Foreign Exchange
US Dollar Index has based near term and we look for a challenge of the 2011 resistance line at 75.59. EUR/USD has failed at the 78.6% retracement and risk has shifted to the downside – target 1.4010 then 1.3526
Are we approaching a period of more sustained AUD/USD weakness? AUD Trade weighted index looks to have topped.
One to go back on the radar – EUR/SEK is basing but has been for a while – why the interest now????
EUR/TRY has topped – Wedge, key week reversal and divergence all suggest we adopt a strategy of sell the rally (also a 13 count on the TD Combo).
Fixed Income
Bund has reached the 200 day ma, allow for move to 126.50/73. Expect initial failure here. EU 5Y swap – Support at 2.69 eroded, target 2.56
EU 210 swap curve – Downtrend breached, the market is widening short term – this is viewed as a correction only.
US T-Notes September 10Y T-Notes near the significant 124-035/15 resistance area. US swap curve – maintain narrowing bias.
JGB – Continues to be capped by the 140.85/141.23 resistance zone.
Commodities and Other Markets
Spot gold – The May high is still not expected to be bettered,. NYMEX Crude oil -4 month uptrend at 98.21 is exposed. Tight coiling price action increases downside risk
Commodity Markets tend to come under pressure in the latter half of the year. Seasonality declines after July, markets are sidelined at best
The ITRAXX 5Y crossover is seen reversing higher, having overcome the 2010 low at 383.31. This has neutralised our medium term forecast.
We issue 2 new trade ideas today – sell EUR/TRY and sell NYMEX Crude oil August contract
Commerzbank Corporates & Markets
Technical Research