BUY NOKSEK on poor GDP

EURUSD traded above 134.50 yesterday.
No fundamental events prompted the movement; rather it was speculative movements targeted at taking stops above 134.20. Over the evening/night, the cross-rate dropped back towards 134. It is crucial that today remains below 134.50 - closing above this level (at 22.00) is most likely to change our short-term view. Today's minutes from the recent FOMC meeting will be essential. If our expectations are met (please see below), USD should strengthen (signal about phasing out in September of USD 10bn distributed equally between government bonds and mortgage bonds).

The EU: Merkel and Schaeuble disagree on Greece.
Merkel finds that Greece should manage without renewed support. Finance minister Schaeuble estimates that Greece needs a new rescue package. Jyske Bank expects that Greece will receive a new rescue package within the next year, which will put a slightly negative pressure on EUR.

Japan: central bank governor Kuroda promises to speed up relaxations.
Kuroda continues with verbal intervention. Tonight he announced that if the domestic economy weakens slightly, BoJ will not hesitate to launch further relaxations to boost the economy further.

Turkey: the Central bank (CBRT) once again hikes its rate to strengthen TRY.
CBRT raised the short-term lending rate by 50 bps. from 7.25% to 7.75%. CBRT maintained the discount rate and the deposit rate. Thus, the interest rate is a clear signal that CBRT maintains focus on supporting TRY so the pace of the currency depreciation will not be too fast.

Today's main event: minutes from the FOMC interest rate meeting in the US.
The minutes from the FOMC meeting, which will be released at 20:00, will be crucial for the short-term trend of EURUSD.
Market consensus is that FOMC will provide some obvious clues on phasing out in September or December. Two circumstances will affect USD:
Will a phasing out materialise? And will the amount be higher or lower than USD 10bn? Will the phasing out be distributed over both mortgage credit and states?
If these questions can be answered in the affirmative, US yields are most likely to increase and USD to strengthen.

Recommendations:
EURUSD (SELL): we recommend investors to SELL and to take profit at 128.50, and place stop loss orders at 134.76.
Slightly surprisingly, the recent volatility in the financial markets has only had a moderate effect on EURUSD. We expect to see the resistance level at 132.00-132.50 again before the end of the week, if the current concerns among investors gain momentum.

NOKSEK (BUY): we recommend investors to BUY and to take profit at 113.50 and stop loss at 107.98.
GDP was a great disappointment and sent down NOK against most currencies.
NOKSEK fluctuated more than 1.50% and closed the day at 108.90. On closer investigation of the sub-indices of GDP, they do not appear quite as negative on the surface. But all things being equal, the surprise adds negative pressure on the market rate and, consequently, lower NOK for the short-term.

NOKSEK

We restate our BUY recommendation for NOK against SEK, and we still see good long-term value in selling EURNOK (buying NOKDKK).

GBPUSD (SELL ORDER): SELL at 155.70. Take/profit at 151.55. Stop/loss at 156.75.
Much positive news has been discounted in GBP. Yet, we see a rather actual risk that the Bank of England will at its next interest-rate meeting attempt to send signals which should keep down interest rates - this will depreciate GBP.
If we look at the so-called "Surprise Index", we are at the top (indicators have been positive surprises). We have often seen that very high levels in the Surprise Index are followed by negative surprises because analyst expectations are too high and unrealistic - the UK economy still faces very large challenges.

Due to these two elements in combination we see value in an early sale of GBPUSD. Renewed risk aversion, if any, will also put pressure against the downside of GBPUSD.

Support: Slight support at 156.08 and then 153.50-154.23.
Resistance: 156.73 and then 157.52 and 159.10.

EURPLN (BUY): We recommend investors to buy EURPLN with take/profit at 428.50 and stop/loss at 421.95.
Although EURPLN rarely considers the 50- and 200-day moving average, the cross rate has presently been caught between two strong technical levels. Since July we have not seen a breach neither to the upside nor to the downside. This indicates that investors are beginning to attach more importance to them than is usually the case.
Hence, we can now use them as indicators of when EURPLN will again begin to trend either higher or lower. A breach above 426 gives expectation of continued trade towards 430-35.
A breach below 417.50 will give rise to expectations of additional falls to the 412-14 range.

EURPLN

AUDJPY (BUY ORDER): Winner of the month? Take/profit at 95.50. Stop/loss at 88.89.
AUDJPY turned round due to the higher risk aversion, and we are now far away from our recommended entry level. We restate our buy order. The cross rate should not be bought until at/above 90.25.

Today’s events
20:00 USA: Minutes from the latest FOMC meeting.
China: Tonight, PMI data for industry will be released.

Chart of the day: EURUSD