flexianalysis
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My name is Rana Adnan and i am social media and marketing manager of flexianalysis. I will post our technical/fundamental analysis and discuss trading opportunities and setbacks here. Thanks
Flexianalysis
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flexianalysis
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Eurusd intraday: Key resistance at 1.079.
EURUSD INTRADAY: KEY RESISTANCE AT 1.079.
Our Preference Short positions below 1.079 with targets @ 1.0705 & 1.067 in extension.
Alternate Scenario Above 1.079 look for further upside with 1.083 & 1.086 as targets. Comments As long as 1.079 is resistance, look for choppy price action with a bearish bias.
S1 1.0705
S2 1.067
S3 1.0625
R1 1.079
R2 1.083
R3 1.086
EURUSD INTRADAY: KEY RESISTANCE AT 1.079.
Our Preference Short positions below 1.079 with targets @ 1.0705 & 1.067 in extension.
Alternate Scenario Above 1.079 look for further upside with 1.083 & 1.086 as targets. Comments As long as 1.079 is resistance, look for choppy price action with a bearish bias.
S1 1.0705
S2 1.067
S3 1.0625
R1 1.079
R2 1.083
R3 1.086
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Aud/usd intraday: 0.715 in sight.
Pivot 0.7055
Our Preference Long positions above 0.7055 with targets @ 0.715 & 0.717 in extension.
Alternate Scenario Below 0.7055 look for further downside with 0.7015 & 0.6975 as targets.
Comments The RSI calls for a new upleg.
S1 0.7055
S2 0.7015
S3 0.6975
R1 0.715
R2 0.717
R3 0.7195
Pivot 0.7055
Our Preference Long positions above 0.7055 with targets @ 0.715 & 0.717 in extension.
Alternate Scenario Below 0.7055 look for further downside with 0.7015 & 0.6975 as targets.
Comments The RSI calls for a new upleg.
S1 0.7055
S2 0.7015
S3 0.6975
R1 0.715
R2 0.717
R3 0.7195
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NZDUSD INTRADAY: THE BIAS REMAINS BULLISH.
Pivot 0.653
Our Preference Long positions above 0.653 with targets @ 0.659 & 0.6625 in extension.
Alternate Scenario Below 0.653 look for further downside with 0.65 & 0.6475 as targets.
Comments Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
S1 0.653
S2 0.65
S3 0.6475
R1 0.659
R2 0.6625
R3 0.6645
Pivot 0.653
Our Preference Long positions above 0.653 with targets @ 0.659 & 0.6625 in extension.
Alternate Scenario Below 0.653 look for further downside with 0.65 & 0.6475 as targets.
Comments Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
S1 0.653
S2 0.65
S3 0.6475
R1 0.659
R2 0.6625
R3 0.6645
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Nzd down as focus shifts to aussie
The New Zealand dollar was lower Thursday as traders soured on the currency in favor of a resurgent Australian dollar.
The Aussie dollar jumped after data showing a sharp drop in the Australian unemployment rate in October. The jobs surge was enough to see markets trim back expectations of further interest rate cuts by the Reserve Bank of Australia.
Unemployment in Australia fell to a seasonally adjusted 5.9% in October, from 6.2% in September, as the number of new jobs created in the month soared by 58,600, of which two-thirds were full-time positions.
The strength of the data was enough to prompt some forecasters to abandon expectations of further rates cuts by the Reserve Bank of Australia.
At times considered one of the more downbeat forecasters on the Australian economy, Goldman Sachs said it now sees no change in the official cash rate until 2017.
Previously, Goldman had been forecasting a further 50 basis points of cuts in coming months.
At 5:20 a.m. GMT, the New Zealand dollar was at US$0.6548, from US$0.6576 late Wednesday. Earlier, it traded around a high of US$0.6577.
Sean Callow, currency strategist at Westpac, said the only explanation for the weakness in the New Zealand dollar was traders reassessing the central bank outlook in Australia.
The Australian dollar surged against the New Zealand dollar after the jobs data. It climbed from around NZ$1.075 to NZ$1.0910.
Mr. Callow said fair value for the cross currently looks to be NZ$1.11 to NZ$1.12. Further support should come to the cross amid confident bets that the Reserve Bank of New Zealand will cut interest rates next month.
The New Zealand dollar was lower Thursday as traders soured on the currency in favor of a resurgent Australian dollar.
The Aussie dollar jumped after data showing a sharp drop in the Australian unemployment rate in October. The jobs surge was enough to see markets trim back expectations of further interest rate cuts by the Reserve Bank of Australia.
Unemployment in Australia fell to a seasonally adjusted 5.9% in October, from 6.2% in September, as the number of new jobs created in the month soared by 58,600, of which two-thirds were full-time positions.
The strength of the data was enough to prompt some forecasters to abandon expectations of further rates cuts by the Reserve Bank of Australia.
At times considered one of the more downbeat forecasters on the Australian economy, Goldman Sachs said it now sees no change in the official cash rate until 2017.
Previously, Goldman had been forecasting a further 50 basis points of cuts in coming months.
At 5:20 a.m. GMT, the New Zealand dollar was at US$0.6548, from US$0.6576 late Wednesday. Earlier, it traded around a high of US$0.6577.
Sean Callow, currency strategist at Westpac, said the only explanation for the weakness in the New Zealand dollar was traders reassessing the central bank outlook in Australia.
The Australian dollar surged against the New Zealand dollar after the jobs data. It climbed from around NZ$1.075 to NZ$1.0910.
Mr. Callow said fair value for the cross currently looks to be NZ$1.11 to NZ$1.12. Further support should come to the cross amid confident bets that the Reserve Bank of New Zealand will cut interest rates next month.
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Dollar flat against yen
The dollar was almost flat against the yen during Asia trade Thursday, with brightened sentiment prompting selling of the Japanese currency and its perceived safety, which offset dollar selling by investors looking to lock in profits.
Meanwhile, the Australian dollar jumped against its rival currencies following a sharp drop in the nation’s unemployment rate.
Around 0450 GMT, the U.S. dollar was at Y122.88, compared with Y122.86 late Wednesday in New York.
Earlier in the session, the U.S. currency was drifting lower, tracking the overnight selling pressure with investors booking profits on the currency’s recent gains. But a late-morning rise in the Nikkei Stock Average, albeit at only a moderate pace, helped brighten the mood, prompting yen selling that pushed the dollar to as high as Y123.04. The benchmark Nikkei was up 0.01% midday.
Investors are becoming more convinced that the U.S. Federal Reserve will raise short-term rates in December. However, they still aren’t fully confident about the U.S. central bank’s timetable, said Marito Ueda, director at FX Prime by GMO.
That is why investors “still have found it difficult to embark on a major offensive,” by taking strong dollar-long positions, he said. “But they still feel they can’t sell the currency of the nation potentially aiming to raise rates,” another reason causing the dollar to remain trapped in a narrow range against the yen this week, he said.
Investors are looking to see if Fed officials including Chairwoman Janet Yellen later Thursday will offer any hints about the central bank’s plans for its December policy-setting meeting.
The Australian dollar jumped to $0.7142 and Y87.75, respectively, from $0.7061 and Y86.75 after Australia’s unemployment rate fell to a lower-than-expected seasonally adjusted 5.9% in October from 6.2% in September. Economists had been expected a rate of 6.2%.
Among other currency trade pairs, the euro was higher against the U.S. currency on short covering after a mixture of hawkish and dovish comments regarding possible monetary-policy decisions at the European Central Bank’s Dec. 3 meeting.
ECB governing council member Ardo Hansson said in an interview with The Wall Street Journal there was no need currently for the ECB to reduce its policy rates, including the deposit rate.
The euro grew to $1.0762 midday from $1.0743 late Wednesday. The common currency was at Y132.25 from Y131.98.
The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was down 0.17% at 90.08.
The dollar was almost flat against the yen during Asia trade Thursday, with brightened sentiment prompting selling of the Japanese currency and its perceived safety, which offset dollar selling by investors looking to lock in profits.
Meanwhile, the Australian dollar jumped against its rival currencies following a sharp drop in the nation’s unemployment rate.
Around 0450 GMT, the U.S. dollar was at Y122.88, compared with Y122.86 late Wednesday in New York.
Earlier in the session, the U.S. currency was drifting lower, tracking the overnight selling pressure with investors booking profits on the currency’s recent gains. But a late-morning rise in the Nikkei Stock Average, albeit at only a moderate pace, helped brighten the mood, prompting yen selling that pushed the dollar to as high as Y123.04. The benchmark Nikkei was up 0.01% midday.
Investors are becoming more convinced that the U.S. Federal Reserve will raise short-term rates in December. However, they still aren’t fully confident about the U.S. central bank’s timetable, said Marito Ueda, director at FX Prime by GMO.
That is why investors “still have found it difficult to embark on a major offensive,” by taking strong dollar-long positions, he said. “But they still feel they can’t sell the currency of the nation potentially aiming to raise rates,” another reason causing the dollar to remain trapped in a narrow range against the yen this week, he said.
Investors are looking to see if Fed officials including Chairwoman Janet Yellen later Thursday will offer any hints about the central bank’s plans for its December policy-setting meeting.
The Australian dollar jumped to $0.7142 and Y87.75, respectively, from $0.7061 and Y86.75 after Australia’s unemployment rate fell to a lower-than-expected seasonally adjusted 5.9% in October from 6.2% in September. Economists had been expected a rate of 6.2%.
Among other currency trade pairs, the euro was higher against the U.S. currency on short covering after a mixture of hawkish and dovish comments regarding possible monetary-policy decisions at the European Central Bank’s Dec. 3 meeting.
ECB governing council member Ardo Hansson said in an interview with The Wall Street Journal there was no need currently for the ECB to reduce its policy rates, including the deposit rate.
The euro grew to $1.0762 midday from $1.0743 late Wednesday. The common currency was at Y132.25 from Y131.98.
The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was down 0.17% at 90.08.
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Gold spot intraday: Key resistance at 1096.
Pivot 1096
Our Preference Short positions below 1096 with targets @ 1082 & 1079 in extension. Alternate Scenario Above 1096 look for further upside with 1103 & 1111 as targets. Comments As long as 1096 is resistance, look for choppy price action with a bearish bias.
S1 1082
S2 1079
S3 1072
R1 1096
R2 1103
R3 1111
Pivot 1096
Our Preference Short positions below 1096 with targets @ 1082 & 1079 in extension. Alternate Scenario Above 1096 look for further upside with 1103 & 1111 as targets. Comments As long as 1096 is resistance, look for choppy price action with a bearish bias.
S1 1082
S2 1079
S3 1072
R1 1096
R2 1103
R3 1111
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Hey, thanks for the feedback. Yeah, it has to touch 1082 Supply level most probably. once it tests this level, hopefully a pullback.
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Gbp/jpy intraday: Caution.
Pivot 186.25
Our Preference Long positions above 186.25 with targets @ 187.1 & 187.5 in extension.
Alternate Scenario Below 186.25 look for further downside with 185.8 & 185.3 as targets.
Comments Intraday technical indicators are mixed and call for caution.
S1 186.25
S2 185.8
S3 185.3
R1 187.1
R2 187.5
R3 188
Pivot 186.25
Our Preference Long positions above 186.25 with targets @ 187.1 & 187.5 in extension.
Alternate Scenario Below 186.25 look for further downside with 185.8 & 185.3 as targets.
Comments Intraday technical indicators are mixed and call for caution.
S1 186.25
S2 185.8
S3 185.3
R1 187.1
R2 187.5
R3 188
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Eur/usd intraday: The bias remains bullish.
Pivot 1.0745
Our Preference Long positions above 1.0745 with targets @ 1.083 & 1.086 in extension.
Alternate Scenario Below 1.0745 look for further downside with 1.0705 & 1.067 as targets.
Comments Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
S1 1.0745
S2 1.0705
S3 1.067
R1 1.083
R2 1.086
R3 1.089
Pivot 1.0745
Our Preference Long positions above 1.0745 with targets @ 1.083 & 1.086 in extension.
Alternate Scenario Below 1.0745 look for further downside with 1.0705 & 1.067 as targets.
Comments Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
S1 1.0745
S2 1.0705
S3 1.067
R1 1.083
R2 1.086
R3 1.089
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USD flat ahead of US retail sales
The U.S. dollar was flat against the yen in quiet Asia trade on Friday as investors refrained from taking lopsided positions ahead of key U.S. data later the day.
Around 0450 GMT, the dollar was at 122.61 yen, compared with Y122.62 late Thursday in New York.
The dollar had tracked a bout of selling overnight after comments by Federal Reserve officials dashed market hopes for stronger signals for a December rate increase.
Risk sentiment worsened slightly amid weakness in Tokyo stocks, with the benchmark Nikkei Stock Average down 0.8% at midday.
But the U.S. currency pared some of its earlier losses as “appetite for (dip) buying still remains strong amid expectations for a rate hike,” said Minori Uchida, head of Tokyo global markets research at Bank of Tokyo-Mitsubishi UFJ.
Still, investors mostly sat on the sidelines ahead of U.S. October retail-sales data.
Federal Reserve Bank of New York President William Dudley on Thursday declined to comment on the timing of a rate increase, though he said it was getting closer and that future rate increases would likely come at a slow pace.
Fed Vice Chairman Stanley Fischer said Thursday a strong dollar had already delayed the Fed’s interest-rate increase, but said it “may be appropriate” for the central bank to begin raising rates next month.
Mr. Uchida said expectations for a Fed rate increase often worsens risk sentiment, especially because of the debilitating effect of U.S. monetary tightening on emerging economies.
This causes a higher dollar but also helps strengthen the yen, widely considered a safe haven in times of financial instability. As a result, “the dollar doesn’t go much higher against the yen,” said Mr. Uchida, making it top heavy around Y123 or Y124.
The euro declined to $1.0792 midday from $1.0808 late Thursday. It was at Y132.32 from Y132.52 previously.
The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was up 0.08% at 90.06.
The U.S. dollar was flat against the yen in quiet Asia trade on Friday as investors refrained from taking lopsided positions ahead of key U.S. data later the day.
Around 0450 GMT, the dollar was at 122.61 yen, compared with Y122.62 late Thursday in New York.
The dollar had tracked a bout of selling overnight after comments by Federal Reserve officials dashed market hopes for stronger signals for a December rate increase.
Risk sentiment worsened slightly amid weakness in Tokyo stocks, with the benchmark Nikkei Stock Average down 0.8% at midday.
But the U.S. currency pared some of its earlier losses as “appetite for (dip) buying still remains strong amid expectations for a rate hike,” said Minori Uchida, head of Tokyo global markets research at Bank of Tokyo-Mitsubishi UFJ.
Still, investors mostly sat on the sidelines ahead of U.S. October retail-sales data.
Federal Reserve Bank of New York President William Dudley on Thursday declined to comment on the timing of a rate increase, though he said it was getting closer and that future rate increases would likely come at a slow pace.
Fed Vice Chairman Stanley Fischer said Thursday a strong dollar had already delayed the Fed’s interest-rate increase, but said it “may be appropriate” for the central bank to begin raising rates next month.
Mr. Uchida said expectations for a Fed rate increase often worsens risk sentiment, especially because of the debilitating effect of U.S. monetary tightening on emerging economies.
This causes a higher dollar but also helps strengthen the yen, widely considered a safe haven in times of financial instability. As a result, “the dollar doesn’t go much higher against the yen,” said Mr. Uchida, making it top heavy around Y123 or Y124.
The euro declined to $1.0792 midday from $1.0808 late Thursday. It was at Y132.32 from Y132.52 previously.
The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was up 0.08% at 90.06.
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Dollar gains against Euro after Eurozone slow economy
Snapshot:
-EUR/USD at 1.0753-56; 10-year Treasury yield at 2.304%; stock futures mostly flat; Nymex at $41.73; gold at $1082.30
-Watch for: U.S. retail sales; producer prices; University of Michigan Survey of Consumers; Bank of Canada’s Wilkins speech; earnings from J.C. Penney, Aimia, Power Financial
-News: Eurozone Economy Slows as Exports Weaken; Fischer: Strong Dollar Delayed Rate Rise, but Fed Could Move in December; Global Oil Demand Growth to Slow in 2016, IEA Says
Markets Outlook:
Forex:
The dollar was stronger by midmorning in Europe, with the WSJ Dollar Index recently up 0.2% at 90.16.
The euro fell 0.5% against the dollar to trade at 1.0768, after data showed the German economy slowed in the third quarter, even though its French counterpart returned to growth.
The dollar was flat against the yen in quiet Asia trade as investors mostly sat on the sidelines ahead of U.S. October retail-sales data.
Ahead, Friday’s report on October retail sales will give clues about the mood of consumers heading into the crucial holiday shopping season. Car sales have been on a tear, but purchases outside of the auto sector have been sluggish. The economy’s fourth-quarter growth will hinge largely on consumer spending, especially given the beating manufacturers are taking from the weak global economy.
Meanwhile, a producer price index will hint at the direction of overall inflation. Federal Reserve officials have signalled they want to be confident that inflation is heading toward their 2% annual target before raising interest rates.
Bonds:
The yield on the benchmark 10-year U.S. Treasury note was last at 2.304%. Short-term Treasury yields inched traded near their highest level in five years Thursday, as investors continued to sell U.S. government debt in anticipation of an interest-rate increase by the Fed in December.
New York Fed President William Dudley on Thursday declined to comment on the timing of a rate increase, though he said it was getting closer and that future rate increases would likely come at a slow pace.
Fed Vice Chairman Stanley Fischer said a strong dollar had already delayed the Fed’s interest-rate increase, but said it “may be appropriate” for the central bank to begin raising rates next month.
Japanese 10-year government bonds were unchanged.
Equities:
U.S. stock futures struggled for direction early Friday after heavy losses in the previous session.
Stocks in Europe were slightly lower. The Stoxx Europe 600 dropped 0.2% to 371.60 by midmorning. It faces a 2.2% decline for the week, which was dogged by investor worries about slowing global growth and the possibility of an U.S. interest-rate increase next month.
In London, the FTSE 100 was headed for its biggest weekly loss since Sept. 4, down 0.3% as health care, technology and consumer-oriented shares moved lower.
Asian bourses fell sharply amid a drop in commodities prices. Australia’s S&P/ASX 200, which heavily depends on commodity exports, was down 1.5%, Hong Kong’s Hang Seng was down 2.1% and the Shanghai Composite Index was down 1.4%.
Commodities:
Oil prices rebounded in Europe as investors were bargain hunting after oil’s steep losses this week, but a bearish outlook for next year by a top energy watchdog kept prices under pressure.
Brent crude rose 1.3% to $45.80 a barrel. On the NYME, West Texas Intermediate futures were trading up 0.5% at $41.96. Both benchmarks fell to their lowest level since end of August on Thursday.
Spot gold prices were hovering near five-and-a-half year lows in Europe, trading down 0.1% at $1,083.88 on concerns the Fed will raise U.S. interest rates in December. “Given weakness across the commodities, further weakness in gold prices now seems likely,” says William Adams at Fastmarkets.
Snapshot:
-EUR/USD at 1.0753-56; 10-year Treasury yield at 2.304%; stock futures mostly flat; Nymex at $41.73; gold at $1082.30
-Watch for: U.S. retail sales; producer prices; University of Michigan Survey of Consumers; Bank of Canada’s Wilkins speech; earnings from J.C. Penney, Aimia, Power Financial
-News: Eurozone Economy Slows as Exports Weaken; Fischer: Strong Dollar Delayed Rate Rise, but Fed Could Move in December; Global Oil Demand Growth to Slow in 2016, IEA Says
Markets Outlook:
Forex:
The dollar was stronger by midmorning in Europe, with the WSJ Dollar Index recently up 0.2% at 90.16.
The euro fell 0.5% against the dollar to trade at 1.0768, after data showed the German economy slowed in the third quarter, even though its French counterpart returned to growth.
The dollar was flat against the yen in quiet Asia trade as investors mostly sat on the sidelines ahead of U.S. October retail-sales data.
Ahead, Friday’s report on October retail sales will give clues about the mood of consumers heading into the crucial holiday shopping season. Car sales have been on a tear, but purchases outside of the auto sector have been sluggish. The economy’s fourth-quarter growth will hinge largely on consumer spending, especially given the beating manufacturers are taking from the weak global economy.
Meanwhile, a producer price index will hint at the direction of overall inflation. Federal Reserve officials have signalled they want to be confident that inflation is heading toward their 2% annual target before raising interest rates.
Bonds:
The yield on the benchmark 10-year U.S. Treasury note was last at 2.304%. Short-term Treasury yields inched traded near their highest level in five years Thursday, as investors continued to sell U.S. government debt in anticipation of an interest-rate increase by the Fed in December.
New York Fed President William Dudley on Thursday declined to comment on the timing of a rate increase, though he said it was getting closer and that future rate increases would likely come at a slow pace.
Fed Vice Chairman Stanley Fischer said a strong dollar had already delayed the Fed’s interest-rate increase, but said it “may be appropriate” for the central bank to begin raising rates next month.
Japanese 10-year government bonds were unchanged.
Equities:
U.S. stock futures struggled for direction early Friday after heavy losses in the previous session.
Stocks in Europe were slightly lower. The Stoxx Europe 600 dropped 0.2% to 371.60 by midmorning. It faces a 2.2% decline for the week, which was dogged by investor worries about slowing global growth and the possibility of an U.S. interest-rate increase next month.
In London, the FTSE 100 was headed for its biggest weekly loss since Sept. 4, down 0.3% as health care, technology and consumer-oriented shares moved lower.
Asian bourses fell sharply amid a drop in commodities prices. Australia’s S&P/ASX 200, which heavily depends on commodity exports, was down 1.5%, Hong Kong’s Hang Seng was down 2.1% and the Shanghai Composite Index was down 1.4%.
Commodities:
Oil prices rebounded in Europe as investors were bargain hunting after oil’s steep losses this week, but a bearish outlook for next year by a top energy watchdog kept prices under pressure.
Brent crude rose 1.3% to $45.80 a barrel. On the NYME, West Texas Intermediate futures were trading up 0.5% at $41.96. Both benchmarks fell to their lowest level since end of August on Thursday.
Spot gold prices were hovering near five-and-a-half year lows in Europe, trading down 0.1% at $1,083.88 on concerns the Fed will raise U.S. interest rates in December. “Given weakness across the commodities, further weakness in gold prices now seems likely,” says William Adams at Fastmarkets.
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ECB QE loosing its power
As investors gear up for more stimulus from the European Central Bank, short-term bonds in the eurozone are on a tear, but investors are much more cautious about longer-dated debt.
That reflects two things. First, investors are increasingly confident that the region’s economy will continue its slow, steady recovery. But it also indicates that the ECB’s bond-buying program, known as quantitative easing, is losing its power to pack a punch in markets.
Earlier this year, when the ECB made clear it would launch a quantitative-easing program, eurozone bonds of all stripes went on a massive rally. Now, even though ECB chief Mario Draghi has indicated more stimulus is coming, the reaction has been less sweeping.
“The belief that QE will lift bonds across the board has run its course, ” said Chris Wightman, a senior portfolio manager at Wells Fargo Asset Management, which manages $496 billion of assets.
The yield on German two-year debt–the eurozone’s benchmark for heavily-traded short-term bonds–sank to an all-time low of minus 0.37% on Friday, after ECB boss Mario Draghi a day earlier reiterated that the central bank may ease policy at its next meeting in December. Two-year yields–which fall as prices rise–are deep in negative territory in a range of countries inside the currency bloc, meaning investors are paying more than ever before to park their cash for two years.
Longer-term yields, by contrast, are well above the record lows they touched in April shortly after the ECB launched quantitative easing. Germany’s 10-year finished Thursday at 0.58%, having fallen as far as 0.07% earlier in the year.
A vicious selloff later in the second quarter stung many of the investors who had piled into aggressive bets on government bonds.
Mr. Draghi said earlier in November that the ECB will consider expanding or lengthening its bond-buying program in December. He also said the central bank will consider a further reduction in interest rates, some of which are already negative.
The rally in short-term debt–where yields tend to closely mirror expectations for short-term interest rates–suggest the second of these measures is having a more powerful impact, according to Mr. Wightman.
Many banks, already under pressure from regulators to buy piles of high-rated government debt, are likely to put money into the bond market rather than pay to store it at the ECB.
But the prospect of a rate increase from the Federal Reserve–which is now widely expected in December and has lifted bond yields in the U. S.–is deterring some would-be buyers of long-term eurozone bonds.
Mr. Wightman said he prefers to buy 10-year U.S. Treasurys, which currently yield 2.31%, rather than their German counterparts.
Investors also point to a sluggish but persistent economic recovery in the eurozone, which should eventually drive up inflation from ultralow levels. Any prospect of rising prices, which erode the value of long-term debt, would make low-yielding German debt an even less appealing proposition.
Indeed, a durable rise in long-term yields could actually signal success of quantitative easing, given that the program is designed to boost inflation back to the central bank’s target.
For fund managers, owning 10-year bonds now yielding little more than 0.5% means “you are scarcely covering your management fee,” according to Russel Matthews, a portfolio manager at BlueBay Asset Management, which manages around $60 billion.
Mr. Matthews favors riskier and higher-yielding euro-denominated bonds issued by countries including Mexico, Croatia and Bulgaria over German debt. Those bonds should benefit from an easing of fears over global growth, he said.
Investors are also chastened by their experience earlier in the year, when the massive eurozone bond rally snapped back violently in April and May, wiping out many funds’ gains for the year.
“Investors got burned quite badly in the volatility earlier this year. As a result they’re less inclined to chase yields lower,” Mr. Matthews said.
As investors gear up for more stimulus from the European Central Bank, short-term bonds in the eurozone are on a tear, but investors are much more cautious about longer-dated debt.
That reflects two things. First, investors are increasingly confident that the region’s economy will continue its slow, steady recovery. But it also indicates that the ECB’s bond-buying program, known as quantitative easing, is losing its power to pack a punch in markets.
Earlier this year, when the ECB made clear it would launch a quantitative-easing program, eurozone bonds of all stripes went on a massive rally. Now, even though ECB chief Mario Draghi has indicated more stimulus is coming, the reaction has been less sweeping.
“The belief that QE will lift bonds across the board has run its course, ” said Chris Wightman, a senior portfolio manager at Wells Fargo Asset Management, which manages $496 billion of assets.
The yield on German two-year debt–the eurozone’s benchmark for heavily-traded short-term bonds–sank to an all-time low of minus 0.37% on Friday, after ECB boss Mario Draghi a day earlier reiterated that the central bank may ease policy at its next meeting in December. Two-year yields–which fall as prices rise–are deep in negative territory in a range of countries inside the currency bloc, meaning investors are paying more than ever before to park their cash for two years.
Longer-term yields, by contrast, are well above the record lows they touched in April shortly after the ECB launched quantitative easing. Germany’s 10-year finished Thursday at 0.58%, having fallen as far as 0.07% earlier in the year.
A vicious selloff later in the second quarter stung many of the investors who had piled into aggressive bets on government bonds.
Mr. Draghi said earlier in November that the ECB will consider expanding or lengthening its bond-buying program in December. He also said the central bank will consider a further reduction in interest rates, some of which are already negative.
The rally in short-term debt–where yields tend to closely mirror expectations for short-term interest rates–suggest the second of these measures is having a more powerful impact, according to Mr. Wightman.
Many banks, already under pressure from regulators to buy piles of high-rated government debt, are likely to put money into the bond market rather than pay to store it at the ECB.
But the prospect of a rate increase from the Federal Reserve–which is now widely expected in December and has lifted bond yields in the U. S.–is deterring some would-be buyers of long-term eurozone bonds.
Mr. Wightman said he prefers to buy 10-year U.S. Treasurys, which currently yield 2.31%, rather than their German counterparts.
Investors also point to a sluggish but persistent economic recovery in the eurozone, which should eventually drive up inflation from ultralow levels. Any prospect of rising prices, which erode the value of long-term debt, would make low-yielding German debt an even less appealing proposition.
Indeed, a durable rise in long-term yields could actually signal success of quantitative easing, given that the program is designed to boost inflation back to the central bank’s target.
For fund managers, owning 10-year bonds now yielding little more than 0.5% means “you are scarcely covering your management fee,” according to Russel Matthews, a portfolio manager at BlueBay Asset Management, which manages around $60 billion.
Mr. Matthews favors riskier and higher-yielding euro-denominated bonds issued by countries including Mexico, Croatia and Bulgaria over German debt. Those bonds should benefit from an easing of fears over global growth, he said.
Investors are also chastened by their experience earlier in the year, when the massive eurozone bond rally snapped back violently in April and May, wiping out many funds’ gains for the year.
“Investors got burned quite badly in the volatility earlier this year. As a result they’re less inclined to chase yields lower,” Mr. Matthews said.
flexianalysis
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Eur/usd intraday: The downside prevails.
Pivot 1.077
Our Preference Short positions below 1.077 with targets @ 1.067 & 1.0625 in extension.
Alternate Scenario Above 1.077 look for further upside with 1.083 & 1.086 as targets. Comments As long as 1.077 is resistance, look for choppy price action with a bearish bias.
S1 1.067
S2 1.0625
S3 1.06
R1 1.077
R2 1.083
R3 1.086
Pivot 1.077
Our Preference Short positions below 1.077 with targets @ 1.067 & 1.0625 in extension.
Alternate Scenario Above 1.077 look for further upside with 1.083 & 1.086 as targets. Comments As long as 1.077 is resistance, look for choppy price action with a bearish bias.
S1 1.067
S2 1.0625
S3 1.06
R1 1.077
R2 1.083
R3 1.086
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Usd/jpy intraday: Capped by a negative trend line.
Pivot 123.05
Our Preference Short positions below 123.05 with targets @ 122 & 121.6 in extension.
Alternate Scenario Above 123.05 look for further upside with 123.4 & 123.6 as targets.
Comments As long as 123.05 is resistance, look for choppy price action with a bearish bias.
S1 122
S2 121.6
S3 121.35
R1 123.05
R2 123.4
R3 123.6
Pivot 123.05
Our Preference Short positions below 123.05 with targets @ 122 & 121.6 in extension.
Alternate Scenario Above 123.05 look for further upside with 123.4 & 123.6 as targets.
Comments As long as 123.05 is resistance, look for choppy price action with a bearish bias.
S1 122
S2 121.6
S3 121.35
R1 123.05
R2 123.4
R3 123.6
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Gbp/usd intraday: The bias remains bullish.
Pivot 1.517
Our Preference Long positions above 1.517 with targets @ 1.524 & 1.5275 in extension.
Alternate Scenario Below 1.517 look for further downside with 1.514 & 1.5095 as targets.
Comments The next resistances are at 1.524 and then at 1.5275.
S1 1.517
S2 1.514
S3 1.5095
R1 1.524
R2 1.5275
R3 1.531
Pivot 1.517
Our Preference Long positions above 1.517 with targets @ 1.524 & 1.5275 in extension.
Alternate Scenario Below 1.517 look for further downside with 1.514 & 1.5095 as targets.
Comments The next resistances are at 1.524 and then at 1.5275.
S1 1.517
S2 1.514
S3 1.5095
R1 1.524
R2 1.5275
R3 1.531
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flexianalysis
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Usd/chf intraday: The bias remains bullish.
Pivot 1.002
Our Preference Long positions above 1.002 with targets @ 1.0095 & 1.0125 in extension.
Alternate Scenario Below 1.002 look for further downside with 0.999 & 0.9945 as targets.
Comments The RSI lacks downward momentum.
S1 1.002
S2 0.999
S3 0.9945
R1 1.0095
R2 1.0125
R3 1.015
Pivot 1.002
Our Preference Long positions above 1.002 with targets @ 1.0095 & 1.0125 in extension.
Alternate Scenario Below 1.002 look for further downside with 0.999 & 0.9945 as targets.
Comments The RSI lacks downward momentum.
S1 1.002
S2 0.999
S3 0.9945
R1 1.0095
R2 1.0125
R3 1.015
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flexianalysis
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Aud/usd intraday: The bias remains bullish.
Pivot 0.708
Our Preference Long positions above 0.708 with targets @ 0.715 & 0.717 in extension.
Alternate Scenario Below 0.708 look for further downside with 0.704 & 0.7015 as targets.
Comments Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
S1 0.708
S2 0.704
S3 0.7015
R1 0.715
R2 0.717
R3 0.7195
Pivot 0.708
Our Preference Long positions above 0.708 with targets @ 0.715 & 0.717 in extension.
Alternate Scenario Below 0.708 look for further downside with 0.704 & 0.7015 as targets.
Comments Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
S1 0.708
S2 0.704
S3 0.7015
R1 0.715
R2 0.717
R3 0.7195
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flexianalysis
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Eur/gbp intraday: Key resistance at 0.7075.
Pivot 0.7075
Our Preference Short positions below 0.7075 with targets @ 0.701 & 0.6975 in extension.
Alternate Scenario Above 0.7075 look for further upside with 0.71 & 0.713 as targets.
Comments As long as 0.7075 is resistance, look for choppy price action with a bearish bias.
S1 0.701
S2 0.6975
S3 0.695
R1 0.7075
R2 0.71
R3 0.713
Pivot 0.7075
Our Preference Short positions below 0.7075 with targets @ 0.701 & 0.6975 in extension.
Alternate Scenario Above 0.7075 look for further upside with 0.71 & 0.713 as targets.
Comments As long as 0.7075 is resistance, look for choppy price action with a bearish bias.
S1 0.701
S2 0.6975
S3 0.695
R1 0.7075
R2 0.71
R3 0.713
