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ridethepig | AUDNZD Market Commentary 09.12.2020📌 Buyers attacking and maintaining the pressure! Since the initial weakness we spotted at the lows, we have seen the birth of an impulsive leg higher: Of course this is very promising, buyers have much rather played the breakup and we got our momentum gambit! Well, for those wondering what rendered the base as valid, I would point you in the direction of the NZ10Y chart which was calling for the end of NZD strength as soon as we approach the 1.00% target. We must be clear that in AUDNZD 1.055x contains a lot of interest, the ambitious dream of forcing a straight leg towards 1.075x and forcing our opponent into complete capitulation is far from fiction. We can now attack the breakout and force the aggression. The continuation might be 1.055x -> 1.062x -> 1.075x which keeps NZD under pressure. Thanks as usual for keeping the feedback coming 👍 or 👎
Long
by ridethepig
5
ridethepig | AUDNZD Market Commentary 02.12.2020There was apparently no motivation for sellers to continue the advance lower and neither does it seem pragmatic. AUD buyers are showing up once more and this looks like the prelude to an exciting momentum gambit. The trigger comes from a leap above the latent highs, it will move us forward full of energy as shorts start covering and the youthful arrogance of those reluctant to close get margin called. I choose to answer the lows with a gentle position, no more than one or two in the start, and the quietness of a worthwhile virtue. The whole business of markets is about the advance for our momentum, because the traps have already been set, sellers still think they have won, but only when we zoom out on the macro charts can we truly demonstrate the underlying AUD strength. So I would tend to describe the above floor as cheap and open. With clearing month end flows and markets trying to get their 2021 trades on early with commodity shortages entering into the picture already, we should emphasise exposure in AUD. Of course, Australian and China relationships are not working perfectly, although I expect this will be the story to track in 2021 rather than December 2020. Thanks as usual for keeping the feedback coming 👍 or 👎
Long
by ridethepig
9
ridethepig | AUD Market Commentary 2020.10.21🔸 AUDUSD - Market Commentary 2020.10.21 The following play is aiming for a test of 70c; after a very dovish RBA earlier in the week opening the window for negative rates, we have some more downside to play. Wellll done all those selling AUDCAD , AUDUSD and AUDCNH . Volatility is going to continue to expand as we enter into the elections which will weigh heavily on AUD and NZD to a lesser extent. The play towards 70c can be opened by a fresh zig-zag from sellers. Such a move should never be played without being aware where we are wrong and measuring with certain effectiveness the bang for our buck. The downside is made possible via USD finding a temporary bid for ultimate safe-haven flows. We must recognise the dollar as the reserve currency and give it credit where credit is due. For the technical flows, looking for an eventual test of 0.700x/0.699x while invalidation above comes with a closing basis through 0.711x. Thanks as usual for keeping the feedback coming 👍 or 👎
Short
by ridethepig
2
'Giant Panda' surrender of the AUD bid📌 Surrendering of the AUD bid The following play is an example of how easily a premature surrender of the ladder can lead to a correction. In light of that, for the news flow we have a two course dinner: 1️⃣ A dovish RBA on deck notably showing signs of distress with Australian 10Y Yield and opening the door for more QE. This is going to keep the downward pressure on AUD in the immediate term while CB's and governments around the globe prepare to tap into the overdraft one more time. 2️⃣ Regular readers will know we have been tracking PBOC for some time. The "Giant Panda" has been spotted (more than once on the AUD bid and quite practicably so. The importance here comes from them effectively pressing the release valve via banning Australian coal. 3️⃣ Any last minute USD outflows ahead of election event risk will be positive CAD in the immediate term. A Trump victory would then likely unwind those, while a Biden sweep I suspect accelerates the flows from US to Canada. 📌 The following swing that we are tracking is a combinatory complication . From a flows perspective, sellers can resign after testing the previous resistance turned support, with the threat of penetration towards the previous centre in the orderblock. The floor will depend on risk passing, for now let's keep working shorts and use CAD to park as a defensive move to ride the pig on any last minute U.S election outflows; 0.930x -> 0.900x looks within reach. Thanks as usual for keeping the feedback coming 👍 or 👎
Short
by ridethepig
2
FX Update: Market hopeful on US stimulus and Brexit breakthrougSummary: The US dollar continues to meander back and forth on the rise and fall in stimulus hopes, with a new timeline early this week for the prospects of a deal after a House Speaker Pelosi ultimatum. Our focus this week elsewhere is on AUD after the sell-off last week on indications that the RBA is readying a proper QE programme, and on GBP as the market continues to lean in favour of a breakthrough in Brexit talks. Trading focus: US stimulus go/no-go deadline shaping up for tomorrow? The US stimulus question may finally be nearing a near-term resolution as the weekend saw US House Speaker Nancy Pelosi issuing a 48-hour deadline (apparently Tuesday night) for a stimulus deal if anyone expects something to pass before the election. With some Republicans apparently willing to burn bridges to Trump due to the Democrats’ commanding lead in the polls and at odds with the president on whether a large stimulus package is advisable. The headlines suggest that stimulus prospects are still strong, and even when they appeared less strong recently, the narrative seemed to be that the rising odds of a Democratic clean sweep of Congress and the presidency at the election will mean a far larger package will be coming by spring either way. The market feels somewhat complacent here and tactically there is room for a mishap on the stimulus front that sees another modest leg higher in the US dollar, but confidence in reading the market here is quite low. The Aussie is still digesting the RBA’s dovish tilt last week Feels like the Aussie being pulled in two directions simultaneously here. On the negative side is the dovish RBA Governor Lowe speech last week that appears to be a setup for a full QE programme announcement at the November 3rd meeting. On the more supportive side as this week gets underway is the solid bounce-back in risk sentiment and the strong Chinese data overnight, with the weak Q3 GDP numbers off-set by strong September Industrial Production and Retail Sales data. As well, the Chinese yuan is trading back toward the cycle highs despite the recent apparent attempt to slow its rise. A move lower in AUDUSD here below 0.7000 and AUDJPY below 74.00 may be more up to US stimulus prospects and risk sentiment supporting safe havens rather than any isolated AUD weakness. Chart: AUDUSD The next two weeks and a day will be pivotal for AUDUSD, as the RBA meets and may announce its first real QE programme at the November 3rd RBA meeting – in the Asian session on the day when the US goes to the polls for Election Day. Huge technical interest here in the pivotal 0.7000 level if the AUD suffers another bout of weakness, which could lead to a further slide to 0.6800. On the flipside, to dig itself out of range, the pair needs to pull back above the 0.7200-50 area. If yield spreads mean anything any longer, the pressure is to the downside. Sterling – market continues to lean in favour of a breakthrough. The market continues to look through UK Prime Minister Boris Johnson’s exhortations for the UK to prepare for a no deal Brexit, and has bid sterling up close to the range highs against the euro and GBPUSD is poking back above 1.3000 as of this writing. Boris Johnson is said to be likely to roll back some of the controversial portions of the Internal Market Bill that would have overridden portions of the Withdrawal Agreement in a bid to get a deal. That bill might not have cleared the House of Lords anyway. In any case to support the current sterling price, we need a headline touting a real breakthrough soon – more below on thoughts for how to trade either directional outcome for GBP. The G-10 rundown USD – the US dollar’s fate tactically linked to risk sentiment and stimulus prospects, with no stimulus deal a possible supporter, but still looking for USD weakness for the long term. EUR – the new Covid-19 lockdowns and case counts across Europe making the bullish story for the Euro a tough sell – does the EU risk a double dip recession? JPY – safe haven yields are creeping back higher again, eroding some of the support for the JPY here – but only a story if US yields from 10 years and longer pop to a new highs. GBP – as noted above, the market continues to lean in favour of a breakthrough and we’re likely to see a considerable leap higher in sterling (2%?) on a clear agreement-in-principle headline as early as this week or next. GBP calls for expiry in less than four weeks one way to position for a breakthrough, with GBP puts beyond December 31 are more appropriate for a “No Deal” scenario CHF – no real growth in sight deposits this and if safe haven yields rise further, fundamental support for CHF weakens, but having a hard time paying attention to CHF as long as we remain in 1.06. AUD – the negative reaction to the RBA halted after a single day and needs to get on the move lower again soon if it is meant to sell off further as last week’s negative momentum is already fading. The latest RBA meeting minutes and an RBA speaker are up tonight. CAD – USDCAD consolidated to the 1.3250 resistance area. CAD seems likely to coil passively with overall USD direction awaiting the US election outcome. NZD – NZD firms after the strongest result ever for NZ’s Labour party in the election, giving it an outright majority. The AUDNZD is looking below last support levels ahead of the 200-day moving average near 1.0620. The pair is big-picture cheap at 1.0500. SEK – EURSEK gapped higher overnight but is back where it came from and seems ready to work towards the range lows of the summer as long as risk sentiment stays stable despite growing concern of a double dip slow-down in the EU on the Covid-19 resurgence. NOK – we like long-term EURNOK downside, but will have to steer clear of near term double-dip concerns in Europe and any new crude oil sell-off on the ongoing supply overhang. Local resistance in the 11.00 area here. John Hardy Head of FX Strategy Disclaimer The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
by Saxo
FX Update: GBP up as Brexit talks extend, RBA takes AUD downSummary: There will be no Brexit talk deadline today, a relief for sterling bulls, but a situation that merely extends the uncertainty. Elsewhere, the RBA November 3 meeting is likely shaping up for a new easing push from Lowe and company as their overnight musings on longer term QE took the AUD down a few notches. Elsewhere, we watch the relative strength race between the USD and JPY as 105.00 has come into view in USDJPY. Trading focus: JPY still in the cross-hairs As I have noted recently, the yen is receiving a double whammy of support from the strength in safe haven bond yields (the most important driver) and weak risk sentiment of the last couple of sessions. I speculated in this morning’s Saxo Market Call podcast whether one of the factors keeping the EURJPY from lower levels is the EU sovereign bond market, where bond traders have had a field day since the spring in bidding up peripheral debt (piggy-backing ECB flows) as EU sovereign spreads tighten. This element is entirely missing in Japan’s moribund JGB market, but the JPY remains undervalued in real-interest rate terms. We focus on the 105.00 area in USDJPY for a wider realization of this level – every prior attempt below this level since 2018 has been gathered up within a few trading days. Pause button pressed for sterling Just ahead of yesterday’s update, the headline crossed my screen that Boris Johnson would not walk away from talks today, which the market took as a hopeful sign that the current status of the talks is sufficiently amicable to indicate that a deal is reachable. According to sources in the major news media, both sides suggest that late October or the first week of November are the more likely timeframe for an agreement. On balance, the fact that talks are ongoing are promising for sterling, but we still likely will need that critical breakthrough for sterling to post any larger directional move. Until then, a break below 0.9000 in EURGBP would represent a fuller reversal of the prior rally and could lead to the exploration of the bottom of the range just below 0.8900, which also happens to coincide with the 200-day moving average. AUD hit on RBA consideration of longer term bond purchases The Australian 10-year yield dropped a chunky 7 basis points overnight (from 0.84% to 0.77%) on RBA governor Lowe out indicating that the RBA is considering extending the maturities of its bond purchases and mulling whether lowering 5-10 year yields would help the Australia labour market. The Governor complained that Australian 10-year yields are still too high. This has the market placing bets that the RBA is set for a bigger move at the November 3rd meeting, which could include a rate cut and now more likely to see a proper QE programme that includes purchases to lower Australian yields all along the curve. Chart: AUDUSD The AUD is lower across the board on the RBA’s consideration of extending bond purchased out the yield curve and the local line of consolidation has fallen overnight in AUDUSD as the pair really only has the huge 0.7000 area to consider from here to the downside tactically. To get the pair significantly below that level, we would likely need to see further weakness in China’s currency, commodity prices like iron ore heading lower, and generally weak risk sentiment. The first area lower beyond 0.700 is the 200-day moving average just below 0.6800. The G-10 rundown USD – looking generally firm, but not the centre of attention at present. As long as US stimulus fears weigh on risk sentiment, likely to continue to see resilience. EUR – considerable speculation around the ECB’s next measures, but the ECB is already doing plenty if we have a look at EU peripheral spreads, and the focus is likely to increasingly shift to the fiscal – watching for signals from the EU Summit today and tomorrow on that front. JPY – very interested in the relative horse race of the USD and JPY as 105.00 and below approaches to see which achieves top status as a safe haven currency if yields continue lower and risk sentiment is rocky. GBP – potential for further gains here, but still need the key breakthrough and wonder if the ceiling is a bit low for sterling even in the best of outcomes – more thoughts later now that talks likely to drag on for two more weeks or more. CHF – a grinding bit here in CHF as EURCHF slowly moves lower – maybe more sensitive to global bond safe-haven seeking that risk sentiment swings per se? AUD – Australia hit by the RBA and could trade on weak side until the November 3 RBA meeting, especially if global outlook remains further clouded by Covid-19 concerns and China’s yuan suffers a bout of consolidation after its recent run. CAD – USDCAD has room to consolidated to 1.3250 without raising eyebrows, but seems low beta to the overall USD situation. CAD traders need keep an eye on oil prices as these traded near resistance yesterday. NZD – the kiwi enjoying strength against the sudden downshift in the Aussie, but the RBNZ will be quick to take care of preventing pronounced NZD strength eventually. For relative strength in that pair, watching the 200-day moving average around 1.0620. Big level for NZDUSD is 0.6500. SEK – the krona may be overachieve in short term, but still have a “fade the rallies” stance in EURSEK as long as we remain south of 10.500 for a move into sub-10.00 territory in 2021. NOK – the EURNOK level of 10.75-80 is the one to crack tactically for NOK bulls – could be a short term walk in the desert here for those bulls if the Covid-19 partial shutdowns continue to weigh on the oil outlook over the winter. John Hardy Head of FX Strategy Disclaimer The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
by Saxo
Is the future for the Australian dollar downwards?AUD/USD has been a strong performer in the currency markets, returning just under 30% since its March lows. We talked about how the Australian dollar was poised for a rally on a market recovery earlier this year. The market has recovered, and the Australian dollar has recovered with it. This was due to the Australian dollar being mainly a “commodity currency,” with manufacturing worldwide slowly starting to pick up, specifically in China. Erik Nelson from Wells Fargo stated that “If you consider some of the fundamentals in Australia, you can justify the valuation of the Australian dollar at current levels” and that Australia is “very well positioned right now” about its exports to China. However, the AUD/USD has fallen over3% in the past couple of days. This has been on a multitude of factors. The US Dollar strengthening on Donald Trump’s recovery, recent weakness in the oil prices, and the tremulous Coronavirus situation in Australia have pushed the Aussie lower. Is this a long term trend for the Australian dollar, or just Market Volatility? Yesterday, the RBA left rates at 0.25%, which it has been since the initial rate cut in March. RBA’s Governor Philip Lowe stated that the decision was based on the uneven recovery of the global economy due to the Coronavirus – “The global economy is gradually recovering after a server contraction due to the pandemic. However, the recovery is uneven and its continuation is dependent on the containment of the virus”. Analysts are predicting a rate cut in the next six months. However, there is little chance for rates to fall into the negative as Governor Lowe historically has been against negative rates, citing that they are “extraordinarily unlikely in Australia” due to the documented downsides on consumption sentiment. Furthermore, Australia has been able to control its second outbreak in the state of Victoria, enabling them to focus on the path to recovery from the Coronavirus. The RBA also stated that “Labour market conditions have improved somewhat over the past few months and the unemployment rate is likely to peak at a lower rate than expected” With elections coming up in the United States, the Trans-Tasman bubble between New Zealand and Australia coming to fruition, and Australia slowly recovering, market volatility may affect the AUD/USD pair, rather than a long term trend. I believe the Australian dollar’s tailwinds are a lot stronger the potential headwinds it may face.
by BlackBull_Markets
FX Update: USD close to the brink of support as US yields spikeSummary: USD weakness has extended to pivotal levels that are the bull-bear dividing line between a return to a weak USD regime and the more neutral tactical outlook if USD support holds here. Volatility remains muted, but will have a hard time remaining that way if we continue to see anything resembling the pronounced weakness in US treasuries yesterday Trading focus: Getting a grip on the US yield spike and what it means for the US dollar The most important development across markets yesterday was the steep sell-off in US treasuries all along the yield curve coming after a period in which US yields have been moribund. What are the drivers here? Is the market satisfied that US data is bouncing back strongly as evidenced in the latest strong September ISM Services yesterday (at 57.8) and that a stimulus deal looks more likely now that Trump is back in the White House and has argued in favour of striking a deal? Or perhaps the signs that Biden is pulling away in the polls is the chief driver and the argument here is that the Democrats are set to take back the presidency and the Senate, therefore paving the way for a massive multi-trillion stimulus passed in the first one hundred days of a Biden administration, taking US inflation much higher while leaving the Fed policy rate pegged near zero. The US dollar has clearly been driven by the market’s pricing of future inflation. The Biden argument seems the more plausible driver here, and US rates spiked all along the curve, but most aggressively at the long-end yesterday, with the 10-year trading above 0.75% resistance and the 30-year above 1.50%, a notable chart level. Also, the stronger the apparent edge that the Democrats are achieving in the polls, the less likely that Trump’s claims of a fraudulent election will be able to drive “contested election” uncertainty for any appreciable length of time after Election Day. In the meantime, however, if US rates continue spiking here the risk sentiment apple cart could be upset and keep the USD bears at bay – tough to tell where the balance of risks lies, but equities are stumbling in the European session today after the boost yesterday, supposedly from Trump’s quick return to the White House (at the margin, a healthy Trump through Election Day keeps the risk of election chaos at bay as well). Chart: AUDUSD The AUDUSD rally has found that 0.7200 is the sticking point here after an uninspiring RBA meeting overnight that provided no notable shift in forward expectations for policy. This has coincided with EURUSD testing the 1.1800 area. The narrative for the USD bears is that the US is set to unleash further torrents of liquidity, either right away in a last-ditch Trump administration-Democratic House deal to juice the economy and get checks in the mail ASAP, or at worst, after the election with a massive, multi-trillion new stimulus from an increasingly likely US Democrat “clean sweep” scenario. The downside trigger is rather far away at 0.7000 but is the more prominent chart point. The G-10 rundown USD – the US dollar taken to the last bits of support in a number of pairs – more USD liquidity from stimulus and rising expectations of a Biden win and the deeper negative real US rates that this might bring on a heavier dose of fiscal stimulus are theoretically USD negative, but if spiking US yields spike risk sentiment, the USD bears could be in for a rough ride tactically. EUR – EURUSD has tickled the 1.1800 level, arguably the local bull-bear line for the pair and a key for the broader USD outlook. The services PMI revisions for Europe were positive for Germany, but even worse for Spain at a terrible 42.4 as piecemeal shutdowns are threatened there. The only argument for euros is that they will hold their value because more cautious fiscal in Europe together with demographics will keep the negative real rate threat lower than elsewhere. JPY – hard to argue in favour of the yen if yields spike further, but as long as the spike is isolated to the US on fear of negative real rates, the stronger JPY story could re-emerge if risk sentiment wobbles here. So many JPY crosses resemble their USD counterparts (EURUSD and EURJPY, for example) and would expect that to continue. GBP – sterling poised for good news, which the market seems to be leaning for as we await the key headline announcing some breakthrough in post-Brexit transition period negotiations. Still have long term doubts on the height of the ceiling for sterling due to the UK’s structural deficits, but a sterling surge on finally getting the Brexit issue in the rear view mirror is likely in the cards.. CHF – nothing to report here, but watching with interest on whether yield move continues higher and drives weakness at the margin. EURCHF 1.0600-1.0900 is the limbo zone for the franc and has been since June. AUD – the RBA looking for ways to bring further easing if needed, but happy where it is at present and already hopeful that the unemployment rate peaks at a lower level than previously feared. AUDUSD has found resistance again at the pivotal 0.7200 area as noted above. CAD – CAD failed to react much to the very strong surge in WTI crude yesterday as USDCAD sits at a local tactical pivot area of 1.3250 – the pair looks passive and low-beta to the USD direction. NZD – in NZDUSD terms, we have been coiling and coiling since July – the clearest level at the moment there is the 0.6500 area, which could set up a run towards 0.6400 if the USD puts on a rally again. The AUDNZD cross is lost in the desert, but downside pressure risk towards 1.0600 perhaps weighs more as long at 1.0850 isn’t retaken. S EK – EURSEK needs a positive news in Europe and another surge in risk sentiment to punch back down through the 10.40 pivot area and suggest an end to upside risk. Right now - in limbo between recent top and that 10.40 area. NOK – a nice rebound in crude oil gives the NOK a shot in the arm and if positive risk sentiment continues here, we could see a full return to the 10.50 area in EURNOK. The CPI rise and implications for negative rates looks scary until we consider that it is mostly FX-driven as the trade-weighted NOK is some 8% below where it was a year ago even after the comeback from the spring-time lows. John Hardy Head of FX Strategy Disclaimer The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
by Saxo
RidetheMacro| AUDUSD Crawls downwards 📉AUDUSD Key Points The Focus will be on the Australian Dollar this week with the Reserve Bank of Australia (RBA) expected to make a major decision on its cash rate. Additionally, the government will release its Annual Budget. As of Friday’s close, market consensus was evenly split on whether the RBA will adjust the cash rate in October or November. A 50/50 consensus usually means no rate cut. Rather than another full 25 basis point cut, it seems most market participants are anticipating some version of “micro easing” such as lowering the official cash rate from 25 bps to 10 bps this month or next. “Consequently, financial markets are now anticipating a roughly 50% chance the RBA will cut the official cash rate before the end of the year,” according to Brian Reid, Treasurer of Newcastle Permanent. For weeks, investors had been pricing a rate cut to 0.10%, based on forecasting from Westpac. But that changed last week with Westpac economists now forecasting November instead, at the November 3 meeting. until the Next time. Ridethemacro
Short
by Ridethemacro
ridethepig | Australian YieldsThe gridlock continues with CB's keeping Yields interlocked for as long as possible. An attack on the highs is inevitable if you ask me, sellers base is just not strong enough. 📌 Recession Strategy US will lead for the purpose of these flows, buyers may still make concessions and allow a retest of 0.82% lows but anything else looks very difficult. The counter-play here to the topside will cause severe damage to the economy as inflation enters back into the game. I will be doing a detailed post on inflation as there have been a number of questions coming in around how it will develop. We need to keep tracking the supply side to really get into the heart of the matter. The post is going to cover much more about the reversal of globalisation , government intervention, more protectionism, productivity taking another hammer via covid, less tech and etc and how to work with these moves.
TVC:AU10YLong
by ridethepig
1
ridethepig | AUD Market Commentary 2020.06.15For this one we are talking about an extremely disruptive swing that will continue to cause high beta FX outflows in the immediate term. The nice problem we have on our hands with this, is that we are now entering into a new long-term bullish trend for AUDUSD. So we 'know' this pullback will have a minimum flow towards the 0.650x handle before bulls have to deal with a completely new decision point. Since I considered the said bounce from the lows, a complete 5 wave sequence right on time for Fed and called live here, the strategic rule that one must now to cover and protect. In the long run, the positional struggle comes down to a struggle between USD devaluation via FED and restraining tendencies towards high beta fx. In this all embracing dance with risk, though an important strategy in itself is to remember it is only a means to an end.
Short
by ridethepig
6
ridethepig | Dovish RBNZ Pricing & Commodity Shortages📍 RBNZ formula So what are we trading here? In this position it would be an obvious mistake to not acknowledge risk sentiment worsening over the weekend as cases continue to escalate, clearly the market is exposed to the storm (that is to say the series of localised lockdowns are a done-deal, the only question remains whether it becomes more widespread). On the monetary side, the correct flow to shelter from if things materially worsen (sadly looks inevitable) is the dovish RBNZ. After the latest meetings they have opened the window for a game changer on the stimulus front coming in August (via lowering domestic borrowing costs). Consider the situation on the AUD side of the equation: Commodity shortages are entering back into play via the Covid shock which is a prelude towards the monetary crisis. Gold, Iron Ore, Copper and etc all look set for further advance; it will keep the basis for some action to the topside in AUD via collateral. Here tracking closely 0.677x in AUDUSD and 0.637x in NZD as the line in sand for the cross. Look to ride AUDNZD up towards the 1.12 macro targets. As usual thanks all for keeping the feedback coming 👍 or 👎
Long
by ridethepig
AUDNZD - ABC Correction In PlayHello traders, Australia has just moved Melbourne back into stage 3 lockdown for an additional 6 weeks. The AUD has performed extremely well over the past month due to the market pricing in an economic recovery. If other governments feel pressured to copy Victoria we could be set for a second lockdown in numerous parts of the world. This suggests the AUD may come under pressure in the near future. We are now looking to go short on the AUDNZD. From a technical perspective there is a head and shoulders set up in play and an ABC correction from the 5 wave structure higher. Any thoughts or comments please let us know.
Short
by Trading_Tony
ridethepig | GBP/AUD Outlook📍 Overview This chart comes after a conversation with @Alamakota. Brexit move played in this game was triggered in Jun 2016, you will notice on the Q chart how four years after buyers demonstrated a full retrace, before sellers rejected the highs and there we have the winning move. The UK is entering into the house of economic bondage in the ST and MT. Covid has put additional pressure on the pursuit of UK weakness; buyers were forced to flee and risks of a no-deal are rising again. As we discussed together earlier in the year in this Brexit chapter will make it difficult to conjure any reason to hold GBP and as such investors would rather avoid the unnecessary risk. The GBPUSD outlook will be also a function of how much artificial USD devaluation we see from global CB's to help keep EM alive. This makes the preferred vehicles of expressing weaker GBP clear, the connection between GBP vs EUR and JPY will be unprotected. Despite the risk associated with NDB, Downing Street have managed to get this across the line and pushed the UK into the blackhole. This "trap" in wave ii was much praised. The fact that it is a strategic goal to pump and dump the currency was not really considered by anybody. But the goal is and will remain to shake out soft retail hands and not allow any easy entries for the central knee-jerk reactions, while in the long run the crumbling continues. Risks to the thesis come from: => UK softening Brexit tone and looking for possible extensions => China-Australia trade protectionism In our case, short-term and medium-term / daily and weekly charts will come over the weekend as we dig deeper into the set-up. Hope I am wrong but looks like the UK is at the start of a difficult and costly journey. A more natural continuation is expected.
Short
by ridethepig
8
ridethepig | AUD Long-Term Macro Map We shall open the chapter on AUD with the Monthly chart and as usual work our way down towards the inner time frames. The aim for the frontal attack here comes with a double whammy from USD devaluation and Commodity appreciation. AUD buyers are aiming to carry out the deeply laid plan (although it was almost refuted after the Covid crisis) since the macro flows seemed handicapped but now the short-circuit is clear. Things will proceed as follows: 📍 On the USD side.... The key idea. All that has happened up till now was solely and simply to clear the board and unlock the pathway for large hands to get filled. Here we can prepare for the Dollar to begin its journey as planned towards the 75 and 50 targets over the medium and long term. Note that the immediate short-term outlook in DXY is still for a pullback after the latest payrolls, this will be bought as all believe things are right again.... the US had to make a choice between a higher stock market or a higher currency, this was a well orchestrated move from China & Russia right under everyones nose! How keenly the Whitehouse are to describe this as a win is very telling of the desperation! Why? Equities can continue rising and rising but what will the value of the dollar be then? The next example shows the example of how macro flows have been flanking in the background while all the masses are distracted: 📍 On the AUD side .... Expecting very little from the RBA till 2021, a masterstroke from Governor Lowe and Scott Morrison to achieve the liquidity and get borrowing costs down. A lot of uncertainty around the local macro data, forecasts reached extreme readings to the downside so any overshoots are seen as 'positive' or 'less bad'. In exemplary fashion, Lowe has managed to achieve the yield target above without bond purchases all month! Look and marvel! The usual critics will intervene and mutter something about inflation. But it is obvious that what I am admiring is not the way he conducted the rate cycle transition, but rather the performance of the AUD acting as a blockader to China / HK risk. " In Australia, the government bond markets are operating effectively and the yield on 3-year Australian Government Securities (AGS) is at the target of around 25 basis points. Given these developments, the Bank has purchased government bonds on only one occasion since the previous Board meeting, with total purchases to date of around $50 billion. The Bank is prepared to scale-up its bond purchases again and will do whatever is necessary to ensure bond markets remain functional and to achieve the yield target for 3-year AGS. The target will remain in place until progress is being made towards the goals for full employment and inflation. " On the account that RBA avoid negative rates, then maximum pressure will be applied from AUD buyers when commodity shortages enter into play from 2021. Let us take a closer look at Copper: The point of the combination from Gold, Copper, Iron Ore will time the further illustration and lust to expand towards the 0.813x, 0.950x and 1.058x highs in the macro range. As usual we will open the inner flows with Weekly, and Daily charts before working our way into the Hourlies. Thanks for keeping the support coming with likes, comments, charts, questions and etc!
Long
by ridethepig
13
ridethepig | Australian Yields breaking out? Smells like it...I would have preferred it if Aussie Yields could have sought the break for the close last week, the decision to hold up here, rather than forcing the pass is notable that Yield curve control is really coming through. Which is an appendage to the following position in AUD: Those aiming for this macro swing position are effectively trading the artificial Fed control over USD supply side . As long as the printers are on full blast, the move from Fed towards a more lenient Yield curve control playbook will be done in broad daylight, as I have been saying for some time, they were faced with a decision as to whether they wanted a stronger currency or stronger equity market. After witnessing the Whitehouse policies being funded by Keynsian economics it is a disaster for confidence in the LONG RUN for the US. Capital is beginning to slowly migrate towards Europe and Asia. Get used to China and Russia having a larger seat at the table; hence we need to keep a close eye on Australia - China relations as the elephant in the room. What is important in the positional play is not the attack, but rather how price responds at support levels. We are wanting to only add exposure in periods of consolidation, calm waters. Do not let the loud noise and sharp spikes affect your decisiveness.
TVC:AU10YLong
by ridethepig
1