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Macro trading ideas ...

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US employment to be release on Friday. What to expect?

#31
80 straight months of job gains.
The US non farm payroll has increased for 80 consecutive months. Tomorrow it is expected to make that number 81.
  • The average gain over the 80 months is 197K.
  • The average over the last 12 months is 189K
  • The average over the last 3 months is 121K. That is the lowest 3 month average since June 2012 (5 years ago).
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G20 Summit: Putin says IMF needs further reforms

#32
Russia intends to further participate in global energy harmonization, price volatility reduction
call on G20 nations to join forces to fight terrorism
views Paris climate accord as basis for long-term co-operation

Swiss Forex First Timers Deposit Most in May 2017

#34
Switzerland was the best market for forex brokers in May, as new Swiss clients were the biggest spenders.

The latest report from the Finance Magnates Intelligence Department the retention automation firm CPattern shows that Switzerland was the best market for getting new deposits on the global forex trading map during the month of May 2017.

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Euro Surges To 2-Year High In 'Bipolar' Draghi Reaction; Futures Flat

#35
"Draghi tried to talk the Euro down, even going so far as to suggest that ECB’s quantitative easing could be increased and prolonged," said Swissquote Bank's Yann Quelenn. "But the currency markets were not buying Draghi’s line, and neither are we. Available bonds are too scarce, and turn to a taper is too clear to disguise."

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The 6 different elements of FX positioning and sentiment

#36
Has the EUR rallied too far, too fast, and is a reversal now imminent?
To answer this we look at six different elements of FX positioning and sentiment across three different types of investment horizons and styles.

Fast moving - speculative investors:

  • FX positioning: long EUR positions have increased but this in itself does not mean a pullback is imminent
  • FX options: relative call-put prices and call strike levels do not yet suggest the market believes in a much stronger EUR

Medium paced - portfolio managers:

  • Portfolio flows: no investment pick-up into Europe yet, after years of outflows
  • Equity market conviction: funds remain underweight on European equities relative to history

Slower moving - reserves holdings:

  • Reserves managers: EUR holdings are at multi-year lows, and not rising yet
  • Consensus forecasts: the sell-side does not appear to have become more bullish on the EUR yet; if anything, consensus is showing a lack of conviction
The fast money has become more positive on EUR but not to such a degree that it implies a pull-back is imminent. Meanwhile, the slower moving investors have shown little sign of turning more bullish. If they start to follow the speculators' lead, then EUR-USD could move significantly higher. We maintain a forecast of 1.20 for EURUSD by year-end.

JPM Develops A.I. Robot To Execute High Speed Trades, Put Humans Out Of Work

#37
JPMorgan will soon be using a "first-of-its-kind robot" to do away with carbon-based traders altogether and execute trades across its global equities algorithms business using a "robot" after a recent trial of JPM's new artificial intelligence (AI) programme showed it was "much more efficient than traditional methods of buying and selling", the FT reports.

JPM Develops A.I. Robot To Execute High Speed Trades, Put Humans Out Of Work

Euro Forecasts at UniCredit Raised: EUR/USD seen Towards 1.25, GBP/EUR Could go Below 1.11

#38
UniCredit Bank announce a material upgrade to their forecasts for the Euro against the Dollar while maintaining a negative view on the British Pound.

Analyst Kathrin Goretzki, an FX Strategist with UniCredit Bank in London says the Euro is finally starting to recover from years of undervaluation - an undervaluation largely brought about by policies put in place at the European Central Bank.

The ECB has printed money in under its quantitative easing programme and slashed interest rates to record lows in order to try and stimulate the Eurozone’s economy. A side-effect is a materially undervalued Euro.

Now that traders are seeing a future free of quantitative easing at the ECB and higher interest rates, a “correction of fundamental EUR/USD undervaluation is gathering pace and is likely to be completed by the end of next year,” says Goretzki.

UniCredit when they expect the EUR/USD exchange rate to reach its fair value estimate of 1.25.

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EUR/USD: A Test & Break Break Above 1.20 Looks 'Increasingly Likely'

#39
The EUR continues to ramp higher against the USD with a potential test and break back above key resistance at the 1.2000-level looking increasingly likely in the coming months.

The latest economic data releases from the euro-zone are unlikely to turn the tide. The ECB will have been pleased yesterday by the upside inflation surprise in July which saw the annual rate of core inflation tick higher by 0.1 point to 1.2%. It provides further tentative evidence that underlying inflation pressures are beginning to gradually firm although it still remains uncomfortably below their target.

From that perspective the sharp strengthening the euro if sustained is unwelcome and could prompt a downgrade to their inflation outlook which favours only a very gradual pace of policy normalization in the coming years.

EUR/USD - 'conditions for a EUR breakout are not yet met'

#40
An outlook for the euro from Barclays' quarterly strategy
  • We continue to believe that the conditions for a EUR breakout are not yet met
  • The current move likely is an extension of and shift higher in the range due to a decline in perceived euro area risks and the prospective removal of 'insurance' monetary policy
  • The USD remains about 9-12% overvalued and consistent with a cyclical peak, but it is 8% off its recent peak and extended horizon range trading is typical at inflection points
  • Measures of returns to capital suggest a narrowing of the US advantage and pickup in Europe, but the shift to EUR leadership has not yet happened
  • The ECB's and Fed's respective measures of spare capacity suggest that the euro area's output gap should continue to act as a drag on returns to capital throughout our forecast horizon, as well as provide a sustained carry advantage for the USD in both nominal and real terms. We expect the USD's already significant policy rate advantage to increase over our forecast horizon, as the Fed steadily tightens policy amid building capacity pressures, while the ECB retains some QE and negative nominal rates throughout our forecast horizon
More:
  • Our own proprietary client flow shows a mixed picture by investor segment in positioning, as leveraged clients have moved to a sizeable net short in EURUSD. There has been a significant reduction in actual and perceived risks in the euro area.


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