something interesting

<  BACK TO Market Analysis

PIG TODAY-USD, EUR, GBP, CHF, CAD, NZD: Weekly Outlook - Morgan Stanley

USD: Bullish Following Fed. Neutral.

We previously saw USD beginning to rally again in the new year. Following the hawkish Fed meeting, we are bringing forward that expected strength and expect USD to rally in line with the themes we have been discussing. The revising up of the 2017 dots and the neutral rate, along with Yellen's pushback on her support for an overheating economy, are all hawkish signs and more reason for the rates market to reprice higher. Next year, major policy initiatives as a result of the US election are likely to be USD positive, including fiscal stimulus, risk of protectionism and corporate tax reform. USD strength will be most pronounced against the low yielders like JPY.

EUR: Making New Lows. Bearish.

Amidst the broad USD strength from a hawkish Fed, EURUSD has reached the lowest level since January 2003, giving it more momentum to the downside. We expect EURUSD could continue to head towards parity driven by USD strength and an accommodative ECB. The ECB allowing purchases of bonds in the 2-year tenor and below the depo rate weakens the EUR by lowering front-end yield differentials – which EURUSD is more sensitive to – and steepening the yield curve which will help bank profitability and encourage the export of capital.

GBP: Potential for Rebound. Bullish.

We maintain the view that GBPUSD could tactically rebound to 1.30/1.31 going into year-end. With the BoE maintaining its neutral stance, coupled with recent UK data such as CPI and retail sales holding up well, the downside in GBP is likely to be capped. GBP also has a high 'hard Brexit' risk premium priced in, and with recent news indicating that this risk is lessening, there is potential for some 'hard Brexit' discount to be priced out. We remain short EUR/GBP.*

CHF: More Strength Tolerated. Neutral.

We continue to look for CHF strength against selected currencies such as JPY. The latest SNB meeting adds further support to our argument that the SNB may be more tolerant of CHF strength. The statement that they will intervene "while taking the overall currency situation into consideration" suggests that they may focus more on the CHF TWI which is not at extreme levels, allowing more room for CHF appreciation. With a busy Eurozone political risk calendar in 2017, CHF could also benefit from safe haven demand.

CAD: Best Performing Commodity Currency. Bullish.

We expect CAD to outperform other commodity currencies. CAD is not as vulnerable as MXN to trade protectionism given a prior free trade agreement which would take effect if the US backs out of NAFTA, though this still remains a risk. However, a better US economic outlook (from other policies like fiscal stimulus) should benefit Canada. Data has remained weak with this week's poor manufacturing sales report following a poor trade report last week. However, last week's BoC meeting provided no surprises and while the Bank pointed out uncertainties around the outlook, it reaffirmed its neutral bias and made clear the bar for easing is high. Poloz noted that it would take a "significant departure" in the outlook for easing, supporting ourview.

NZD: Outperformance vs AUD. Neutral.

We expect NZD to outperform AUD but weaken against USD. New Zealand's economic outlook has improved with high migration and booming housing supporting growth. The half-year update this week from Bill English confirmed this, with growth being revised higher and rising budget surpluses. This is likely to be enough to offset the RBNZ worries over the inflation outlook and, in particular, the exchange rate. However, we don't rule out another rate cut or even FX intervention, though the latter would occur only after substantially more FX appreciation. We expect NZDUSD to continue to depreciate due to the USD rally but we expect NZD outperformance of AUD in the near term unless we see worsening data in New Zealand or dovish rhetoric from the RBNZ.

Source: efxnews.com

USD: Bullish Following Fed. Neutral.

We previously saw USD beginning to rally again in the new year. Following the hawkish Fed meeting, we are bringing forward that expected strength and expect USD to rally in line with the themes we have been discussing. The revising up of the 2017 dots and the neutral rate, along with Yellen's pushback on her support for an overheating economy, are all hawkish signs and more reason for the rates market to reprice higher. Next year, major policy initiatives as a result of the US election are likely to be USD positive, including fiscal stimulus, risk of protectionism and corporate tax reform. USD strength will be most pronounced against the low yielders like JPY.

EUR: Making New Lows. Bearish.

Amidst the broad USD strength from a hawkish Fed, EURUSD has reached the lowest level since January 2003, giving it more momentum to the downside. We expect EURUSD could continue to head towards parity driven by USD strength and an accommodative ECB. The ECB allowing purchases of bonds in the 2-year tenor and below the depo rate weakens the EUR by lowering front-end yield differentials – which EURUSD is more sensitive to – and steepening the yield curve which will help bank profitability and encourage the export of capital.

GBP: Potential for Rebound. Bullish.

We maintain the view that GBPUSD could tactically rebound to 1.30/1.31 going into year-end. With the BoE maintaining its neutral stance, coupled with recent UK data such as CPI and retail sales holding up well, the downside in GBP is likely to be capped. GBP also has a high 'hard Brexit' risk premium priced in, and with recent news indicating that this risk is lessening, there is potential for some 'hard Brexit' discount to be priced out. We remain short EUR/GBP.*

CHF: More Strength Tolerated. Neutral.

We continue to look for CHF strength against selected currencies such as JPY. The latest SNB meeting adds further support to our argument that the SNB may be more tolerant of CHF strength. The statement that they will intervene "while taking the overall currency situation into consideration" suggests that they may focus more on the CHF TWI which is not at extreme levels, allowing more room for CHF appreciation. With a busy Eurozone political risk calendar in 2017, CHF could also benefit from safe haven demand.

CAD: Best Performing Commodity Currency. Bullish.

We expect CAD to outperform other commodity currencies. CAD is not as vulnerable as MXN to trade protectionism given a prior free trade agreement which would take effect if the US backs out of NAFTA, though this still remains a risk. However, a better US economic outlook (from other policies like fiscal stimulus) should benefit Canada. Data has remained weak with this week's poor manufacturing sales report following a poor trade report last week. However, last week's BoC meeting provided no surprises and while the Bank pointed out uncertainties around the outlook, it reaffirmed its neutral bias and made clear the bar for easing is high. Poloz noted that it would take a "significant departure" in the outlook for easing, supporting ourview.

NZD: Outperformance vs AUD. Neutral.

We expect NZD to outperform AUD but weaken against USD. New Zealand's economic outlook has improved with high migration and booming housing supporting growth. The half-year update this week from Bill English confirmed this, with growth being revised higher and rising budget surpluses. This is likely to be enough to offset the RBNZ worries over the inflation outlook and, in particular, the exchange rate. However, we don't rule out another rate cut or even FX intervention, though the latter would occur only after substantially more FX appreciation. We expect NZDUSD to continue to depreciate due to the USD rally but we expect NZD outperformance of AUD in the near term unless we see worsening data in New Zealand or dovish rhetoric from the RBNZ.

Source: efxnews.com

lastest Articles

Market Analysis
British pound volatile as Brexit-vote day arrives
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Quips of Wisdom
Forex Trading Wisdom:- Perfection
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
PAMM News
Managed Forex Accounts Daily Results (14.01.2019)
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Daily Results (14.01.2019)
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY- 14.01.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Fed’s Dovishness Confirmed – Focus Shifts to Brexit and Earning Season
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Quips of Wisdom
Forex Trading Wisdom: Investing
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
Market Analysis
USD/JPY - Fed Will Put Over-Valued USD/JPY In The Cross Hairs
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Daily Results (10.01.2019)
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Quips of Wisdom
Forex Trading Wisdom: Do what you love
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
Market Analysis
FOMC: Caution in mind
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Daily Results (09.01.2019)
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Quips of Wisdom
Forex Trading Wisdom: The goal
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY -09.01.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Daily Results (08.01.2019)
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Quips of Wisdom
Forex Trading Wisdom: Opportunities...
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - 08.01.2018
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Daily Results (07.01.2019)
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Markets Rise After Strong US Jobs Growth with Fed Talking Down Rate Hikes
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Daily Results (03.01.2019)
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Quips of Wisdom
Forex Trading Wisdom: Accepting losses
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY-03.01.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Daily Results (02.01.2019)
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
USD/JPY recovers large part of daily drop on improved sentiment, trades near 109.50
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Quips of Wisdom
Forex Trading Wisdom: The Impossible
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - 02.01.2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Company News
Happy and Prosperous New Year
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Yearly Results - 2018
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Quips of Wisdom
Forex Trading Wisdom: Trade What’s Happening…
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
Market Analysis
FX Today: Markets thin as the new year rolls around
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Dollar might face hard times in 2019
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Oil remains bid after inventories post small decline
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Quips of Wisdom
Forex Trading Wisdom: Never let a win go to your head, or a loss to your heart
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
Market Analysis
EUR/USD eases from weekly tops, still well bid around mid-1.1400s ahead of German CPI
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Dollar slides versus haven currencies as equities renew selling
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Quips of Wisdom
Forex Trading Wisdom: Good Trading
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
Market Analysis
Fed projections are the problem
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Quips of Wisdom
Forex Trading Wisdom:The market is a device for transferring money from the impatient to the patient
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
Market Analysis
Japan’s Nikkei tumbles into a bear market after Wall Street’s latest slide
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Company News
Christmas And New Year Trading Schedule
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Quips of Wisdom
Forex Trading Wisdom: Take your profits
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
Market Analysis
Forex Today: Risk sentiment sees markets drifting mildly higher in the pre-Christmas wind-down
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Weekly Results
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Volatility and Risk Aversion Continue to Dominate December
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Daily Results (20.12.2018)
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Company News
ONDA PAMM - Very Promising PAMM...Could it Be?!
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Daily Results (18.12.2018)
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Cloudy Skies Remain For AUD/USD Into The Fed
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Gold retreats after being unable to break above $1250
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Daily Results (17.12.2018)
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD May Struggle To Rally On Any Fed Dovishness
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
EUR/USD extends the bounce towards 1.1350
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Weekly Results
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Dollar Higher Ahead of Crucial Fed Meeting
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Quips of Wisdom
Forex Trading Wisdom: Control
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY - 14.12.2018
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Quips of Wisdom
Forex Trading Wisdom: Risk Control
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
PAMM News
Managed Forex Accounts Daily Results (13.12.2018)
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Currencies struggle for direction despite Draghi and Trump comments
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY -13.12.2018
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Daily Results (12.12.2018)
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Company News
USD Bank Wire Notice
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
Market Analysis
ECB will say goodbye to quantitative easing, but when will it hike rates?
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Quips of Wisdom
Forex Trading Wisdom:Knowing Your Self
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY- 12.12.2018
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Daily Results (11.12.2018)
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Quips of Wisdom
Forex Trading Wisdom: Personalizing Loses
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY-11.12.2018
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Daily Results (10.12.2018)
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY- 10.12.2018
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Quips of Wisdom
Forex Trading Wisdom: Amateurs vs Professionals
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
Market Analysis
Forex Today: Risk-off extends into Asia, UK monthly GDP – key focus
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Company News
BREXIT - Margin Requirement
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Quips of Wisdom
Forex Trading Wisdom: The Game
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
Market Analysis
Gold retreats from 5-week tops amid a modest USD rebound
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Daily Results (04.12.2018)
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Company News
US National Mourning day Trading Schedule
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY- 04.12.2018
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Quips of Wisdom
Forex Trading Wisdom: Keep it Simple
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
Market Analysis
Breaking: GBP/USD jumps on ECJ opinion that the UK can revoke Article 50 unilaterally
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Daily Results (03.12.2018)
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
GBP/USD fails to preserve gains, calms down below mid-1.27s
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Quips of Wisdom
Forex Trading Wisdom: Your Friend
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY- 03.12.2018
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Weekly Results
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Dollar Looking for Economic Guidance Ahead of Busy Week
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Quips of Wisdom
Forex Trading Wisdom: You are what you do
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
Market Analysis
FOMC to press on with hikes, cautiously
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Daily Results (29.11.2018)
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
US Dollar Tests Trend-Line Support Ahead of FOMC Minutes
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Quips of Wisdom
Forex Trading Wisdom: Risk and Reward
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY- 29.11.2018
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Fed's Powell: Estimates of neutral policy rate, maximum employment highly uncertain
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Quips of Wisdom
Forex Trading Wisdom: Bull and Bear
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
Market Analysis
EUR/USD: On the defensive
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Daily Results (27.11.2018)
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Market Analysis
Forex Today - Sterling falls on Brexit vote worries, Trump weighs in
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
Quips of Wisdom
Forex Trading Wisdom: Move on
https://en.gravatar.com/userimage/34011725/cac48086660b253b9c1e53a8b4a23604.png
Market Analysis
Tech Targets: EUR/USD, GBP/USD, AUD/USD, NZD/USD, USD/JPY -27.11.2018
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613
PAMM News
Managed Forex Accounts Daily Results (26.11.2018)
https://secure.gravatar.com/avatar/b23a9c274f4a28b6ab7acddb98b80613