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3 Jul 2015
Dollar strength stalled post NFP, NZD/USD bearish target at 0.6475 – OCBC
FXStreet (Barcelona) - According to Emmanuel Ng, FX Strategist at OCBC Bank, the Greece uncertainty along with the dented Fed rate hike expectations will counter the USD strength narrative in near-term, and further maintains a NZD/USD bearish target at 0.6475.
Key Quotes
“Sketchy global equities (SHCOMP -3.48% to below 4,000) pulled the FXSI (FX Sentiment Index) slightly higher within Risk-Neutral territory on Thursday and expect investor caution to continue to prevail into the weekend.”
“Outside of the Greek-related chatter, the latest NFP numbers have dented market-implied liftoff expectations post-NFP, providing a near term counterpoint to the dollar strength narrative.”
“To this end, our refreshed FX forecasts continue to reflect a subdued expectation of secular dollar strength beyond the short term (shallower convexity so to speak), reflecting the impact from a normalization of Fed monetary policy as opposed to the implied connotation of a “lift-off”.”
“With the broad dollar carving higher universally, our 18 Jun 15 idea to be tactically long GBP-USD (spot ref: 1.5843) was stopped out on 01 Jul 15 at 1.5640 for an implied -1.29% loss.”
“Elsewhere, the 15 Jun 15 recommendation to be short NZD-USD (spot ref: 0.6976) met its 0.6720 objective on 02 Jul 15 for an implied +3.67% gain (excl carry). With the antipodeans in a shambles and amidst the risk for a potentially stronger dollar environment going ahead, we extend our objective to 0.6475, trailing the stop to 0.6845.”
Key Quotes
“Sketchy global equities (SHCOMP -3.48% to below 4,000) pulled the FXSI (FX Sentiment Index) slightly higher within Risk-Neutral territory on Thursday and expect investor caution to continue to prevail into the weekend.”
“Outside of the Greek-related chatter, the latest NFP numbers have dented market-implied liftoff expectations post-NFP, providing a near term counterpoint to the dollar strength narrative.”
“To this end, our refreshed FX forecasts continue to reflect a subdued expectation of secular dollar strength beyond the short term (shallower convexity so to speak), reflecting the impact from a normalization of Fed monetary policy as opposed to the implied connotation of a “lift-off”.”
“With the broad dollar carving higher universally, our 18 Jun 15 idea to be tactically long GBP-USD (spot ref: 1.5843) was stopped out on 01 Jul 15 at 1.5640 for an implied -1.29% loss.”
“Elsewhere, the 15 Jun 15 recommendation to be short NZD-USD (spot ref: 0.6976) met its 0.6720 objective on 02 Jul 15 for an implied +3.67% gain (excl carry). With the antipodeans in a shambles and amidst the risk for a potentially stronger dollar environment going ahead, we extend our objective to 0.6475, trailing the stop to 0.6845.”