Head of FX Strategy
Summary: The US dollar is at it again, but at it in slow-motion as it pushes to new local highs in several places without showing much momentum, to the frustration of momentum traders everywhere. Today we focus most on GBPUSD downside risks.
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. Note that EURUSD nominally broke lower yesterday by posting a new 19-day and 49-day low close, although the obvious focus is on the 1.1000 level and a more convincing break. USDCHF also broke higher yesterday and GBPUSD has broken lower as of this writing. Among other USD pairs within the G10, USDCAD is poised right at resistance and NZDUSD is close to an important breakdown level as well – also in the longer term perspective.
We also note the AUDNZD attempt higher into interesting levels locally around 1.0450, although the longer term picture will require a bit more from the pair to mark a larger breakout. In EM, note that while many EM currencies have taken some heart from the strength in risk appetite, USDTRY is having a look at breakout levels to the upside once again and USDSGD has been ripping higher after Singapore’s monetary authority suggested it would allow a weakening outside the normal band.
Today’s Breakout Highlight: GBPUSD
GBPUSD is trading heavily below the 19-day low close today, although the nominal intraday levels of note are bit lower at 1.2941 and 1.2905. If the pair pushes through these levels we could be looking toward the 200-day moving average next as the market feels ill-prepared for the long wait for the trade deal with the EU to take shape – actually the key hurdle for improving business sentiment, more than the December election result.
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.
