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USD losing momentum? – Danske Bank

Jens Pedersen, Senior Analyst at Danske Bank, has assessed the recent performance of the greenback.

Key Quotes

“USD bulls are losing confidence as Fed Chair Yellen’s latest comments seem to undermine previous hawkish comments from other board members”.

“Indeed, in our view the dovish camp of the Federal Reserve seems to dominate with seven out of 10 voting members indicating a maximum of two hikes this year (our estimates)”.

“With US monetary policy setting focused on external developments – which now to a much lesser extent seem deemed as ‘exogenous factors’ – even a strong non-farm payroll report on Friday would most likely not be enough to trigger a renewed USD up-trend”.

“Overall the latest developments give us comfort in our long held non-consensus call of EUR/USD ending the year higher”.

Jens Pedersen, Senior Analyst at Danske Bank, has assessed the recent performance of the greenback...

(Market News Provided by FXstreet) [...]

USD/JPY: Further downside expects below 111.97 – Commerzbank

Karen Jones, Head of FICC Technical Analysis at Commerzbank, believes the pair could re-test 110.67 in case it breaks below 111.97.

Key Quotes

USD/JPY’s correction higher has failed at the top of a 6 week channel at 113.96 and so far eased back to its mid point, which today is located at 111.97”.

“Failure here should be enough to trigger losses to the 110.67 recent low and the 110.00 base of the channel”.

Karen Jones, Head of FICC Technical Analysis at Commerzbank, believes the pair could re-test 110.67 in case it breaks below 111.97...

(Market News Provided by FXstreet) [...]

CAD: Setting up for real GDP (January) – TDS

Research Team at TDS, suggests that strong activity-level data will lend support to what should be a stellar month for the Canadian economy.

Key Quotes

“Real industry-level GDP is forecast to grow at an above-consensus 0.4% on a monthly basis, which would mark the fastest pace since June 2015. Manufacturing volumes rose by 2.4% in January, driven by a strong (+9.6% m/m) auto sector as low gasoline prices continue to drive demand for Canadian-made light trucks and SUVs. Railcar shipments were also higher in the month, indicating a pickup in commodity-related industries. Looking to the services sector, the number of hours worked was up sharply in January while retail volumes rose by 2.2% m/m. Utilities could provide a minor offset due to the unseasonably warm weather throughout the month, but it will not be enough to significantly dampen the overwhelmingly positive tone of the report.

After a solid handoff from Q4, our forecast for industry-level GDP corresponds to an annualized Q1 growth rate of nearly 3.0%, which reflects a sizeable upside risk to the Bank of Canada's conservative 1.0% estimate in the January MPR. This, along with the forthcoming fiscal stimulus unveiled in the 2016-17 budget, will should keep the Bank firmly on the sidelines in the coming months.

Foreign Exchange

The Canadian dollar has had a strong month, rallying a tad over 4% against the greenback. This added further support to the rally over Q1, totaling nearly 6.5%. This reflects the stabilization in oil prices and stronger Canadian data relative to the US. Indeed, Canadian data surprises have widely outperformed the US, leading to a compression in the 2y interest rate differential.

Given this backdrop, we think CAD will remain sensitive to growth and inflation releases. TD’s above consensus call would translate into a near one standard deviation upside surprise relative to consensus. This level of surprise in GDP over the past year has seen CAD rally about 0.66% on the day. This is nearly double the returns of for a one standard deviation miss. In turn, we think a solid January release could provide some tailwinds to CAD following the release, but we also see strong resistance near 1.2940. This level is likely to offer USD/CAD strong support ahead of Friday's NFP report.”

Research Team at TDS, suggests that strong activity-level data will lend support to what should be a stellar month for the Canadian economy.

(Market News Provided by FXstreet) [...]

Elliott waves for Forex correlation analysis – GBPUSD Elliot Waves Analysis For 31 March 2016

GBPUSD - Flat

Wave Analysis:

GBP/USD is currently trading with a bearish bias. During the previous trading day, the cable traded long as forecasted and even hit out target resistance 1.4410 but could not close above it. Instead, the pair rebounded from this level and is currently heading short. We expect the current downward rally to be the unfolding of corrective three wave cycle with wave (a) ending along 1.4295. We will thus remain short with our target at 1.4295. A break below this level will push the market further down to 1.4196. In an alternative case scenario, should the price end up breaking above 1.4410, then buy the pair with your target at 1.488. The cable should be traded alongside Euro US Dollar. This pairs have a strong positive correlation of up to +0.89 and will likely move in a similar direction during this intraday. Only buy or sell pound if Euro is giving a similar signal

Trade Recommendations:

Remain short with your targets at 1.4295.  A break below this level will call for further short positions with your next target at 1.4196. Only buy if the price clearly breaks above 1.4410.


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