Daily Comment

Daily Comment,

Impressive round-trip movement of the USD during the Asian session.

The Steve Bannon subpoena by Attorney General Mueller and the fears of a possible "shutdown" due to the lack of agreement of the American Congress, caused a new wave of sales of the USD that has led to mark new highs in the EURUSD at 1.2323 and lows in USDJPY at 110.20, a move that has been quickly corrected to return to the levels of yesterday's session.

The psychological barrier of 110 in the USDJPY has served as support especially after the statements of the Japanese government showing some concern for the appreciation of the JPY

It seems that the upward movement in the European currency begins not to satisfy the ECB that is coming to the fore in different ways in recent days trying to relax expectations. According to sources from the monetary authority, they do not plan to modify the "forward guidance" at the next week meeting. In addition, french Villeroy commented that the strength of the currency is a factor to be taken into account in order to achieve the inflation target. On the other hand, Weidmann said in an interview that a rise in mid-2019 could be appropriate (compared with the expectations that are at the beginning of 2019) and Constancio this morning has stressed that it is still far from achieving the inflation targets of the 2%.

Therefore, we recommend caution after the rally seen at the start and end of last year in the single currency, which could have overreacted with a clear divergence in monetary policy between Europe and the US, with a EUR long positioning at hisorial highs, that could lead investors to take profit.

The Central Bank of Canada meeting will be carefully watched today. The market discounted today`s rise with an 85% probability and another three additional ones until the end of the year, which would make it the more "hawkish" Central Bank. We could find today an upward movement in rates but a "dovish" message for the market to reduce its expectations, which will cause a strong impact on the CAD that against the USD that has left more than 3% in the last month.

Take profit in short USDJPY at 110.25 opened at 112.90
Long USDCAD at 1.2435 - TP 1.2750 - SL 1.2350


Note: This analysis is a personal opinion based on my experience, not a professional signal service. For trading, you must base your decisions on your own criteria

Daily Comment

Daily Comment,

The upward trend of the EURUSD continues after a movement that started on Wednesday with the publication of the ECB minutes from the december meeting.

The single currency managed to break the 2017 highs at 1.2090 after the agreement reached in Germany to form a new government. The positive data published on Friday in the United States of inflation, a tenth higher than expected, and the upward revision of the retail sales did not support the dollar doing three years low at the American close for the DXY Index, and with the EURUSD breaching the 1.22 level.

Note that the movement is weak USD and not so strong EUR, as can be seen in crosses such as the EURGBP which maintains the levels of last week or against crosses such as AUD or NZD that have corrected, but are still far from the december highs.
The GBP was also strongly demanded against the USD, with levels not seen since the night of the Brexit, breaking the last year highs at 1.3660.
Finally the USDJPY, which also has drilled the low of november last year with the gazes placed on the psychological barrier of the 110.

Part of the weakness of the American currency comes from the movement of the Chinese Yuan that continues to appreciate returning to two-year highs. Measures adopted last week, seemed aimed at stabilizing the currency, finally ended the week with a rise of 2%.

USDCNH vs EURUSD (Inverse) - great inverse correlation

German Weidmann's statements at the end of the European session on Friday, which justifies a gradual withdrawal of stimulus, but noting that the upward movement in rates is still far away, seems a message intended to try to reduce the strength of the euro, and lower expectations with some analysts anticipating the first rise of the ECB by the end of this year.
These levels of the European currency could cause some concerns and see a more aggressive language from the members of the monetary authority to avoid a quick appreciation.

Technically the break of the 2017 highs would lead us to the long-term bearish trend in the area of ​​1.25 / 26 now becoming 1.20 in the important support.

EURUSD Weekly - long term downside trend 

Today, bank holiday in the United States, we have a session without relevant data.

Long USDCAD at 1.2435 - TP 1.2750 - SL 1.2350
Short USDJPY 112.90 - TP 110.25 - SL 114.25


Note: This analysis is a personal opinion based on my experience, not a professional signal service. For trading, you must base your decisions on your own criteria

Daily Comment

Daily Comment,

After several unsuccessful attempts to overcome the 1.21 level in the EURUSD we are now in a correction / consolidation phase that should find support at the 1.1940 levels and lower at 1.1880.

This correction of the euro is also favored by the fall and break of important levels against some crosses such as the AUD, the NZD (which return to November levels), the JPY or the GBP, with a generalized drop in the volatility that returns to 2014 levels for the case of the year in the EURUSD. Additionally, the long speculative positioning on euros has reach the highs of 2013, which is another obstacle for the bulls in the European currency.

During the night the USDJPY has corrected more than half a figure after being reported the cut in the JGB (Japanese bonds) purchasing program of 10bn JPY in 0-25 years and 25-40 tenors. Some investors interpret this movement as a first signal towards a gradual exit from the QE of the BoJ.

Highlight Bostic statements (with voting rights), its base scenario is two to three additional hikes this year also highlighting some prudence for low inflation.

Another pending issue within the Fed is the White House's vice president's nomination. Apparently Richard Clarida and Mohamed El-Erian would be the most likely candidates to succeed Fischer.

The day comes without considerable macro data highlighting the appearance of Kashkari of the Fed (16: 00h without the right to vote).

Buy USDCAD at market 1.2435 - TP 1.2750 - SL 1.2350
Sell USDJPY at market 112.90 - TP 110.25 - SL 114.25

Note: This analysis is a personal opinion based on my experience, not a professional signal service. For trading, you must base your decisions on your own criteria

Summary of the year

Here you have the annual P&L of our recommendations. There have not been many but  the profitability obtained seems very acceptable.

* P&L is calculated with 1M Euros spot trades

Will try to make more next year....

Good luck for 2018!

Note: This analysis is a personal opinion based on my experience, not a professional signal service. For trading, you must base your decisions on your own criteria

Take profit in EURGBP short recommendation

Yesterday we took profit at 0.8800 in our short EURGBP recommendation opened last October 20th at 0.9000.

The cross is just in the upside trend from Dec 2015. Ahead of the SuperThursday with the BoE and the IR this week it could be broken (if any hawkish signs from Carney are seen) with next support on the 0.85 zone.

Note: This analysis is a personal opinion based on my experience, not a professional signal service. For trading, you must base your decisions on your own criteria

Daily Comment

Daily Comment,

At the beginning of the European session we say a "Risk off" movement without a clear catalyst coinciding with the 30th anniversary of the 1987 crack, the famous black Monday as a backdrop. Movement towards safe havens like the JPY or CHF that corrected considerably and with stock American futures in red. Little by little the movement corrected to find us now practically at the same levels where we began yesterday's session.

The Budget approval by the US Senate has attracted demand for USD, next step will be the approval of the long awaited tax reform.

Yesterday's President Trump's brief meeting with Janet Yellen strengthen even more Jerome Powell as her favourite successor, which would mean keeping the same line in rates as the current Federal Reserve.
Just as a reminder of Trump's comments during the 2016 campaign, saying that "They're keeping rates artificially low", we are seeing again a President who differs a lot between his campaign proposals and the measures that he is currently carrying out.

The Euro demand continues against its main crosses, especially JPY, CHF and GBP. EURCHF has set new highs during the Asian session at 1.1630, levels not seen since the floor was withdrawn in January 2015.

Nevertheless, we continue to hold 1.17/1.19 range in the EURUSD and 111.50/113.50 in the USDJPY.

On Sunday the presidential elections will take place in Japan where, with a high probability, the current president Shinzo Abe will win again. We expect some volatility in the Asian opening this weekend especially in the crosses against the yen if the survey forecasts are not fulfilled .

H&S formation in the Daily EURUSD graph. To nice to be true. 1.1650 level to watch on the downside to confirm.

Sell ​​EURGBP 0.90 - TP 0.88 - 0.91

Note: This analysis is a personal opinion based on my experience, not a professional signal service. For trading, you must base your decisions on your own criteria

Daily Comment

Daily Comment,

Yesterday was a transition day ahead of the holidays in the USA and Japan.

Investors will be looking at the possible unilateral declaration of independence from Catalonia and consequently the Spanish State response, with a clear impact on the stock market and Spanish debt as well as the euro.

USD lost ground despite the good data published last week (ISM, NfP and unemployment rate) in a more technical correction than a trend change that in the case of the EURUSD could take us over 1.18/1.1850

The polls in Japan continue supporting the current President Abe for the 22th elections. We continue to see an asymmetric risk in the election event, if the current status quo is maintained, the JPY would weaken, although not having a large majority the appreciation of the Japanese currency would be much more important, with the replacing of Kuroda (President of the BoJ) and probably modifying the current stimulus program.

Yesterday the modification of the last salary data, because of a computer error with wages up from 1.6% to 2.4% give support to the GBP. The market discounts near 80% probability for a rate increase in the November meeting and an additional for the whole year 2018, so there would be scope to allocate more rises next year with the consequent support to the GBP.

USDCNH (white/blue) vs EURUSD (orange, inverse). Really good inverse correlation because of the currency diversification from the Bank of China.

If USDCNH contiue the downtrend will give support to the EURUSD

Stop profit executed at 1.1750 in short EURUSD position, opened at 1.20

Note: This analysis is a personal opinion based on my experience, not a professional signal service. For trading, you must base your decisions on your own criteria