Today's Highlights - 07-13-11

8/6/2019 Today's Highlights - 07-13-11

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Market Commentary - for Institutional Client use only.

Refer to information, disclosures and qualifications at the end of this publication.

13 July 2011 Tom Fitzpatrick (1-212-723-1344)Shyam Devani (44-207-986-3453)

Alex Good (1-212- 723-3469)CitiFX Technicals Portfolio [email protected] Highlights

USDJPYhold the 763.4% Fibonacci retracement against the all time low which comes in at 78.44while CNYJPY sits on good long term support

U.S. 5 year yields:continues to hold 1.35% support EURUSD:We are still watching 1.3968 on a weekly close basis. A daily close below there if seen

would add strength to the bearish bias USD Index: (DXY):Failed so far to close above the May high (76.36). The platform still argues for a

rally overall GBPUSD:Hammer pattern suggests short term consolidation / bounce within a more dominant

downtrend that should still take the pair to 1.54. Resistance is at 1.6055 EURCAD:Double top targets 1.2950 EURAUD:Resistance holding at 1.3220. Further losses would not be surprising EURNOK:Turning up from the base of the range. Break higher on CADNOK? Gold:New trend highs. A close above1575 would suggest a move to $1,630 area

Chart of the Day: USDJPY

Source: Aspen Graphics / Reuters 13 July 2011

USDJPY moved within pips of its 76.4% retracement at 78.44

Short term resistance is at 79.57-69 and a close above there would suggest further gains ahead

TechnicalsTechnical Developments in the Foreign Exchange andAsset Markets

76.4% Fibonacci retracement holds assupport


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CitiFX Technicals 13 July 2011



2

CNYJPY


We sent a note yesterday (USDJPY, Thats Enough for Now) citing that important levels on CNYJPYdid not suggest further downside for USDJPY. CNYJPY has an important base in the 12.25 area

Yesterdays close was 12.26 and for now we continue to believe this support level will hold

US 5 Year Yield

Source: Aspen Graphics / Bloomberg 13 July 2011

The US 5 year yield chart has been one we have been focusing on since it first bounced off its76.4% Fibonacci at 1.35%

This is an important support on the downside that has effectively held again this week

Support at 76.4% Fibonacci at 1.35%


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EURUSD

Source: Aspen Graphics / Bloomberg 13July 2011

EURUSD has so far failed to close below the May low of 1.3968 A daily close below there would add to the bearish bias however we are looking for a weekly close

below this level to confirm the break lower The general setup is still a 76.4% Fibonacci retracement against the highs set on May 4

thand we

continue to believe that a trend lower to at least the 1.34-1.3450 support area is on the cards(horizontal supports and 50% retrace of the 2010-2011 rally)

As we highlighted yesterday, any bounce back in EURUSD should be seen as an opportunity to sell Resistance levels are at 1.4102 (marginally overshot this morning) and then 1.4345-1.4368 (high

from May 20th

and 61.8% Fibonacci retracement of the last move down from June 7th)

USD Index


Failed to close above the resistance levels at 76.01-76.36 however we still believe there is a goodplatform for a rally over the weeks ahead

The double 76.4% Fibonacci retracement against the lows is a setup that cannot be ignored. The longer term resistance / target area is till 81.40 and a rally to there would suggest EURUSD

around 1.30 Short term supports are at 75.40-41 and then the trend support at which currently comes in at 74.36


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GBPUSD


Posted a hammer pattern yesterday which suggests a short term bounce / consolidation However this would in our opinion be counter trend as we believe the dominant pattern is the head

and shoulders top that targets 1.54 Decent resistance is at 1.6055 where the low from May 24

thconverges with the 76.4% Fibonacci

retracement of the last fall from the July 4th

high (1.6140) Similar to EURUSD, we believe a bounce on GBPUSD would present opportunities to sell

EURNZD


EURNZD is approaching major long term supports. The most recent low to look out for is 1.6928from January 2011

1.7040 was the 2007 low, which though broken a couple times is sufficiently close to 1.6928 that thisarea should be viewed as an important support that if broken would argue a move on EURNZD tothe trend channel lows around 1.6650

S

HS

Resistance at 1.6055

Eventual move to 1.54still expected


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EURAUD


EURAUD has breached the May low at 1.3220 which has now provided good resistance over thepast 24 hours (it has held twice)

A breach of 1.3124 (yesterdays low) would suggest further losses still Additional support is at 1.2910-18 lows form Dec 2010 and Jan 2011.

EURCAD


EURCAD closed beneath its double top neckline at 1.3626 and the pattern targets 1.2950 Interim support is at 1.3256 and the double top neckline at 1.3626


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EURNOK


Turning up from the base of the range again with momentum crossing back up The top of the range is at 7.9550-7.97

USDNOK


Important level under threat here at 5.62 which was the high from May 2011 from where we cameback down to the 76.4% Fibonacci retracement against the lows (cam e in at 5.31 and held in June)

The trend resistance from the June 2010 highs also converges with the May 2011 highs A weekly close above 5.62 would be considered a bullish break The double bottom that has formed over the past two months would target 5.85 and longer term

resistance comes in at 6.20

Key resistance at 5.62

76.4% against the lows


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CADNOK


Given the bullish set up on EURNOK and the bearish EURCAD set up, CADNOK becomes aninteresting technical cross

CADNOK crossed above its downward sloping highs which converged with the highs from May 16th

at 5.76 This is now being retested as support and a continued hold of that would suggest that the break

seen yesterday is ready to extend to further gains Medium term resistance is in the 6+ area.

Gold


Gold will break an all time high if it closes above $1,575. Yesterday Gold posted a bullish key day, making such a close more likely

The channel top currently comes in at $1,627.


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PLEASE NOTE THAT: The tables and information specified below under Short Term Conviction views, Long TermConviction views, CitiFX Technicals Portfolio, Strategic Portfolio, and Tactical Portfolio ARE NOT INTENDED AS, ANDDO NOT CONSTITUTE, AN OFFER, RECOMMENDATION, ADVICE OR A SOLICITATION TO BUY, SELL OR TO ENGAGE IN ANYSTRATEGY, WHATSOEVER, IN ANY FOREIGN CURRENCY CONRACT OR ANY INSTRUMENT OR INVESTMENT. EACHDECISION BY YOU TO ENTER INTO ANY FOREIGN CURRENCY CONRACT OR TO INVEST IN ANY INSTRUMENT OR ENGAGEIN ANY STRATEGY MUST BE BASED ON DILIGENCE AND ANALYSIS INDEPENDENTLY UNDERTAKEN BY YOU AND YOURADVISORS. PLEASE CAREFULLY REVIEW THE DISCLAIMERS AT THE LAST PAGE OF THIS DOCUMENT.

Short term conviction views 1

Instrument ViewDate view was

establishedTarget Level today

Crude

Bearish daily reversal at thehighs and breach of near termsupports suggest short termweakness

13 April

** $93 Target Met.

Possibleextendedmove to $83.40 (200

week movingaverage)**

In addition a move to$75 (Head and

shoulders target)cannot be ruled out.

$97.17

EURUSD Bearish weekly reversal at the

trend highs09 May

1.4156**Target Met. Extended

to 1.3871 (200 day)1.4059

GBPUSD Revisited but could not sustain

rising trendline, head andshoulders targeting 1.5345

21 June 1.5345 1.5936

Gold Breaking to new trend highs 13 July $1,630 $1,577

Source: CitFXTechnicals Views 13 July 2011

1Convictions represent the views of the CitiFX Technical staff and not actual trades.


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Long term conviction views1

Summary of our strong conviction 2011 views as we open the year.

(As we continually note, when and if factors/dynamics change, we will adjust them into our thoughtprocess. These are our views we hold with conviction today. As we head through the year we willupdate our level of conviction on an ongoing basis.)

Instrument View for 2011 on 03 Jan 2011Conviction on 03

Jan 2011Conviction today-

13 July 2011Level today

S&P 500

Bearish year with double digit

percentage down close of 15-16% (1,055-1070) expected.

Intra year bear market (High tolow fall of 20%+ ) also a danger.

Peak could well come in theopening days of the year.

Strong Strong 1,313

U.S. long endyields

10 year yields to head towards4% and possibly 4.5% by end ofyear.

30 year yields to head towards5%

Strong Strong10Y at 2.93%and 30Y at

4.21%

Crude A move above $100 and

possibly towards $120Strong $100 target met. $97.17

Gold $1,700 this year and as high as

$2,000 eventuallyStrong Strong $1,573

Palladium A move above $1,000 this year Strong Strong $775

EURUSD

A move to high 1.40s (1.4850)by end of year) with possible1.50+ and even 1.60+ in early2012

Strong

Weak. We have nowchanged our year endview and believe that

the move seen to1.4940 on 04 May has

established a longterm peak earlier than

we thought.

1.4059

Data as at 13 July 2011


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CitiFXTechnicals PortfolioStrategic trades will likely be / intended to be of more medium term nature using the variety of building blocks that we articulate in thatmedium term view.Tactical trades by definition are likely to be more short-term and driven more by day to day price dynamics, risk management P&L etc.The strategic portfolio will be made up of 100 units of capital with the potential for modest leverage while the tactical portfolio willcomprise 50 units of capital also with modest leverage potential.These portfolios represent actual trades in FX, EM, Fixed income, Commodities or Equity indices

Strategic PortfolioData as at 13 July 2011

Instrument PositionDate

establishedComment Entry

Stop(If breached

unlessspecified

otherwise)

TargetPresent

level

Tactical PortfolioData as at 13 July 2011

Instrument PositionDate

established Comment Entry

Stop(If breached

unlessspecified

otherwise)

TargetPresent

level

GBPUSD Short 23 June 2011

Long term headand shoulders,

interest rate andequity

Spot Ref:1.6133

1.63051.5345-1.5370

1.5935

10 YearFuture(TYU1)

Short 24 June 2011

Held base of whatlooks like

corrective flag,potential double

bottom

124 14/32 125 1/2 3.10%(yield) 124.39


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CitiFXTechnicals ProductsToday's Highlights - Sent Monday, Tuesday and Wednesday. Technical Strategy focused publication detailingimportant technical developments in the past 24 hours and looking at possible implications for other markets.Main focus is the FX market but the piece also covers important developments in Equity, Fixed Income andCommodity markets, especially where we believe the moves are significant for FX. The publication also includes adaily grid with short comments on each major currency pair and support/resistance levels

Weekly Roundup - Sent late Thursday European time. Detailed coverage of all G10/EM FX Markets and relatedasset markets, with charts of each market. The document is hyperlinked to ease use and navigation. It should bethought of as an e-mailed website that can be kept for reference over the following week.

Bulletins Ad hoc pieces sent where we believe particularly significant developments have taken place. Oftenbased on interrelationships between markets.

Portfolio Updates - We run a portfolio on the back of our ideas/views and as such send e-mails detailingchanges to positions (targets/stops etc.) in relation to this.


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CitiFX Value Added Services & Products

FX TechnicalsTom Fitzpatrick New York 1-212-723-1344 [email protected]

Shyam Devani London 44-20-7986-3453 [email protected]

Alex Good New York 1-212- 723-3469 [email protected]

CitiFX Value Added Services & Products Group Heads

Global Head of Value Added Services & ProductsStephane Knauf London 44-20-7986-9486 [email protected]

Corporate Solutions GroupStephane Knauf London 44-20-7986-9486 [email protected]

FX & Local Markets StrategySteven Englander New York 1-212-723-3211 [email protected]

FX TechnicalsTom Fitzpatrick New York 1-212-723-1344 [email protected]

Quantitative Investor SolutionsJessica James London 44-20-7986-1592 [email protected]

Structuring GroupStephane Knauf London 44-20-7986-9486 [email protected]

Value Added ProductsPhilip Brass London 44-20-7986-1614 [email protected] Thomet Zurich 41-58-750-7646 [email protected]


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