EM currencies strengthened both yesterday and overnight

  • EUR/USD (SELL): We recommend SELL; T/P at 130.77; S/L at 136.20.

  • NOK/SEK (BUY): We recommend BUY; T/P at 119.95 and S/L at 116.85.

  • GBP/USD (BUY): We recommend BUY with S/L at 152.44.

  • EUR/JPY (from Neutral to BUY): We recommend BUY; T/P at 106 and S/L at 101.89.

  • USD/JPY (BUY): We recommend BUY; T/P at 79.50 and S/L at 75.75.

  • EUR/SEK(NEUTRAL): We recommend SELL in the range of 943-945. S/L at 952.42.

  • EUR/NOK (NEUTRAL): We recommend SELL in the range of 795-800. Double S/L at 802.25.

Following the extensive sale in the commodity complex Monday morning, the financial market players turned around and began to look to risky assets again.

Equities are indicated up; EM currencies strengthened both yesterday and overnight. The strengthening took place because the market players are hoping that the euro countries will offer the necessary initiatives to bring the debt crisis in Greece, etc. under control.
Due to the recent risk aversion, most currencies are very oversold, which will often result in a correction. Whether we are ready for a slightly longer lasting correction will be evident over the week. At any rate, we will focus very much on indications often seen prior to a correction.

Today focus will be on the vote in the Greek parliament on an increase of property taxes and on consumer confidence data to be announced in the US at 4 pm.

EUR/USD (SELL): We reiterate our SELL recommendation; T/P at 130.77 and S/L at 136.20.

EUR/JPY (from Neutral to BUY): We recommend that investors BUY EUR/JPY with T/P at 106 and S/L at 101.89. Yesterday Japan announced that it will implement initiatives today to ensure weakening of JPY. We think this will not take place in the form of a direct intervention but rather as a couple of alternative initiatives to ensure a more structural weakening of JPY.

GBP/USD (BUY): We recommend investors to BUY GBP/USD with S/L at 152.44. We have chosen not yet to recommend a T/P. The reason is that the cross rate has fallen by almost 8% since August and is therefore very oversold; we expect that a correction may be in the range of 2.5% to 6%. We initiated the recommendation at 153.95 and assess that the current level is still an attractive level to BUY at.

EUR/NOK (NEUTRAL): We recommend SELL in the range of 796-799. A breach above 800 will be significant and indicate further strengthening. We therefore recommend a double stop at 801.10.

Short Term

Chart of the day: GBPUSD

Chart Of The Day
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