Synopsis:

Danske Bank provides an analysis of the near-term outlook for the global oil market, noting its resilience in the face of recent geopolitical tensions. Despite Iran's missile and drone attacks on Israel, Brent crude prices have remained stable around USD 90 per barrel. Danske predicts a stabilization in Brent prices at approximately USD 85 per barrel in the near term, influenced by OPEC+ capabilities and potential U.S. actions regarding strategic oil reserves.

Key Points:

• Current Market Stability: Brent crude has demonstrated remarkable stability, maintaining around USD 90 per barrel even amid recent geopolitical upheavals and a significant rally in previous weeks. This stability underscores the market's robustness against geopolitical shocks.

• Role of OPEC+: OPEC+ plays a crucial role in maintaining price stability, possessing significant excess capacity to mitigate potential price spikes. This capacity is particularly vital in scenarios where geopolitical tensions could otherwise lead to price escalations.

• U.S. Strategic Options: The U.S. holds strategic levers that could influence oil prices, including the potential tightening of sanctions on Iranian oil exports or adjustments to the U.S. strategic petroleum reserves. These measures could involve halting purchases or even selling from the reserves to counterbalance disruptions in global oil supplies.

• Impact on Oil-Linked Currencies: The anticipated stabilization of oil prices is expected to cap the near-term upside potential for oil-linked currencies, such as the Norwegian Krone (NOK). This effect reflects the direct relationship between oil price movements and the economic outlooks of oil-exporting nations.

Conclusion:

Danske Bank anticipates a period of relative stability in oil prices, with Brent expected to average around USD 85 per barrel in the near term. This forecast is based on the market's current resilience, strategic capacities of OPEC+, and possible interventions by the U.S. in its oil reserve strategies. Investors and policymakers should monitor these developments closely, as they have significant implications for global energy markets and related currencies.

• USD/JPY is closing the gap on major resistance at 155.00/20

• The 155 figure hurdle is also by the upper 10-wk Bolli

• The weekly ATR-projected top is by 155.20

• As are two 161.8% Fibo objectives off major 2023 lows

• Daily RSIs are the most O/B since 2022, but not bearishly diverging

• Top of rising channel off Dec & Mar lows vs Jan & Feb highs is @156.40 Wed

• A possible backstop if 155.20 is broken above before a correction

For more click on FXBUZ

• NY opened near 1.0625 after 1.06025 traded on EBS overnight, rally extended

• Pair hit 1.06535 with help from EUR/JPY rallying to 164.655 & some US$ sales

• Pair turned down again however, yields US10YT=RR & US$ firmed again

• Comments from Fed Chair Powell helped drive EUR/USD to a fresh 5-month low

• Stocks ESv1 sank and gold XAU= erased some earlier gains

• EUR/USD traded 1.06013 on EBS, was down-0.20% late in the session

• Techs are bearish; RSIs are falling, monthly inverted hammer in place

• For more click on FXBUZ

Synopsis:

Bank of America (BofA) advises investors to consider fading the recent weakness of the Scandinavian currencies—Swedish Krona (SEK) and Norwegian Krone (NOK)—against the Euro (EUR), citing quantitative models and fundamental factors. Both SEK and NOK have shown significant depreciation against the EUR in Q1 2024, but BofA’s analysis suggests these movements may have gone too far, with a potential reversal on the horizon.

Key Points:

• Quantitative Analysis: BofA’s evaluation of EURSEK and EURNOK movements relative to rate differentials, moving averages, and fair values (as derived from dynamic factor models) suggests that both Scandinavian currencies are currently either oversold or undervalued versus the EUR.

• Fundamental Outlook: The bank expects both EURSEK and EURNOK to end the year lower than current levels. This outlook is predicated on the assumption of the Federal Reserve beginning to cut rates by December 2024 and a soft landing scenario in the U.S. economy.

• Supporting Factors for NOK and SEK:

  • NOK: Supported by stable oil prices, resilient economic growth within Norway, and relatively light positioning in the currency market.
  • SEK: Benefits from reduced risks of a hard economic landing in Sweden and the unwinding of previously established short positions against the SEK.

• Risks: While the overall outlook is favorable for the Scandinavian currencies, sticky U.S. inflation and unexpected moves by the Federal Reserve pose potential upside risks to the EUR/Scandies exchange rate forecasts.

Conclusion:

BofA’s analysis indicates a promising opportunity for investors to fade the recent weakness observed in the Scandinavian currencies against the Euro. Given the quantitative and fundamental factors highlighted, there appears to be potential for SEK and NOK to appreciate against the EUR as the year progresses. Investors should monitor key economic indicators and central bank actions, particularly from the Fed, as these will significantly influence the trajectory of these currencies.

Fixes typo in headline

• NY opened near 0.6310, pair rallied above 0.6325 early then turned lower

• US yield US10YT=RR, equity ESv1 drop & buoyant UDS/CNH weighed

• Pair traded to a fresh 5- month low, 0.63975 hit, pair then bounced

• Gold XAU= turned positive, stocks neared flat, USD/CNH neared flat

• AUD/USD bounced above 0.65305, traded down -0.53% late in the session

• Techs are bearish; RSIs are falling, monthly inverted hammer in place

• Australia March composite leading index is a data risk in Asia

• For more click on FXBUZ

Synopsis:

Société Générale (SocGen) projects a potential decline for GBP/USD towards 1.20 following disappointing UK labor market data. The data underscores concerns about weak productivity and inflation persistence, suggesting a challenging economic outlook for the UK, which contrasts starkly with the more robust U.S. economic performance.

Key Points:

• Depressing UK Labor Market Report: The latest labor market data from the UK paints a grim picture, with underlying ex-bonus wage growth remaining high at 6% year-over-year in February, only slightly down from 6.1% the previous month. Additionally, employment figures have dropped significantly, with a 3-month/3-month change showing a decrease of 156,000 jobs.

• Increased Unemployment Rate: The unemployment rate has risen from 4.0% to 4.2%, adding to the economic woes and heightening concerns about the overall health of the UK labor market.

• Monetary Policy Implications: Despite the pressing need for economic stimulation, the Bank of England (BoE) may approach rate cuts cautiously due to persistent wage inflation. SocGen's analysis aligns with comments from BoE MPC member Megan Greene, emphasizing the unique challenges faced by the UK economy compared to the U.S., particularly in terms of productivity and inflation.

• Currency Impact: The weak labor market data and cautious outlook on rate cuts are likely to exert downward pressure on the GBP, particularly against the USD. SocGen sees GBP/USD potentially testing the 1.20 level as market conditions evolve. Meanwhile, EUR/GBP is near the lower end of its range and could see upward movement.

Conclusion:

SocGen forecasts a challenging period ahead for the British pound, particularly against the U.S. dollar, driven by stark contrasts in economic conditions between the UK and the U.S. and the somber implications of the latest UK labor data.

• USD/JPY briefly spiked down from 154.77 to 153.90 on EBS

• No apparent news and move not high volume, so was bought into

• Longs getting jittery as BoJ intervention risk seen high by 155

• But uptrend getting fresh support from rising Tsy yields

• Howver, prices are the most O/B since Oct. 2022's 151.94 peak

• So risk vs reward for new longs a little riskier than on 152 breakout

• Also have twin Fibo objectives at 155.20 as a possible P/T spot

• US data mixed, but Fed speakers keep rate cuts off the table for now

• IMM specs most net long since 2007 also hints at O/B condition

For more click on FXBUZ

Synopsis:

Goldman Sachs highlights the U.S. as the only G10 nation where recent inflation data has exceeded expectations, suggesting potential for continued upward movement in the USD. Despite a favorable cyclical backdrop and currency management strategies that may moderate broad dollar gains, the firm anticipates that currencies sensitive to policy shifts, particularly the EUR, may underperform against the dollar due to this divergence.

Key Points:

• Unique Position of U.S. Inflation: The U.S. stands out among G10 countries with its latest inflation figures surpassing forecasts, marking a significant divergence that could influence currency markets. This is seen as a critical factor driving the relative strength of the USD.

• Impact on Policy-Sensitive Currencies: With inflation pressures mounting, currencies that are particularly sensitive to policy decisions, like the EUR, are expected to lag behind the USD. This trend is likely to persist as markets and central banks navigate these inflationary developments.

• Market and Policy Implications: Recent shifts in the market align with these divergent inflation data points, entering a crucial period for policy decisions that could further influence currency dynamics. Goldman Sachs suggests that this context sets the stage for significant USD advantages in the coming period.

Conclusion:

Goldman Sachs projects continued USD strength based on the unique inflation dynamics in the U.S. compared to other G10 countries. This inflation surprise not only supports a stronger dollar but also sets expectations for the underperformance of policy-sensitive currencies like the EUR. As markets adjust to these realities, Goldman sees a critical period ahead for currency and monetary policy decisions, recommending close monitoring of these developments for investment and trading strategies.

Synopsis:

Credit Agricole reports a notable increase in investor bearishness towards EUR/USD, though significant short positions have not been extensively established in the market. Given recent U.S. economic data and revised Fed rate cut expectations, the bank foresees additional potential declines for the EUR/USD pair, suggesting that current market pricing may not fully reflect these bearish prospects.

Key Points:

• Growing Bearish Sentiment: Recent interactions and market behaviors indicate an increasing bearish sentiment among investors specifically targeting EUR/USD. However, Credit Agricole's positioning indicators show that the market has yet to accumulate significant short positions in EUR/USD.

• Lag in FX Market Adjustments: Although bearish sentiment is evident, FX consensus forecasts have not yet adjusted to align with recent market developments and the bank's more negative outlook on EUR/USD. This suggests that the full extent of potential EUR weakness may not be currently priced into the market.

• Impact of U.S. Economic Data: The unexpected upward trend in U.S. CPI data for the third consecutive month in 2024 has led U.S. rates investors to scale back expectations for imminent Fed rate cuts. This reassessment supports a stronger USD outlook, contributing to potential further downside for EUR/USD.

• Prospects for EUR/USD: While some negative factors impacting EUR/USD may already be reflected in its current pricing, Credit Agricole believes that there are additional downside risks ahead. This perspective is based on the ongoing adjustments in U.S. rate expectations and the broader economic context.

Conclusion:

Despite existing market bearishness towards the EUR/USD, Credit Agricole anticipates further downward movement in the pair, driven by recent shifts in U.S. economic indicators and rate expectations. Investors and market participants are advised to remain vigilant, as the EUR/USD may face additional pressures that are not yet fully accounted for in current market valuations. As such, strategies should consider the potential for continued EUR depreciation in the face of strengthening U.S. economic data and monetary policy adjustments.

• Broader FX option volatility surges amid risk aversion/USD gains

• 1-week GBP/USD implied volatility trades 8.0, 1-month 7.35 - highs since Jan

• 1-month up from 6.8 Monday and post Brexit lows 5.4 mid March

• Risk reversal vol premium for USD calls over puts doubles to high since July

• Shows GBP/USD traders are more wary of GBP/USD downside vs upside

• Cable drops to 1.2409 (5-month low) after disappointing UK jobs data Tues

• Traders alert for UK CPI Wednesday - headline f/c 3.1% vs 3.4% prior

• Overnight expiry implied volatility holds firmer levels around 12.5

• Premium/break-even for straddle is 65 USD pips in either direction

For more click on FXBUZ

• April 16 sees EUR/USD fall to 1.0603 EBS

• EUR/USD drop stretched below 1.0626 base 20-day Bollingers

• The 1.0596 mark is 76.4% Sep-Dec rise, break would target 2023 low 1.0448

• Oversold conditions may lead to minor consolidation ahead deeper drop

• Recoveries unlikely to go much beyond prior 2024 low at 1.0695

• Two big changes to alter the path of FX markets nL2N3GP0MA

• EUR/GBP downside risks pick up, putting key support at 0.85 in focus

• Wider EZ/UK 10-year yield spreads lean in favour of sterling

• Hawkish wage data in UK jobs report will concern BoE officials

• Private sector regular pay growth posts largest monthly rise since May

• Markets slightly reduce BoE easing bets - 2024 cuts = 46bps from 50bps

• However, the bigger focus is on CPI. Particularly services CPI

• A hot CPI print will likely take EUR/GBP through 0.85

• Near-term resistance: 0.8550 (55-DMA), 0.8580-85, 0.8600-05 (200-DMA)

For more click on FXBUZ

• 155.00 is considered to be the true BoJ line-in-the-sand for intervention

• However, some of the recent option trade flow would suggest otherwise

• There's been buyers of options that cover the risk of gains beyond 155.00

• 156, 158 stand out, but a few at 160.00 with sub 3-month expiries

• Big 155.00 option barriers can fuel short gamma/USD/JPY gains if breached

• Topside strike options would cover risk and increase in value above 155.00

• Topside strikes trade at large implied volatility discount to downside

• That discount shows the scale of perceived intervention risk nL2N3GO0FV

• FX warning signals as option risk premiums trade Jan highs nL2N3GP0FD

For more click on FXBUZ

• FX option implied volatility reflects FX realised volatility risk premium

• It's surged from 2+year lows in mid March to highs since Jan across G10 FX

• EUR/USD 1-month implied vol now 2.0 above mid March lows - trades 6.9

• Even 1-year expiry has rallied to 6.9 vs its own 2+year lows around 6.1

• Implied vol premium for EUR puts over calls has also surged

• 1-month risk reversals highest downside vs upside vol premium in a year

• 1.0600 contains large option barriers, break risks deeper declines

For more click on FXBUZ

• Cable drops to 1.2409 (new five-month low) after disappointing UK jobs data

• UK jobless rate 4.2% vs 4.0% forecast; employment down 156k vs +58k f/c

• 1.2423 was Asian session low (pre-UK data). UK wages up 6.0% vs 5.8% f/c

• Cool UK jobs data is boost for doves advocating BoE rate cut before Q3

• Incoming BoE deputy governor Lombardelli to address UK TSC from 0915 GMT

• 1.2400 and 1.2375 (Nov 17 low) are GBP/USD support points. UK CPI Wednesday

• A marginal close below the daily Ichimoku cloud but a doji candle too

• Tight open-close hints at market indecision

• We are holding a short from 0.8568 for 0.8510 with an 0.8580 stop

• A new low of 0.8527 for the current bear run

• Early Tues gains stalling the fall in the 0.8530s

• Key resistance at 0.8551, the 50-day moving average

• May 2 0.8556-57 cloud twist a concern for our short play

  For more click on FXBUZ

• AUD/USD opened -0.31% at 0.6441 after USD moved up on higher US yields nL2N3GO2H7

• AUD/USD came under pressure in early Asia as risk assets sold off nL2N3GP032

• USD/CNH climbed higher to put more pressure on the AUD/USD nL2N3GP02Z

• AUD/USD traded down to 0.6408 before steadying above 0.6410

• There was a muted reaction to mixed China data as GDP beat and IP and Retail sales missed nP8N3FE05DnP8N3FE05C

• AUD/USD support at 76.4 of Oct-Dec rise at 0.6412 proving a bit sticky

• Trend lower is developing and a break below 0.6400 targets Oct low at 0.6271

• Resistance is at 0.6530/35 where the 10 & 21-day MAs converge

• For more click on FXBUZ

Synopsis:

HSBC notes that while the European Central Bank (ECB) and market expectations are currently aligned on starting the rate-cutting cycle in June, the near-term direction of the EUR will likely be influenced by further ECB communications regarding the future trajectory of rates. Upcoming speeches by ECB officials, including President Christine Lagarde, are pivotal as the market assesses the likelihood of additional rate cuts in 2024.

Key Points:

• Alignment on Initial Rate Cuts: Both ECB policymakers and financial markets anticipate the commencement of a rate-cutting cycle by the ECB in June. Any reaffirmations of this timeline in upcoming ECB communications are unlikely to significantly impact the EUR, as this expectation is already priced in.

• Focus on Future Rate Trajectory: The crucial factor for the EUR will be any new guidance on the trajectory of future rate cuts. ECB Governing Council member Simkus recently mentioned the possibility of a follow-up rate cut in July and suggested a greater than 50% likelihood of more than three rate cuts in 2024. These comments have introduced new variables for market consideration.

• ECB President Lagarde's Upcoming Speech: ECB President Christine Lagarde is scheduled to speak on Wednesday, and her remarks will be closely watched for any indications that might suggest a deviation from or confirmation of the anticipated rate path. With the market pricing in a roughly 50% chance of a July rate cut, her comments could be a significant catalyst for EUR movement.

• Market Sensitivity to Rate Expectations: The EUR remains sensitive to shifts in expectations regarding the ECB's rate-cutting strategy. Any signals that suggest an acceleration or deepening of rate cuts beyond the initial June reduction could provoke volatility in the currency's valuation.

Conclusion:

The EUR's near-term trajectory is poised to be heavily influenced by upcoming ECB communications. As market participants look for clarity on the pace and depth of future rate cuts, statements from ECB officials, especially President Christine Lagarde, will be critical in shaping currency strategies. Investors and traders should stay alert to these developments, as they could present opportunities or risks in currency markets.

• AUD/USD testing 76.4 of Oct-Dec 2023 rise at 0.6412 as USD firms in Asia

• A break below 0.6400 targets eventual move to the Oct 26 trend low at 0.6271

• Key China data out shortly with Q4 GDP, March IP and retail sales on tap

• Talk of sellers at 0.6440/45 and more ahead of 0.6500 likely to cap rallies

• For more click on FXBUZ

• USD/KRW soars to new 1.5-yr high 1392.5, last 1391.8

• Major psych barrier 1400.0 becomes a clearer target

• Follows USD/JPY hitting new 34-year peak overnight

• S. Korea to take measures to calm market nP8N3FX01G

• But given USD is broadly stronger, action may be limited

• Strong US retail sales lifted UST yields nL2N3GO13X

• For more click on FXBUZ

• Steady early after closing down 0.05% resilient to the USD closing up 0.2%

• Venture capital investment in UK start-ups fell in Q1 2024 - UK 3rd globally

• UK jobs data leads event risk in London - Employment change RTRS poll +58K

• Strong US retail sales added to the recent strong US data - caps GBP/USD

• Techs; 5, 10 & 21-day moving averages fall, 21-day Bollinger bands expand

• Daily momentum studies slip - last week's fall left a bearish outside week

• Friday's 1.2426 low supports - break targets 1.2368, 0.618% Oct-March rise

• The 1.2498 London high and the 1.2558 top on Friday are initial resistance

  For more click on FXBUZ

• -0.15% amid broad USD strength on strong retail sales and safe-haven demand

• Yield spreads widened, 10yr bund +8bp to 2.431%, 10yr UST +13bp to 4.628%

• ECB's chief economist Philip Lane said inflation is heading back to 2%

• The disparity in the US and EU economic performance weighs on EUR/USD

• Charts - daily momentum studies fall, 21-day Bollinger bands expand

• 5, 10, and 21-day moving averages slide - bearish daily and weekly charts

• 1.0665 early European high and prior 1.0695 2024 base are first resistance

• 1.0620 New York and 2024 low then 1.0594, .786 of the Oct-Dec rise support

• 1.0650 801mln and 1.0660/70 2.597BLN close significant strikes for April 16

  For more click on FXBUZ

• AUD/USD opens -0.31% as US yields rose and risk-aversion persisted nL2N3GO28AnL2N3GO2H7

• AUD/USD made a fresh 2024 low at 0.6438 and there is no bounce

• Next support is at the 76.4 of the Oct-Dec 2023 rise at 0.6412

• Resistance is at 0.6535 where the 10 & 21-day MAs converge

• Sellers are tipped ahead of 0.6500 to cap rallies

• China Q4 GDP along with March retail sales and IP to be released today

• For more click on FXBUZ

Synopsis:

ING emphasizes the significance of the upcoming release of key UK economic data, including February wage and March services figures, in determining the trajectory of the Bank of England's (BoE) potential easing cycle in 2024. With market expectations of a June rate cut currently low, any surprises in the data could have substantial effects on the value of sterling.

Key Points:

• Key Data Releases: This week, the UK will release crucial economic data with February's wage figures due on Tuesday and March's services data on Wednesday. These reports are pivotal in assessing the economic health of the UK and the potential for monetary easing by the BoE.

• Impact on Monetary Policy: Analyst James from ING is slightly more optimistic than the consensus regarding the upcoming services CPI data. A confirmation of his forecast could support sterling, signaling a more robust economic outlook than currently priced into the market.

• Market Pricing and Sterling Vulnerability: Current market pricing indicates only a 31% expectation of a BoE rate cut in June. Consequently, any negative surprises in the wage or services data could adversely impact sterling. Particularly, GBP/USD is noted as appearing vulnerable, with potential downside targets around the 1.2365/75 range.

• EUR/GBP Stability: Despite potential volatility, the EUR/GBP exchange rate remains stable, currently trading within a mid-range between 0.85 and 0.86.

Conclusion:

This week's economic data releases are crucial for shaping market expectations regarding the BoE's monetary policy direction in 2024. With sterling appearing vulnerable to negative data surprises, these releases could potentially prompt significant movements in currency markets.