despite a shift in equity markets. While global equity markets faltered Thursday as investors paused to take stock of recent gains, currencies enjoyed increasing demand for risk, driving commodity and growth sensitive units higher. … Continue reading "Australian dollar makes fresh multi-month highs as risk-on narrative continues"The post Australian dollar makes fresh multi-month highs as risk-on narrative continues appeared first on .
The euro climbed to a nearly three-month high against the dollar and yields on southern European debt fell as investors cheered the European Central Bank’s expansion of its bond-purchase program.
The euro jumped to a 12-week high against the dollar on Thursday after another shot of European Central Bank stimulus to help economies slammed by the coronavirus pandemic, but world equity markets pulled in the reins after a strong seven-day run. The euro rallied for an eighth straight session after the ECB said it would increase the size of emergency bond purchases by 600 billion euros ($674 billion) to 1.35 trillion euros, more than the 500 billion-euro increase analysts had expected. Italy led a rally in southern European bond markets, with 10-year yields tumbling more than 15 basis points to 1.38% - their lowest since late March.
AUD/USD Current Price: 0.6937 * Australian data keeps beating the market's expectations and backing the Aussie. * The poor performance of global indexes put a cap to the AUD/USD pair's advance. * AUD/USD with a limited bearish scope despite some signs of bullish exhaustion.The AUD/USD pair has surpassed its previous monthly high for a couple of pips closing in the green yet spending most of this Thursday within familiar levels. The intraday peak at 0.6987 was achieved within the ECB monetary policy announcement, which exacerbated the dollar's sell-off. The pair eased from the mentioned high amid the poor performance of equities on the back of dismal US data. At the beginning of the day, Australia released the April Trade Balance, which posted a surplus of 8800 million, better than anticipated. Retail Sales fell in the same month by 17.7%, also above forecast. This Friday, the country will release the AIG Performance of Services Index for May, previously at 27.1, and April HIA New Home Sales, previously at -21.1%.AUD/USD short-term technical outlook The AUD/USD pair may continue advancing during the upcoming Asian session, as technical readings suggest so. In the 4-hour a sharply bullish 20 SMA limits intraday declines, currently at around 0.6880, where the pair bottomed daily basis. The Momentum indicator diverges from price, heading south within positive levels, while the RSI consolidates around 68. The pair could enter in a corrective decline once below 0.6880, but buyers are expected to resurge around the next support level at 0.6840.Support levels: 0.6880 0.6840 0.6800Resistance levels: 0.6990 0.7025 0.7060View Live Chart for the AUD/USDSee more from Benzinga * EUR/USD Forecast: Bullish Despite Overbought, Profit-Taking Possible Ahead Of The Weekend * AUD/USD Forecast: Could Correct Lower, But Buyers Ready To Add At Lower Levels * EUR/USD Forecast: Bullish Potential Intact, But The Risk Of A Bearish Corrective Movement Increased(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
EUR/USD Current Price: 1.1336 * The ECB expanded its coronavirus-related stimulus program by €600 billion. * US employment data suggest the Nonfarm Payroll report will post another outrageous month. * EUR/USD bullish despite overbought, profit-taking possible ahead of the weekend.The EUR/USD has extended its latest advance to a fresh multi-week high of 1.1362, ending the day with substantial gains above the 1.1300 threshold. The European Central Bank had a monetary policy meeting, living rates unchanged as widely expected, but also expanding its PEPP program by €600 billion and extended its stimulus scheme until June 2021, somehow anticipating that the recovery will take longer. The central bank also downgraded its growth and inflation forecast for this year and the next ones. The pair seesawed with the news but turned finally turned north, helped by disappointing US employment data.In the US, job cuts announced by US-based employers totalled 397,016 in May, down 40.8% from April, but still far above pre-crisis levels. Initial Jobless Claims for the week ended May 29 came in slightly worse than anticipated, printing at 1.87 million, although the Continuing Jobless Claims for the week ended May 22 were up to 21.487 million. Also, the Trade Balance deficit widened to $-49.4 B in April.This Friday, the EU won't publish relevant data, but the US will unveil its May employment figures. The country is expected to have lost 8 million jobs in the month, while the unemployment rate is seen soaring to 19.8%. Average Hourly Earning are foreseen up by 8.6% YoY in the same month, almost tripling pre-pandemic levels, yet that's the result of the sharp lost of low-income jobs amid the coronavirus crisis.EUR/USD short-term technical outlook The EUR/USD pair has advanced for eight days in-a-row, and the risk of a bearish correction this Friday has increased exponentially. Nevertheless, the bullish trend remains firmly in place, and the potential of a U-turn remains limited. The 4-hour chart shows that the pair has once again found buyers on an approach to a bullish 20 SMA, while technical indicators head sharply higher, despite being in overbought territory. Should the pair continue advancing, the next probable bullish target is the 1.1460 price zone, a long-term static resistance level.Support levels: 1.1305 1.1260 1.1220Resistance levels: 1.1365 1.1410 1.1460View Live Chart for the EUR/USDSee more from Benzinga * AUD/USD Forecast: Could Correct Lower, But Buyers Ready To Add At Lower Levels * EUR/USD Forecast: Bullish Potential Intact, But The Risk Of A Bearish Corrective Movement Increased * AUD/USD Forecast: Trades At Multi-Month Highs With No Signs Of Upward Exhaustion(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
US Jobless claims rise more than expected
The market looks as if it is still deciding whether or not it can go higher, and it should be noted that the dollar has gotten crushed during the same situation.
If there was any doubt, Christine Lagarde made clear Thursday that the now-€1.35 trillion pandemic-inspired asset-buying program is likely to remain a key component of the European Central Bank’s crisis-fighting arsenal, economists said.
European equities, oil and euro markets had been lower before the ECB said it would nearly double the size of its Pandemic Emergency Purchase Programme to 1.35 trillion euros, extend it until June 2021 at the earliest and re-invest the proceeds until at least the end of 2022. It pushed the euro back above $1.1250 and European stock markets into positive territory, although that proved brief. Wall Street opened down after figures showed exports had dropped by a record 20.5% in April to a 10-year low.
The British pound has pulled back a bit during the trading session on Thursday, as the 200 day EMA has come into play. The 1.25 level did offer a bit of support.
The Canadian dollar edged lower against its U.S. counterpart on Thursday as stocks fell and domestic data showed a plunge in exports, but global stimulus measures helped temper the decline, with the currency holding near an earlier three-month high. The Canadian dollar <CAD=> was trading 0.1% lower at 1.3508 to the greenback, or 74.03 U.S. cents. The currency touched its strongest intraday level since March 9 at 1.3468.
The Euro was all over the place for a moment during early New York trading as the ECB announced €600 billion worth of bond buybacks.
The Australian dollar has been all over the place on Thursday, but quite frankly it is overextended so at the very least the market needs to go sideways.