Head of FX Strategy
Summary: The euro is producing the most fireworks in rallying here across the board as global equity markets melt lower, while the yen is proving halting in its movements. Elsewhere, commodity FX is under pressure, led by oil-sensitive NOK and CAD pairs.
Today’s Breakout monitor
The FX Breakout Monitor is a concise PDF overview of all current and recent price breakouts for the short and medium term for major FX pairs and spot silver and gold.
A PDF of today’s Breakout Monitor
Below is a snapshot of the full list of currency pairs we track for the breakout monitor. We employ a 50-day EMA for measuring the ATR and the market energy is finally showing more signs of building as some ATRs have risen to more neutral levels – like GBP pairs, for example, while precious metals have entered the “warm zone” joined by EURNOK and as the first G10 pair to do so in recent days. Note the extreme weakness in EM here continuing, especially RUB, but also oil-linked G10 currencies NOK and CAD.
The new developments of note include new all-time highs in EURNOK (note NOKSEK as well), EURCAD on the cusp of a breakout and USDCAD likewise breaking to new local and medium-term highs today. GBPJPY and AUDJPY are the first JPY pairs eyeing new downside breakouts, with AUDJPY breaking lower yesterday.
Today’s Breakout Highlight: EURCAD
Today’s biggest mover within the G10 space is EURCAD, as the firmer Euro may be on the basis of massive yield compression all along the curve relative to US treasury yields recently, but also as the euro may have been the funding currency of choice for carry trades against higher yielding EM currencies and investments in US tech giants (and hedging of new long EU equity exposure). Regardless, this is quite an impulse of EUR strength and will bear watching in coming days and weeks.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
