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4 Feb 2013
Forex Flash: EUR longs and JPY shorts increase – OCBC Bank
Emmanuel Ng of OCBC Bank has taken a look at key G7 pairs and the factors which may push price action this week,
Starting with EUR/USD he begins by noting that new that European banks would repay a less than expected EUR3.5bn of LTRO loans barely dented the EUR on Fri as investors continued to focus on perceived diminishing tail risks. Looking at CFTC data, he sees that net speculative EUR longs were increased in the latest week and we continue to stay positive on the pair, and writes, “Initial resistance is expected towards 1.3715 while 1.3590 may provide a near term floor.”
Moving to GBP/USD, he notes that the divergent Eurozone and UK PMIs dragged the GBP/USD lower and the lifted the EUR-GBP higher. This week, Ng feels that all eyes are expected to be on incoming BOE Carney’s testimony to Parliament on Thursday, while any disappointments from the data front in the interim may continue to prove negative fro the pound. Looking to CFTC front, he notes that new speculative GBP longs dipped precipitously last week and any fall below 1.5678 may see the pair slide towards 1.5600.
Bouncing to USD/JPY, Ng notes that USD/JPY broke through the 92.00 ceiling on Fri day with the weight of market consensus, continuing to look for higher ground. Looking to the CTFC front, he writes, “net speculative JPY shorts deepened in the latest week and we look for 93.10 to be a first resistance while the psychological 92.00 level is expected to emerge as a support if the pair retraces below 92.50.”
Finally, pivoting to AUD/USD, he comments that aside from the RBA on Tuesday, , the January labor market numbers on Thursday may present yet even more event risks for AUD. Meanwhile, Ng finishes by noting that “net speculative positions as a proportion of net open interest remains bloated. Near term, the 1.0400 levels remains fragile in our opinion and a breach may be expected to see the pair test towards 1.0340. Meanwhile, we continue to expect the AUD/NZD to be heavy pre-RBA.”
Starting with EUR/USD he begins by noting that new that European banks would repay a less than expected EUR3.5bn of LTRO loans barely dented the EUR on Fri as investors continued to focus on perceived diminishing tail risks. Looking at CFTC data, he sees that net speculative EUR longs were increased in the latest week and we continue to stay positive on the pair, and writes, “Initial resistance is expected towards 1.3715 while 1.3590 may provide a near term floor.”
Moving to GBP/USD, he notes that the divergent Eurozone and UK PMIs dragged the GBP/USD lower and the lifted the EUR-GBP higher. This week, Ng feels that all eyes are expected to be on incoming BOE Carney’s testimony to Parliament on Thursday, while any disappointments from the data front in the interim may continue to prove negative fro the pound. Looking to CFTC front, he notes that new speculative GBP longs dipped precipitously last week and any fall below 1.5678 may see the pair slide towards 1.5600.
Bouncing to USD/JPY, Ng notes that USD/JPY broke through the 92.00 ceiling on Fri day with the weight of market consensus, continuing to look for higher ground. Looking to the CTFC front, he writes, “net speculative JPY shorts deepened in the latest week and we look for 93.10 to be a first resistance while the psychological 92.00 level is expected to emerge as a support if the pair retraces below 92.50.”
Finally, pivoting to AUD/USD, he comments that aside from the RBA on Tuesday, , the January labor market numbers on Thursday may present yet even more event risks for AUD. Meanwhile, Ng finishes by noting that “net speculative positions as a proportion of net open interest remains bloated. Near term, the 1.0400 levels remains fragile in our opinion and a breach may be expected to see the pair test towards 1.0340. Meanwhile, we continue to expect the AUD/NZD to be heavy pre-RBA.”