FX Daily Wrap – mundane Monday trade


Off best levels, but still firm just below 94.000 on the Trump fiscal policy ticket, and awaiting news on the next Fed chair that could arrive sooner than November 3rd.



Ending the first session of the week as the weakest vs the Usd amongst majors, despite firm expectations that the ECB will announce QE tapering details on Thursday. The Spain-Catalonia spat continues to weigh on sentiment, with the regional parliament planning to consider its response to Article 155 also on Thursday. Note, 2 prominent northern Italian states voted overwhelmingly for more autonomy as well. Eur/Usd hit a low of 1.1734, just above chart support at 1.1730 and option expiries at the same level. On a break, bids are expected an intervals down to 1.1700, while the next tech supports come in at 1.1670 (low from Oct 6th) and then 1.1660 (100 DMA).


Some consolidation and respite after much heavier losses in wake of PM Abe’s landslide election victory over the weekend that paves the way for him to continue his expansionary policies. The safe haven Jpy (and Chf for that matter) was hit hard as renewed risk appetite propelled the Nikkei to fresh 2 decade peaks. Usd/Jpy briefly scaled 114.00 before slipping back towards 113.50 chart support and a series of option expiries down to 113.00.


Also softer vs the Greenback, as BoC rate hike expectations dwindle further ahead of this week’s policy meeting and last week’s poor retail sales data.


Sterling still bucking the overall trend, with Cable hugging the 1.3200 level on a combination of near term BoE tightening expectations and hopes of constructive Brexit negotiations after UK PM May’s spox said the final EU divorce bill could be tweaked. However, offers are seen capping the pair from 1.3200-1.3220, and the 200 HMA.


The Kiwi clawed back some lost ground, as Nzd/Usd steered clear of the 0.6900 level and some option expiries drew some attention away from the new Labour-led (but First Party made) Government coalition. 250 mn at 0.6950 rolled off today, and 750 mn awaits at 0.7000 on Wednesday, but the latter could be a strike too far if sellers resurface in the interim.

23 Oct 2017 - 15:32- Forex- Source: ransquawk

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