G10 Themes:
Oil Implications for FX:
– Fundamentals, technical picture, and Fed policy supportive for oil
– The rebound in oil prices should support AUD, CAD, and NOK
– Correlations between AUD, CAD, NOK and oil remain strong
EURUSD: New upside risks from eurozone credit crunch:
– Our 1.50 2012 EURUSD forecast remains intact
– FOMC likely to drive next leg of the move higher
– Eurozone banking sector deleveraging entails additional upside euro risks
Look to Sell USDCAD:
– Recent CAD underperformance should reverse as oil prices remain firm and as rate spreads should remain supportive despite the recent dovish BoC statement
– A move by the FOMC to signal rates remaining low for longer with US data outperforming should help the CAD
– We would look at opportunities to sell USDCAD on any rebounds
FX Technical Analysis:
– USDSEK continues its falling scenario for 6.39/6.3959
– COPPER due to rise further if it breaks above 7652.20 neckline
FX Recommendations:
– Short USDJPY from 77.40 targeting 72.00
Market Sentiment & Positioning:
– Our proprietary BNP Paribas sentiment indicator has shown a rapid reversal of fortunes for the USD
– Latest CFTC report suggests EURUSD rally likely driven by position unwinding
– BNP Paribas’ Momentum Indicator recommends AUD and CAD long positions funded in a combination of USD and JPY
Click here to read the full report:
http://www.easyforexnews.net/wp-content/uploads/2011/10/27-Oct-2011-Weekly.pdf
BNP Paribas
Corporate & Investment Banking