Scotiabank: Still bearish on USD/CAD exchange rate
The slide in US to Canadian Dollar exchange rate has found some support recently as momentum to the downside has slowed in a slightly better risk environment as fears over an imminent confrontation between the US and Russia over Syria abated.
Forex strategists at Scotiabank are maintaining their altogether bearish view on the currency pair, in particular as the price is trading below two key momentum indicators with 1.2500 a key psychological target to the downside which may act as relevant support,
“Bearish—USDCAD consolidated overnight but USD gains have only just about recovered the losses seen following the break under support in the low 1.26s yesterday.
"At beast, price action suggests a pause ahead of another push lower; price action is trading below major and intermediate moving averages (200– and 40-day) and we continue to target 1.2500/05 as the downside objective following the late Mar break under a Head & Shoulders trigger.
"We look for resistance intraday at 1.2625/30 and for losses to pick up speed again under 1.2580.”
Above: USD/CAD 90-day chart. Full historical data and chart here.
Danske Bank: Euro to Swiss Franc exchange rate at risk of move lower
Five straight days of gains for the Euro against the Swiss Franc saw EUR/CHF exchange rate rising towards 1.19.
The pair is now pushing into fresh multi-year highs and is now at its highest level since 2015.
The SNB will undoubtedly be delighted that the Franc continues to struggle and that their “overvalued” rhetoric continues to weigh heavy on their haven currency.
FX analysts at Danske Bank believe the worsening economic data in the Eurozone may cause a broader loss of momentum in the Euro exchange rates and push EUR/CHF lower,
“EUR/CHF jumped yesterday to post-SNB-floor-abandonment highs on what appears to be CHF outflows related to the ceasing of trading with Sulzer, a company partly owned by sanctioned Russians.
"The cross has come a long way since early March and as the ECB increasingly has to consider the loss of cyclical momentum in the euro zone and the impairment of consumer and investor confidence deriving from the trade issue as Draghi pointed to yesterday.
"In this setting EUR/CHF could prove vulnerable to the downside near term , even if we still think the SNB will want to see the pair higher before a ‘policy exit’”
Above: EUR/CHF 90-day chart. Full historical data and chart here.
ING: Swedish Krona (SEK) exchange rates to recover further post inflation
The Swedish Krona fell markedly once again against the Euro as EUR/SEK leapt strongly briefly peaking above 10.400 before correcting later in the day.
Euro weakness on exchange rate markets didn’t help the trade-weighted Krona, but the inflationary miss in the CPI as it missed forecasts at 1.9%, was the main catalyst for the selloff even if it was a 0.3%.
Economists at ING believe that trade wars are a particular threat to the Swedish economy and are thus bearish the SEK,
“We look for a lower EUR/SEK, but SEK gains should be bound by the EUR/SEK 10.2000 support level, due in part to the ongoing overhang of global trade wars to which SEK is particularly vulnerable given the openness of the local economy and its leverage towards global growth“
Above: EUR/SEK 90-day chart. Full historical data and chart here.
Maybank: Buy Australian Dollar (AUD/USD) Exchange Rate on dips
The Australian Dollar has largely been tracking risk sentiment recently, and much like USD/CAD exchange rate has moved essentially sideways over the last few days.
With China trying very hard to push a conciliatory tone with the US, making several key concessions, it seems possible that there is some more upside for the Aussie if Trump backs off some of his more aggressive rhetoric.
Forex strategists at Maybank believe while the upside for the AUD has slowed it is still a buy on any fresh weakness,
“AUDUSD hovers around 0.7760, (23.6% fibo retracement of 2018 high to low).
"We think upsides could be a grind now as this pair remains within the descending wedge that has formed since the start of the year.
"A break of the 0.7788- resistance, marked by the 100-DMA could be a bullish signal and a breakout of the descending wedge.
"Daily momentum is bullish while stochastics is rising.
"MACD bullish divergence as previously flagged out appears to be coming into play.Bias remains to buy on dips.”
Above: AUD-USD 90-day chart. Full historical data and chart here.