Subscribe to RSS

The 2 FX Trends That Failed And The 2 That Will Replace Them – Credit Agricole

This week we witnessed the end of two fairly pronounced downtrends – in EUR/GBP and NZD/USD. Data releases and events today and tomorrow will determine whether the downtrends will resume or go into a reverse. The analysis below suggests that the risks of a trend reversal may have grown. We also think that a better way to express any bearish view on GBP and bullish view on NZD should be done via short GBP/USD and short AUD/NZD respectively.

Starting with GBP, evidence that some policy makers remained cautious on the UK's growth and inflation outlook could dampen bets on earlier stimulus removal. In addition, indications that persistent FX strength remains a worry and could delay any hikes should weigh on GBP. Ahead of tomorrow's UK retail sales data consensus is looking for more evidence of strengthening domestic demand. All that may suggest that the bar for potential disappointments maybe relatively low. Indeed, it would take stronger data to see the uptrend in GBP extended.

We further suspect that month-end flows could favour further upside in EUR/GBP in the near term. With EUR/GBP downtrend having stalled of late, investors could start questioning the ability of GBP to decouple from EUR on a sustained basis. We further believe that USD should remain supported as the September Fed liftoff draws near. A new downtrend in GBP/USD could be in the making.

Turning to NZD, we note that the recent comments by the NZ finance minister Key have triggered some profit taking on short NZD/USD positions. Ahead of the RBNZ meeting the rates markets are already fully pricing in a 25bp cut with another 25bp expected in the next 3M to 6M. With some negatives in the NZDprice, the market response will depend on signals of further easing ahead. In its June statement, the RBNZ indicated that: “We expect further easing may be appropriate. This will depend on the emerging data.” Soft NZ CPI inflation and weak dairy prices would suggest that the RBNZ should keep its language little changed today. That said, NZD is starting to look undervalued relative to some ‘fair value’ gauges following the recent moves (NZD TWI is down more than 13% from the May highs). In addition, the renewed weakness in global commodity prices should be seen as a boon to NZ consumers’ real purchasing power and alleviate concerns about imminent domestic demand slowdown.

The RBNZ could struggle to exceed market’s dovish expectations and help NZD consolidate. This could discourage aggressive NZD/USD selling for now but make AUD/NZD selling attractive. The relative AUD-NZD rate outlook is starting to shift again after the somewhat dovish speech by the RBA governor last night. A continuation of the move after the RBNZ could push AUD/NZD lower still.

'This content has been provided under specific arrangement with eFXnews.'

0 commentsback to post

Add your comment

Nickname:
E-mail:
Website:
Comment:

Other articlesgo to homepage

$25 Free Forex Welcome Gift to Start Trading – TRADE

$25 Free Forex Welcome Gift to Start Trading – TRADE(0)

Sign up and receive $25 Free Forex Welcome Gift to Start Forex Trading. $25 Free Forex Welcome Gift by TRADE.com to trade forex live trading without any Deposit and investment to verify live account Link:  $25 Free Welcome Gift to Start Trading Available to: All new trading account Bonus offer: Sign up and receive $25

Stay Informed About Crucial BREXIT News – UFX Broker

Stay Informed About Crucial BREXIT News – UFX Broker(0)

How will BREXIT affect the value of the GBP? Could the EUR be affected, as well? Other European markets may see volatile market reactions as investors wonder how the UK may profit from its own market, rather than remain part of the EU’s single market. Stay Informed About Crucial BREXIT News with UFX Link:  Stay

Up to 444% Profit Receive for a Single Trade – Grand Capital

Up to 444% Profit Receive for a Single Trade – Grand Capital(0)

Up to 444% Receive Profit with our new Express Options for Grand Capital Ltd Binary Option Broker. Make a correct prediction for 3 assets at the same time Link: Up to 444% Profit Receive for a single trade Link:  $500 Forex No Deposit Welcome Bonus Link:  40% Forex Welcome Deposit Bonus Available to: All new

$6000 First Deposit Bonus Limited Time Offer – XTrade

$6000 First Deposit Bonus Limited Time Offer – XTrade(0)

Up to $6000 First Deposit Bonus Limited Time Offer (T&C applied) on all Deposits for all Customers. Become an XTrade customer, and get 60% Forex Special bonuses (T&C applied) on all deposits made during your first 7 days!! Link:  $50 Free Cash Welcome Bonus Promotion  (T&C applied) Link:  $30 Free Account Verification Bonus (T&C applied) Link: 

50% Deposit Bonus and $50 No Deposit Bonus – FortFs

50% Deposit Bonus and $50 No Deposit Bonus – FortFs(0)

$50 Forex No Deposit Bonus Promo Action to all eligible clients. Every client who passed the verification process in their trader’s room can get the $50 No Deposit Welcome Bonus Link:  $50 Forex No Deposit Welcome Bonus Link:  Up to 50% Bonus of Every Deposit Link:  15% Support Margin Bonus Promo Available to: New and

15% Forex Welcome Deposit Bonus Up to $1000 – XM

15% Forex Welcome Deposit Bonus Up to $1000 – XM(0)

15% Forex Welcome Deposit Bonus Up to $1000 and $30 Forex No Deposit Bonus Welcome Bonus brings Real Account clients the best rewards available. Entering the markets and trading with XM enables you to earn from your trades and build your own bonus up to a maximum of $1,000. Link:  $30 Forex No Deposit Bonus

Free $200 Earn with Binary No Deposit Bonus – Ayrex

Free $200 Earn with Binary No Deposit Bonus – Ayrex(0)

Earn $200 Free with Binary Options No Deposit Bonus to all new activated trading account. Ayrex presents its very first Binary Options No Deposit Bonus for new traders. Sign up to get FREE $30 and turn them into a fully withdrawable $200! Link: $200 Earn with No Deposit Bonus Link:  $100 Free Win in Just One

$30 Free No Deposit Welcome Bonus Campaign – Tickmill

$30 Free No Deposit Welcome Bonus Campaign – Tickmill(0)

$30 Free No Deposit Welcome Bonus Campaign to All new traders. $30 Free Welcome Account is available to all new clients who expressed a wish for it during the registration process. Link:  $30 Free Welcome Bonus Offer Available to: All new traders Ending Date: 31 December 2017 Bonus Offer: $30 Free No Deposit Welcome Bonus

Get $2017 No Deposit Hot Bonus Promotion – FreshForex

Get $2017 No Deposit Hot Bonus Promotion – FreshForex(0)

$2017 No Deposit Hot Forex Bonus Offer to all new verified customers. The $2017 Hot No Deposit Forex Bonus offers you a unique opportunity to test trading strategies of FreshForex Link:  $2017 No Deposit Hot Bonus offers Available to: All New Traders. Ending Date: 30 April 2017 Bonus Offer: $2017 No Deposit Exclusive Hot Bonus

100% Real Money Cash Back Bonus Promotion – UFX

100% Real Money Cash Back Bonus Promotion – UFX(0)

100% Real Money CashBack Promotion 2018 to all new and existing clients. Join and gain exclusive access to the ONLY online trading 100% Cashback rewards bonus program Link:  100% Real Money CashBack Promotion Link:  $50 Forex No Deposit Bonus Promotion Available to: All new trading account Ending Date: 31 December 2017 Bonus offer: 100% Real

read more

Forex Featured Broker

Contacts and information

ForexDepositNews.com Forex Deposit Bonus, Forex No Deposit Bonus, Forex Live Contest, Forex Demo Contest, Free Forex Bonus Forex Brokers Review and Other All Forex promotions.

ForexDepositNews.com

Social networks

Most popular categories