Review: Yesterday the ECB denied that it plans to introduce an upper limit to the yields that the euro zone countries can pay on their government bonds (known as a yield cap), and therefore the positive sentiment in the market triggered by this story turned neutral.
Macro: The housing figures from the UK showed a weak development and indicate that the housing market is still vulnerable. Today’s calendar is very thin. At 9.30am Swedish employment figures will be announced.
EURTRY (NEUTRAL): The central bank has begun to issue mixed signals and therefore investors are slowing down their purchases of TRY.
The price development was slowed down in the lower part of the trend channel at the level of 220. It will take extraordinary news to strengthen TRY at this level (a solution to the EU debt crisis). We expect that due to the economic challenges facing Turkey as well as the unorthodox policy pursued by the central bank, TRY will bottom out this time around. In the coming months the pressure will be on the upside. We wouldn’t be surprised if we see 230-34 once again. Please note that a breach of 224 would be able to trigger a fast movement of many points.
GBPUSD (NEUTRAL): The cross rate trades in a triangular formation, which means that a breach to the sides will result in wide price fluctuations. We recommend that investors place a sell order at 155.20.
NOKSEK (BUY): It is not too late to follow the recommendation to BUY NOKSEK.
There is still quite some divergence, and the level at about 112 continues to offer strong support.
In the event of a close above 113.40, we will see confirmation that the trend turns for NOKSEK. There will still be pressure on the downside until we see a close above 113.40.
Our overall view is that the Swedish economy is affected stronger than the Norwegian economy by the current recession in the euro zone.
AUDUSD (SELL): We recommend SELL with S/L at 105.50. Also yesterday AUDUSD did not manage to close below the important level at 104.20. Now momentum is beginning to strengthen on the upside.
MACD and RSI still support the case, but the longer the period without a breach, the less likelihood of a breach this time around.
The central bank was considerably more bullish in its minutes than expected by the market. Therefore AUDUSD strengthened overnight. However, at the same time CB recommends that the decline in commodity prices had a surprisingly negative effect on the Australian economy.
If investors did not follow the recommendation until a level below 105.44, we recommend that they choose 105.44 or higher as S/L due to an important level of resistance.
The 2-year yield spread between AUD and USD as well as the GOLD and COPPER prices, which have historically been important leading indicators for AUDUSD, all suggest that AUDUSD should trade at a lower level.
ZARMXN (Top picks): Spot On Top pick recommendation in ZARMXN is closed at 158 with 5,60% in profit.