Westpac Trade Summary: Increasing Focus on Antipodean Currencies
Westpac's Currency Strategy: Westpac is focusing on three interconnected trades that suggest a weakening US dollar and a strengthening of antipodean currencies, particularly the Australian and New Zealand dollars.
Aussie Dollar Trade: The primary trade involves a long position on the AUD, with expectations of RBA tightening and favorable market conditions, despite potential risks from Governor Bullock's comments.
Short USD Position: Westpac has initiated a short position on the USD, viewing recent strength as temporary noise, while underlying issues such as valuation and geopolitical concerns continue to undermine the dollar's credibility.
Kiwi Dollar Outlook: Westpac is optimistic about the NZD/USD, having successfully predicted a dip and subsequent rise, and plans to re-enter the market on pullbacks, supported by positive economic indicators from New Zealand.
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Weekly Market Forecast for February 9th-13th
Japanese Yen and Elections: Following Japan's lower house elections, Prime Minister Sanae Takaichi secured a supermajority, strengthening the yen as she aims to tackle cost-of-living issues and enhance national security.
U.S. Economic Data Releases: Key U.S. economic indicators, including retail sales and labor market data, are set to be released this week after delays due to a government shutdown, with expectations of moderate growth and potential easing of inflation pressures.
U.K. GDP Projections: The U.K. is expected to report modest GDP growth figures, with a dovish tone from the Bank of England suggesting possible rate cuts if the data underperforms, amid slowing inflation trends.
Inflation Trends in the U.S.: U.S. inflation is projected to show a decline in headline figures, driven by slower food and fuel price increases, while core inflation may firm due to various economic factors, indicating mixed pressures on consumer prices.
Barclays observes increasing risk premium impacting the US dollar
US Dollar Outlook: Barclays warns that the US dollar is facing increasing downside risks due to a rising risk premium, despite the US economy's strong performance compared to global peers.
Currency Comparisons: The Japanese yen is expected to have more potential for appreciation than the euro, which is already trading at high levels, limiting its upside potential.
Asian Currencies: Several Asian currencies may benefit from ongoing dollar depreciation as global investors diversify their portfolios away from the US, potentially increasing inflows into emerging market assets in Asia.
Monetary Policy Impact: The Federal Reserve's interest rate decisions are crucial for the dollar's direction, with current market expectations reflecting two rate cuts this year, which could significantly influence investor sentiment and positioning.
GBPUSD Approaches 2025 Peaks as Attention Shifts to US Data and BoE Decision
USD Outlook: The US Dollar is rebounding due to strong economic data, with upcoming reports like the US ADP and ISM Services PMI potentially influencing interest rate expectations and further supporting the greenback.
GBP Performance: The British Pound received a boost from better-than-expected UK Flash PMIs, while the Bank of England is expected to maintain the current Bank Rate with a focus on data-driven guidance.
GBPUSD Technical Analysis: The GBPUSD pair has seen a false breakout above 1.3790, with sellers targeting the major trendline around 1.3500, while buyers are expected to support the trendline for potential rallies.
Upcoming Economic Events: Key economic data releases include the US ADP and ISM Services PMI today, the BoE rate decision and US Jobless Claims tomorrow, and the University of Michigan Consumer Sentiment data on Friday.
USD/JPY Pushes Japan's Patience to the Brink This Week
USD/JPY Movement: The USD/JPY currency pair has risen over 100 pips to 156.70, recovering from a drop following speculated 'rate checks' by Japanese authorities, who previously intervened to prevent the pair from exceeding 159.00.
Market Sentiment: The Japanese yen continues to face selling pressure, with a shift towards a more bullish near-term bias for USD/JPY as it breaks above key moving averages, indicating a potential for further upward movement.
Intervention Speculation: There is ongoing speculation about when Japan will intervene in the currency market, especially after previous 'rate checks' have led to actual interventions, with officials possibly waiting for the snap election on February 8 to gauge market reactions.
Impact of Trading Levels: As traders push USD/JPY above the 155.00 mark, it may prompt Japanese officials to consider intervention, reflecting their growing impatience with the currency's performance.
USDJPY Set to Approach Intervention Level as US Economic Data Improves
USD Performance: The US Dollar rebounded due to the nomination of Kevin Warsh as the next Fed chair, with improving labor market data and strong ISM Manufacturing PMI suggesting potential for further gains if upcoming data remains positive.
JPY Outlook: The Bank of Japan maintained interest rates and slightly upgraded growth and inflation forecasts, with expectations for a potential rate hike in April depending on economic data, while the Japanese Yen faces pressure from a strengthening US Dollar.
USD/JPY Technical Analysis: The USD/JPY pair has broken above the 154.50 resistance, with potential to reach 159.00 if support holds; however, a rising wedge pattern on the 1-hour chart indicates possible loss of momentum and a correction.
Upcoming Economic Data: Key upcoming economic indicators include the US ADP, ISM Services PMI, Jobless Claims, and University of Michigan Consumer Sentiment, alongside Japan's lower house election expected to favor the LDP party.
Indian Rupee Strengthens Against Dollar Following Trump's Trade Deal and Tariff Reductions
USD Performance: The US Dollar rebounded due to the nomination of Kevin Warsh as the next Fed chair, with improving labor market data and strong manufacturing PMI suggesting potential for further appreciation if upcoming data remains positive.
INR Developments: The Indian Rupee is on a bearish trend against the US Dollar, but recent tariff reductions announced by President Trump have provided a boost, while the RBI is expected to maintain steady interest rates amid rising inflation.
Technical Analysis - USDINR: The USDINR pair is approaching the bottom trendline on the daily chart, with potential for buyers to step in, while a break below could lead to further bearish movement towards the 89.00 level.
Upcoming Economic Data: Key economic indicators to watch include the US ADP, ISM Services PMI, Jobless Claims, and the RBI rate decision, which could significantly impact market sentiment and currency movements.
Weekly Market Forecast for February 9th-13th
Japanese Yen and Elections: Following Japan's lower house elections, Prime Minister Sanae Takaichi secured a supermajority, strengthening the yen as she aims to tackle cost-of-living issues and enhance national security.
U.S. Economic Data Releases: Key U.S. economic indicators, including retail sales and labor market data, are set to be released this week after delays due to a government shutdown, with expectations of moderate growth and potential easing of inflation pressures.
U.K. GDP Projections: The U.K. is expected to report modest GDP growth figures, with a dovish tone from the Bank of England suggesting possible rate cuts if the data underperforms, amid slowing inflation trends.
Inflation Trends in the U.S.: U.S. inflation is projected to show a decline in headline figures, driven by slower food and fuel price increases, while core inflation may firm due to various economic factors, indicating mixed pressures on consumer prices.
Barclays observes increasing risk premium impacting the US dollar
US Dollar Outlook: Barclays warns that the US dollar is facing increasing downside risks due to a rising risk premium, despite the US economy's strong performance compared to global peers.
Currency Comparisons: The Japanese yen is expected to have more potential for appreciation than the euro, which is already trading at high levels, limiting its upside potential.
Asian Currencies: Several Asian currencies may benefit from ongoing dollar depreciation as global investors diversify their portfolios away from the US, potentially increasing inflows into emerging market assets in Asia.
Monetary Policy Impact: The Federal Reserve's interest rate decisions are crucial for the dollar's direction, with current market expectations reflecting two rate cuts this year, which could significantly influence investor sentiment and positioning.
GBPUSD Approaches 2025 Peaks as Attention Shifts to US Data and BoE Decision
USD Outlook: The US Dollar is rebounding due to strong economic data, with upcoming reports like the US ADP and ISM Services PMI potentially influencing interest rate expectations and further supporting the greenback.
GBP Performance: The British Pound received a boost from better-than-expected UK Flash PMIs, while the Bank of England is expected to maintain the current Bank Rate with a focus on data-driven guidance.
GBPUSD Technical Analysis: The GBPUSD pair has seen a false breakout above 1.3790, with sellers targeting the major trendline around 1.3500, while buyers are expected to support the trendline for potential rallies.
Upcoming Economic Events: Key economic data releases include the US ADP and ISM Services PMI today, the BoE rate decision and US Jobless Claims tomorrow, and the University of Michigan Consumer Sentiment data on Friday.
USD/JPY Pushes Japan's Patience to the Brink This Week
USD/JPY Movement: The USD/JPY currency pair has risen over 100 pips to 156.70, recovering from a drop following speculated 'rate checks' by Japanese authorities, who previously intervened to prevent the pair from exceeding 159.00.
Market Sentiment: The Japanese yen continues to face selling pressure, with a shift towards a more bullish near-term bias for USD/JPY as it breaks above key moving averages, indicating a potential for further upward movement.
Intervention Speculation: There is ongoing speculation about when Japan will intervene in the currency market, especially after previous 'rate checks' have led to actual interventions, with officials possibly waiting for the snap election on February 8 to gauge market reactions.
Impact of Trading Levels: As traders push USD/JPY above the 155.00 mark, it may prompt Japanese officials to consider intervention, reflecting their growing impatience with the currency's performance.
USDJPY Set to Approach Intervention Level as US Economic Data Improves
USD Performance: The US Dollar rebounded due to the nomination of Kevin Warsh as the next Fed chair, with improving labor market data and strong ISM Manufacturing PMI suggesting potential for further gains if upcoming data remains positive.
JPY Outlook: The Bank of Japan maintained interest rates and slightly upgraded growth and inflation forecasts, with expectations for a potential rate hike in April depending on economic data, while the Japanese Yen faces pressure from a strengthening US Dollar.
USD/JPY Technical Analysis: The USD/JPY pair has broken above the 154.50 resistance, with potential to reach 159.00 if support holds; however, a rising wedge pattern on the 1-hour chart indicates possible loss of momentum and a correction.
Upcoming Economic Data: Key upcoming economic indicators include the US ADP, ISM Services PMI, Jobless Claims, and University of Michigan Consumer Sentiment, alongside Japan's lower house election expected to favor the LDP party.
Indian Rupee Strengthens Against Dollar Following Trump's Trade Deal and Tariff Reductions
USD Performance: The US Dollar rebounded due to the nomination of Kevin Warsh as the next Fed chair, with improving labor market data and strong manufacturing PMI suggesting potential for further appreciation if upcoming data remains positive.
INR Developments: The Indian Rupee is on a bearish trend against the US Dollar, but recent tariff reductions announced by President Trump have provided a boost, while the RBI is expected to maintain steady interest rates amid rising inflation.
Technical Analysis - USDINR: The USDINR pair is approaching the bottom trendline on the daily chart, with potential for buyers to step in, while a break below could lead to further bearish movement towards the 89.00 level.
Upcoming Economic Data: Key economic indicators to watch include the US ADP, ISM Services PMI, Jobless Claims, and the RBI rate decision, which could significantly impact market sentiment and currency movements.
