Head of FX Strategy
Summary: The euro is the currency showing the most directional momentum at the moment and has broken lower in nearly every euro pair we track. The late US dollar rally, meanwhile, has cooled as some commodity and EM currencies have bounced here, while sterling has suddenly jolted into action over the last couple of sessions and is worth tracking for potential breakouts today.
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. The Euro downside breakouts dominate the picture in the universe of pairs we track, as nearly every Euro pair has broken lower, today with even EURAUD in play. Note that while the recent USD rally has cooled, EURUSD has made a significant break lower and USDCHF is sniffing at an upside breakout today, while other USD pairs (like AUDUSD, USDCAD and USD/EM pairs) have posted pivot levels that are the next focal point on further broad USD upside.
Finally, we note that sterling is on the move today, especially in the wake of a Boris Johnson cabinet shuffle today and we focus on GBPCHF as an interesting breakout candidate below.
Today’s Breakout Highlight: GBPCHF
The weak euro story is fairly well established at this point, but one of the newest movers in recent sessions, and especially today, is sterling, which has moved sharply higher across the board, especially in the wake of today’s political moves that may be lighting a fire under market anticipation of a large fiscal stimulus announcement at the coming March budget statement. UK yields were sharply higher and sterling was stronger on the day. Besides the recent EURGBP breakdown, we have also seen a reversal (so far) in the recent GBPUSD breakdown and GBPCHF, shown below is eyeing a new 19-day high close, though we are still far, far below the 49-day breakout levels. Interesting to watch CHF as well as GBP here as EURCHF has been on a long grind lower and USDCHF is also mulling a breakout higher on today’s close.
Bond. Long Bond(s)
With real rates being too positive, we see three scenarios: Opportunity to lock in rates at cycle high, government overreach to keep the economy afloat or a complete reset of the economy.
Steen Jakobsen,
Chief Investment Officer
Is a bond bull market ahead? Inflation still poses a risk for investors, but the moment for increasing duration to your portfolio may be approaching towards the end of the year, when central banks might be forced to cut interest rates.
Althea Spinozzi,
Senior Fixed Income Strategist
The furious rate hike cycle has brought gains in the US dollar, but with stagflation risks in Europe and the UK and weakness in the Chinese economy, USD may have more room to run. But a strong dollar could also have repercussions for US growth, emerging markets and commodity prices.
Charu Chanana,
Market Strategist
With the cost of capital rising painfully, stagflation fears are back, illuminating the fragile state of the green transformation, while giving a tailwind to nuclear power, and threatening the growth of AI-related stocks.
Peter Garnry,
Head of Equity Strategy
With supply tightness not only in energy but all commodities, the momentum in commodity prices may continue, pressuring central banks to lower real rates. That could be a good setup for precious metals, including gold, silver and potentially platinum as well.
Ole S. Hansen,
Head of Commodity Strategy
As the pandemic showed, even the US Treasury can experience seismic shifts. With the government increasing the pace of issuing bonds to support fiscal spending, the complex Treasury market and regulatory constraints could spark a liquidity event.
Redmond Wong,
Market Strategist
The tide has turned for bonds. Given the current yields, bonds have become an attractive investment, with added benefits including lower risk than stocks, increased diversification and a steady stream of income unaffected by economic changes.
Peter Siks,
Investment Coach
