Currency markets – Capital flows are gaining in importance again……

EUR/USD (1,3140): With the currency market being dominated by capital flows, and in particular swings in stock markets, then my fundamental USD bearish view suffers again.

When I am right on the stock markets (down) then EUR/JPY and EUR/CHF also follows lower and the greenback is bid (I am watching the hedge funds again, it all feels like September to November last year).

With only a few fundamental data out this week its better to read the stock market comments to get a clue. They are as usual bearish so it forces me to lower the 1,3250 / 1,3750 trading range for EUR/USD down to 1,3000 / 1,3500. Due to the very steep economic downturn in US and the following public debt bubble I remain long term bearish regarding the Dollar.

The few economic data this week are the US NAHB Housing Market Index on Wednesday (exp 9) and the Euro Zone Jan Service PMI on Friday (exp 41,7). Not true market movers, so the corporate earning reports are very much in focus.

Target: Range 1,3000 – 1,3500.

 
EUR/GBP (0,9090) – GBP/USD (1,4460): Despite some bought Sterling last during last week I keep the view that EUR/GBP will move back to the 0,9300 / 0,9700 range followed by 1,0000. GBP/USD is back in the 1,4300 / 1,4700 range but it should move even lower.

The new banking rescue package in UK shows how bad the situation is, the economy is so dominated of deteriorating assets and debt that remains unpaid that it seems endless.

The public debt now turns towards unknown highs as the government might be willing to enter what seems like unlimited risk to save the banking system.

I see it very bleak and remain bearish Sterling.

Targets: EUR/GBP range 0,9300 – 0,9700 followed by 1,0000     GBP/USD range 1,4300 – 1,4700 .

EUR/JPY (118,70) – USD/JPY (90,60): Like mentioned under the EUR/USD part it will be much about equities this week.

Of economic data, there is one semi important for the market this week. On Friday the Nov all industry activity index is released (exp -2,2%) but it’s for November and all November numbers around the globe were bad, so not a surprise.

Interesting was the rebound in EUR/JPY last week, but with equities coming lower, EUR/USD with downwards bias and USD/JPY to test the lows again I think the market will test the downside in EUR/JPY as well. Like above, it’s very much about stocks this week.

I keep the USD/JPY target but lower the EUR/JPY range from 117,00 / 125,00 to 115,00 / 121,00.

Targets: EUR/JPY range 115,00 – 121,00  USD/JPY 88,00. Expect intervention.

Bookmark It