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1. FX Beat Inside View
Page 2 Market Recap, Treasuries,
Briefs, Institutional Positions
Page 3 Economic Data Preview,
Key events, Top News
Page 4 Fundamental Analysis
Page 5 Economy Watch, Trade
Views
Page 6 Individual Forecasts
Page 7 Hedging Perspectives
Page 8 Trade Positions
Page 9 Technical Analysis
Page 10 Trade Idea
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● USD: The dollar index has once again retreated after making a high of 99.79. It is
currently trading around 98.82.
● EUR/USD: The euro was broadly flat at $1.0898 with a minor resistance at 1.0880
(trend line joining 1.09147 and 1.0971). The pair has broken minor trend line resis-
tance 1.0880 and jumped till 1.09062 at the time of writing. It was trading around
1.09017 and break above 1.0880 will take it to next level around 1.09490/1.09800
in short term. Overall bearish invalidation is only above 1.1000. On the lower side
minor support is at around 1.0860 (200 day HMA) and break below targets
1.08200/1.07800.
● USD/JPY: The resignation of Japan's economy minister sent the yen higher slightly
against the dollar, with Japanese policymakers currently struggling with the effects
of a firmer yen and worries about a weakening global economy. The yen traded 0.1
percent lower against the dollar at 118.28. The pair has broken minor resistance
118.85 and jumped till 119.06 at the time of writing. The short term trend is slightly
bullish as long as support 118 holds. The major support is around 118 and break be-
low targets 117.50/116.80/116. On the higher side the minor resistance is around
119.40 and break above will take the pair till 120/120.90.
● GBP/USD: The sterling climbed against the dollar and the euro after the data
showed UK economy is growing in line with expectations in the fourth quarter, of-
fering some comfort to the battered pound. It rose 0.5 percent to the day's high of
$1.4298, up from around $1.4263 beforehand. It is facing strong resistance around
1.4370 and any further bullishness only above that level. On the top resistance is at
1.4370 and break above will take the pair to next resistance 1.4400/1.4500. It will
be facing psychological support at 1.4300 (55 day 4H EMA) and break below targets
1.4270/1.4250. Short term weakness is only below 1.4250. The euro slipped 0.2
percent at 76.38 pence, compared with 76.60 pence beforehand.
● USD/CHF: The pair retreated after making a high of 1.01980 and was trading
around 1.01325. Short term trend is bullish as long as support 1.0500 holds. Any
break above 1.0200 will take the pair till 1.02501.0300 is possible. On the lower side
minor support is around 1.0080 and break below will drag the pair till 1.0050/0.9990.
Short term bullish invalidation only below 0.9990. The Swiss franc fell to its lowest
against the euro since the SNB abandoned its currency peg last January, prompting
talk in the foreign exchange market that the central bank was intervening to weaken
the currency. It fell to 1.10805 franc per euro.
● AUD/USD: The Australian dollar surged as oil traded back above $33 a barrel, its
highest levels in almost three weeks. It gained almost 0.8 percent to $0.7081 in early
trade in Europe, nearing 3-week highs hit a day earlier. The Aussie has broken a ma-
jor resistance 0.7060 and this confirms minor trend reversal a jump till 0.7170 is pos-
sible. Short term trend is slightly bullish as long as support 0.7000 holds. On the
higher side major resistance is around 0.7105 and break above targets
0.7170/0.7250. The minor support is around 0.7000 and break below will drag the
pair till 0.6920/0.6820.
1
January 28th, 2016
www.econotimes.com

2. 2 www.econotimes.com
Market Recap
● The uncertainty over the Fed's rate path weighed
on European shares with the FTSEurofirst 300 in-
dex falling 0.2pct in early deals. Britain's FTSE fell
0.3 percent, France's CAC dropped 0.4pct and Ger-
many's DAX plunged 0.5 pct.
● The MSCI All-Country World index rose 0.1pct,
while the MSCI Emerging Market index advanced
0.7 percent.
● Tokyo's Nikkei closed down 0.71 pct at 17,041.45,
Shanghai Composite Index closed down 2.9 pct at
2,655.66 points, while China's CSI300 Index ended
down 2.6 pct at 2,853.76 points.
● Oil steadied above $33 per barrel supported by
the possibility that major producers may co-operate
to cut production. Brent crude was 18 cents higher
at $33.28 a barrel by 0856 GMT, after ending up
4.1 percent in the previous session. U.S. crude was
up 4 cents to $32.34 per barrel.
● Gold edged lower from 12-week highs after the
U.S. Fed acknowledged a challenging global econ-
omy but hinted it was unlikely to be deterred from
raising interest rates this year. Spot gold fell 0.7
percent at $1,117.64 an ounce by 0635 GMT. U.S.
gold for February delivery increased 0.2 percent at
$1,118 per ounce, off a session high of $1,125.70.
Treasuries
● U.S. Treasury yields plunged 6bps from their day's
high of 2.05 percent after the statement was re-
leased late on Wednesday.
● Euro zone bond yields dropped, mirroring an ear-
lier move in U.S. Treasuries, after the U.S. Fed de-
livered a dovish tone by acknowledging recent mar-
ket volatility. German 10-year yields fell 2bps to
0.35pct, their lowest since April 2015. Italian 10-
year yields dropped 2bps to 1.48pct. Greek, Portu-
guese and Spanish equivalents were down by a
similar amount.
● Japanese government bonds mostly edged lower
as investors awaited the outcome of the Bank of
Japan's two-day meeting, though a solid sale of 2-
year JGBs limited losses. The benchmark 10-year
yield added 1.5bps to 0.225pct, while March 10-
year JGB futures shed 0.05 point to end at 149.53.
The 30-year JGB yield rose 2.5 bps to 1.170 per-
cent, a day after dropping as low as 1.140 percent.
● UK Gilts opened 25 ticks higher than the settle-
ment of 119.20 as dealers played catch up with
slightly dovish FOMC meeting last night. March
Gilts are around 5 ticks lower at 119.28 after Brit-
ish Q4 GDP preliminary data.
● New Zealand government bonds were mixed, with
yields a touch lower. Australian government bond
futures were subdued, with the 3-year bond con-
tract off two ticks at 98.080. The 10-year contract
eased one tick to 97.3150, while the 20-year con-
tract added one tick to 96.8300.
Market Briefs
● CHF hits 1-year low vs EUR at 1.1080 amid specu-
lation of SNB helping hand.
● USD/JPY rises to 118.94 but off Wed's 119.08
peak.
● EUR/USD firms from 1.0870 to 1.0927.
● GBP/USD up from Asian 1.4233 low to 1.4298.
● Brent more constructive, up to $33.97/barrel vs
Wed's $33.49 high.
● Japan's Amari stepping down as economy minister.
● Japan's Amari: Did not take money from construc-
tion company and put directly in pocket.
● Japan Government to name ex-LDP executive Ishi-
hara as economy minister- NHK.
● Swiss economy holding up, no deflation risk -
SNB's Zurbruegg
● Kremlin Sopkesman- Nothing to talk about in
practical sense re coordination with OPEC.
● UK Q4 GDP preliminary 0.5% q/q, 1.9% y/y vs
previous 0.4%/2.1%. 0.5%/1.9% expected.
● UK Jan CBI Distributive Trades +16 vs previous
19. 18 expected.
● EZ Jan Economic Sentiment 105.0 vs previous
106.7 revised. 106.4 expected. Industrial Sentiment
-3.2 vs -2.0. -2.4 expected.
● EZ Jan Consumer Confidence final -6.3 vs previous
-5.7. -6.3 expected.
Institutional Positions
● We remain bearish on the ruble in the short and medium
term- Danske Bank.
● EUR/USD puts look historically cheap relative to calls
across the curve, offering a compelling opportunity to ex-
press downside through options- Barclays Research.
● J.P. Morgan: Buy a 2-mo NZD/JPY one-touch put, sell a 1-
mo in premium-rebate notionals.
● Long EUR vs. AUD to position for further China stress; and
long EUR vs. GBP to hedge the UK'S EU referendum risks-
J.P. Morgan.
● Short EUR vs. SEK since we think Riksbank easing has
nearly reached its limits- J.P. Morgan.
● Take profits on a short USD/JPY trade, replace with short
NZD/JPY to retain core long yen exposure- J.P. Morgan.
● Societe Generale: Buy EUR/CHF 3m call strike 1.1460, sell
3m put strike 1.06.

3. Economic Data Preview
● (0830 ET/1330 GMT) The U.S. Commerce Depart-
ment releases durable goods orders for December.
Orders for long-lasting U.S. manufactured goods
likely slipped 0.6 percent in December after being
unchanged in November, as the sector struggling to
face the strong dollar and slowing global demand.
Ongoing efforts by businesses to reduce an inven-
tory overhang and spending cuts in the energy sec-
tor are also undermining factory activity. Orders
excluding transportation are likely to remain un-
changed at -0.1 percent.
● (0830 ET/1330 G MT) The U.S. Labor Department
report is likely to show new applications for jobless
benefits fell to 282,000 last week from 293,000
the prior week.
● (1000 ET/1500 GMT) The National Association of
Realtors will release Pending Home Sales Index for
December which is likely to have risen 0.8 percent,
compared with a 0.9 percent slip in November.
● (1030 ET/1530 GMT) EIA releases its Natural Gas
Storage Change for the week ending Jan 22.
● (1100 ET/1600 GMT) The Federal Reserve Bank of
Kansas City releases its manufacturing activity for
January.
Key Events
● (0845 ET/1345 GMT) FedTrade Operation 30-year
Ginnie Mae (max $1.175 bn).
● (1045 ET/1545 GMT) FedTrade Operation 15-year
Fannie Mae / Freddie Mac (max $525 mn).
Top News
● Japan’s PM Shinzo Abe said he wants new econ-
omy minister, Nobuteru Ishihara, to continue the
government's efforts to push through the struc-
tural reforms.
● UK economy ended 2015 on a soft note after the
annual pace of growth slowed to weakest in almost
three yrs as slowdown in global economy weighed
on its previously rapid growth. Q4 gross domestic
product grew by 0.5pct, up slightly from 0.4 per-
cent in the three months to September, the Office
for National Statistics said on Thursday, and in line
with economists' forecasts. Output in the three
months to December was 1.9 percent higher than a
year earlier, down from 2.1 percent in the third
quarter and the smallest increase since early 2013.
● Euro zone economic sentiment deteriorated by far
more than anticipated in January, pulled down by
more pessimism in industry, the service sector and
among consumers, data from the European Com-
mission showed on Thursday. The Commission said
economic sentiment in the 19 countries sharing the
euro fell to 105.0 in January from a downwardly
revised 106.7 in December. Economists polled by
Reuters had expected a slight decline to 106.4.
● France will sign deals in areas of health, agricul-
ture and the environment with Iran later on Thurs-
day during a visit to Paris by Iranian President Has-
san Rouhani, French Prime Minister Manuel Valls
said. Valls told a Franco-Iranian business forum
that he wanted France and Iran to rebuild ambi-
tious partnerships in various business sectors after
the lifting this year of international sanctions that
had brought once thriving trade to a halt.
● The European Commission proposed on Thursday
allowing EU countries to tax corporate profits at
home in some circumstances even if the money has
been transferred elsewhere to avoid such payments.
● The U.S. Fed kept interest rates unchanged on
Wednesday and said it was "closely monitoring"
global economic and financial developments, sig-
naling it had accounted for a stock market selloff
but wasn't ready to abandon a plan to tighten
monetary policy this year.
● Russian officials have decided they should talk to
Saudi Arabia and other OPEC countries about out-
put cuts to bolster oil prices, the head of Russia's
pipeline monopoly said, remarks that helped spur a
sharp rise in world prices.
● The number of people out of work in Spain fell by
a record amount in 2015, data showed on Thursday,
but with unemployment at over 20pct, the scars of
a deep downturn that led to one of the biggest
electoral upsets in decades are still evident. The
jobless rate fell more than forecast to 20.9 percent
of the workforce in the fourth quarter, its lowest
level since mid-2011, from 21.2 percent three
months earlier, the National Statistics Institute said.
● Debt restructuring firms are poised to pull in re-
cord amounts of business in Brazil this year as the
country’s worst recession in decades and a corrup-
tion probe that has cast a shadow over dozens of
companies leads to a surge in defaults.
● The Reserve Bank of India is expected to leave its
key interest rate steady at 6.75 percent next week
and only make one cut this year as rising inflation
ties its hands, shows a Reuters survey. That marks
a turn from rapidly cooling domestic consumer
price inflation, which allowed the RBI to lower the
repo rate four times in 2015.
3 www.econotimes.com

4. 4 www.econotimes.com
FundamentalAnalysis
Japan's Subdued core inflation could force the FOMC to stay
patient, next hike unlikely before June
In what was a unanimous vote, the Federal Reserve on
Wednesday, kept the target range for the fed funds rate un-
changed at 0.25-0.50% range. FOMC formally kept the door
open to a March hike but did not communicate anything ex-
plicitly at this meeting. It was notable that the Fed was no
longer willing to describe the risks to the outlook as balanced.
While saying ‘labor market conditions improved further’, the
Fed recognized that ‘growth slowed’ in Q4 15, a shift away
from December statement which said ‘expanding at a moder-
ate pace’. However, the committee noted that this was partly
because of slower inventory investment. The statement said
household spending and business fixed investment were still
increasing at ‘moderate’ pace compared to ‘solid’ in Decem-
ber.
The FOMC left the policy guidance paragraph unchanged,
sticking to the "gradual" notion of future rate hikes as ex-
pected. The Committee highlighted that it will monitor eco-
nomic and financial events globally – presumably for any po-
tential downside risks. This shows that the Fed takes the fi-
nancial market turmoil and the development in China and
other emerging markets into account.
Global headwinds, the strong dollar and low oil prices are
likely to have negative effects on US inflation, a concern the
Fed doves had at the time of the December hike. This means
that it will be more difficult to reach consensus on another
hike in the near term. Therefore we do see possibilities for the
next hike before the June meeting.
"We stick to our view that the Fed will increase the Fed funds
target rate three times this year (April, September and December).
However, we still believe there are downside risks to this call, as
the Fed will not risk tightening too much, too quickly, in our view,"
notes DanskeBankin a research note to clients.
Market is now pricing a 20% probability of a hike in March,
compared to 10%-points from before the meeting. Despite
the global headwinds the US services sector continues to
grow and produce jobs at a strong pace, reducing labor mar-
ket slack and bolstering the Fed’s confidence in the inflation
outlook. The actual path of the federal funds rate will depend
on the economic outlook as informed by incoming data.
US front-end rates pared their pre-meeting gains and the USD
lost ground as well. Equity markets also traded in the red in
response to a less hawkish message. At 1110 GMT today,
EUR/USD was trading at 1.0909, while USD/JPY was at
118.87.

5. 5 www.econotimes.com
Economy Watch
● Fitch expects New Zealand's GDP growth to pick up to 2.4 pct and 2.6 pct in 2016 and 2017 respectively.
● Online retail sales in France seen rising 10 percent this year (vs 14.3 in 2015) to 70 billion euros - industry.
● OECD sees Finnish GDP growing 1.1 pct in 2016 and 1.6 pct in 2017.
● Thai 2015 GDP growth estimated at 2.8 pct (vs 2.8 pct seen in Oct) - finance ministry
● Thai 2016 GDP growth seen at 3.7 pct (vs 3.8 pct seen in Oct) - finance.
● Thai 2016 exports seen up 0.1 pct - finance ministry.
● Malaysia PM Najib says GDP growth projection for 2016 revised to 4-4.5 pct.
● Reuters Survey - Median expectation among U.S. primary dealers is for three rate hikes by the Federal Reserve by end of
2016.
● Swiss government projects structural budget deficit to widen to 972 mln sfr by 2019 from 270 mln in 2017 - financing plan.
● German econ min lowers import growth forecast for 2016 to 4.8 pct from previous f'cast of 5.3 pct.
● German econ min lowers export growth forecast for 2016 to 3.2 pct from previous f'cast of 4.2 pct.
● Vietnam revises up 2015 trade deficit at $3.5 bln from $3.17 bln deficit in earlier estimate – govt.
● Vietnam's Jan trade deficit estimated at $200 million vs Dec 2015 revised deficit of $563 mln – govt.
Policy Watch
● Bank of England's Carney says conditions for a rate rise are not yet in place.
● Reuters Survey-First Bank of England rate hike of 25 bps to 0.75 pct now expected in Q4 (Q3 in Jan 14 poll, Q2 in Jan 4
poll).
● Reuters Survey-UK bank rate forecast at 1.25 pct by end of 2017, 2.00 pct by end of 2018.
● Reuters Survey-Bank of England to leave UK bank rate unchanged at 0.50 pct on Feb 4.
● New Zealand c.bank seen holding rates in March, some chance of easing by June- Reuters survey.
● The ECB to be slightly more aggressive in its easing than currently discounted by the market- Danske Bank.
● The market is currently pricing in a some 15 bp rate cut by the ECB towards mid-2016.
● Markets price in a 50% chance of RBNZ’S OCR cut by March, and almost a full OCR cut by June.
● Reuters Survey-Slim majority forecast RBNZ will resume easing by June.
● Reuters Survey-12 out of 13 economists see New Zealand central bank holding rates steady at March 10 meeting.
● Reuters Survey-Reserve Bank of India to cut rate only once this year, likely in Q2 2016, as inflation picks up.
● Reuters Survey-Reserve Bank of India to hold repo rate steady at 6.75 pct at Feb 2 meeting.
● U.S. short-term interest-rate futures rise; traders see Fed waiting until July to raise rates.
● Traders pare bets on Fed rate hikes in 2016 after Fed says its eye is on global developments.
Trade Views
● Barclays expects further GBP weakness against the USD but not the EUR by year-end.
● A weaker EUR would clearly be a useful tool in the ECB’s efforts to restore inflation back towards its target and to reduce
the risk that expectations of near zero inflation become entrenched in the euro zone- Rabobank.
● Euro adds to gains vs dollar after Fed keeps rate unchanged with eye on global markets.
● Westpac: NZD/USD to remain under downward pressure during the next few months, targeting 0.62.
● Sterling rises to day's high of $1.4295, up 0.4 percent on day from around $1.4263 beforehand.
● Swiss franc hits one-year low of 1.1078 francs per euro, down 0.2 percent on day.
● Euro touches new session high vs dollar, extends gains after perceived dovish FOMC statement.

6. Forecasts
6 www.econotimes.com
USD/CNY
CONTRIBUTORS 1 MTH 3 MTHS 6 MTHS 12 MTHS
ABN AMRO -- 6.5500 6.6000 6.7000
ANZ BANK 6.5200 6.5000 6.5500 6.6500
BARCLAYS -- 6.6000 6.8000 6.9000
BBVA 6.5000 6.5800 6.6500 6.8000
BMO 6.5000 6.5200 6.5400 6.5900
BNP PARIBAS 6.5100 6.4300 6.4700 6.5900
BOFAML 6.6200 6.6000 6.7000 6.9000
BTMU 6.5500 6.5800 6.6500 6.4500
CIBC 6.5300 6.5500 6.6000 6.5000
COMMERZBANK -- 6.6000 6.7000 6.9000
DANSKE BANK 6.4200 6.5500 6.6000 6.6500
DBS 6.5200 6.4500 6.4900 6.5000
DESJARDINS 6.5000 6.5500 6.5500 6.5800
DNB 6.4500 6.5500 6.7000 7.0000
DZ BANK 6.5500 6.6000 6.7500 6.8000
FORECAST 6.5000 6.5500 6.5800 6.6400
GOLDMAN 6.4800 6.4500 6.5000 6.6000
HSBC 6.4200 6.5500 6.6000 6.7000
IFR MARKETS 6.5800 6.6500 6.7000 6.7500
INFORMAGLOBAL 6.5500 6.5800 6.6500 6.6500
ING FINANCIAL 6.4800 6.5000 6.5500 6.5500
JULIUS BAER 6.6500 6.6500 6.6500 6.6000
LBBW 6.5500 6.5500 6.6000 6.7000
MACQUARIE -- 6.5500 6.6000 6.8000
MAYBANKINVSEST 6.5500 6.6000 6.6500 6.7000
MORGAN STANLEY 6.5400 6.5400 6.6500 6.8000
NATIXIS -- 6.7000 6.8000 6.9500
NOMURA 6.5100 6.5400 6.6400 6.8000
NORDEA BANK 6.5200 6.5000 6.5000 6.6000
OCBC 6.5200 6.5700 6.5500 6.4000
RABOBANK 6.5500 6.8000 7.2000 7.6000
RBS 6.5500 6.6000 6.8000 6.8500
SAXO BANK 6.5500 6.7500 7.0000 7.2500
SCOTIABANK 6.5500 6.6000 6.6000 6.7000
SEB 6.4700 6.5900 6.4100 6.7000
SOCIETE GENERALE -- 6.6000 6.6500 6.8000
UNICREDIT 6.4200 6.4200 6.4500 6.5500
WELLS FARGO 6.4800 6.4800 6.5000 6.5400
ZKB 6.5000 6.6000 6.7000 6.8000
USD/RUB
CONTRIBUTORS 1 MTH 3 MTHS 6 MTHS 12 MTHS
ALB MENKUL 68.0000 69.0000 69.0000 69.0000
BARCLAYS -- 71.0000 72.0000 73.0000
BINBANK 66.4000 68.5000 76.6000 84.0000
BANK SAINT PT 70.0000 70.0000 70.0000 --
BNP PARIBAS 70.0000 66.8000 68.3800 69.3800
BOFAML 68.7400 64.0000 65.0000 65.0000
BTMU 74.8000 76.9000 76.0000 64.5000
CA-CIB 73.2900 66.5000 65.0000 62.0000
CITIGROUP -- 68.6000 -- 71.0000
COMMERZBANK -- 72.0000 73.0000 75.0000
CREDIT SUISSE 71.3100 67.7800 68.1900 69.0000
DANSKE BANK 70.5000 71.0000 72.5000 73.0000
DZ BANK 75.0000 81.7300 86.5400 81.7300
GOLDMAN SACHS 70.0000 67.0000 66.0000 66.0000
HANDELSBANK -- 70.0000 70.0000 72.5000
HSBC 72.0000 70.0000 70.0000 72.0000
IFR MARKETS 73.2000 73.5000 73.8000 74.2000
IHS GLOBAL 72.2300 70.9100 68.9400 65.0000
INFORMAGLOB 75.0000 78.0000 72.0000 70.0000
ING FINANCIA 68.0000 64.4000 60.5000 59.0000
JULIUS BAER 74.0000 76.5000 77.2000 79.8000
LBBW -- 70.4800 68.5700 62.9600
MORGAN STANL 71.3900 67.2500 67.7500 69.0000
MANTIS -- 66.5656 67.4015 69.1105
NATIXIS -- 70.0000 70.0000 68.0000
NOMURA 69.3900 62.0000 63.0000 65.0000
NORDEA BANK 70.6378 65.7398 61.6220 58.4356
POHJOLA BANK 73.5000 74.0000 76.0000 78.5000
RABOBANK 68.0000 66.0000 64.0000 60.0000
RAIFF BNK AU 72.0000 70.0000 66.0000 63.0000
RBS 73.0000 -- -- 62.9900
SANTANDER 75.0000 80.0000 85.0000 75.0000
SAXO BANK 75.0000 78.0000 78.0000 80.0000
SCOTIABANK 68.5000 68.5000 69.0000 66.0000
SEB 70.0000 70.0000 71.1000 73.0000
SOCIETE GENERALE -- 63.0000 63.5000 59.8000
SWEDBANK 73.0000 73.0000 74.0000 77.0000
UNICREDIT 67.5000 67.5000 67.9000 69.1000
WELLS FARGO 70.0000 70.0000 71.0000 73.0000

7. 7 www.econotimes.com
Hedging Perspectives
AUD reach 2 week’s highs cushioned by CPI but trade terms still edgy – risk averse should offset AUD/USD risks via strad-
dles
For AUD, rate solidity remains a bearish force for the currency, but in 2016 it will be driven by Fed hikes rather than RBA e as-
ing (we think the RBA is done).
AUD jumped to 2 week's highs of 0.7051 after the Australian Bureau of Statistics reported that the CPI rose 0.4% in the
fourth quarter, this upbeat expectation of 0.3%, boosting Aussie dollar to show little strength against USD.
We reckon that the purchase power of AUD is boosted by the CPI and nothing else and changes in purchasing trends brought
a high reading that is viewed as positive for the AUD but would this be sustainable is concerning part.
On the contrary, the greatest difference has been the terms of trade, which we think is bottoming as iron ore prices move
within a range and LNG exports rise, thus insulating the trade balance from higher oil prices next year. AUD/USD is fore-
casted 0.68 in Q2, 0.72 in Q4.
Offsetting AUD/USD long term risks via long AUD/USD 3M ATM straddles financed with AUD/JPY 1Y ATM puts (delta-
hedged):
AUD/USD is currently the highest realizing vols among G10 currency space after USDJPY or any EM basket and same is the
case with IVs (see IV & risk reversal nutshell), proven one of the improved gamma buys of 2015 also, thanks to an outsized
12% decline in the currency.
Given that implied volatility is one of the most important determinants of an option's price, we use it as a proxy for market
demand for a specific option. Thus if we compare implied volatility levels across a series of options, we can get a sense for
trader sentiment on a direction for a specific currency pair.
In line with our preference to sell rich yen skews, we advocate financing AUD/USD 3M straddles by selling 1Y 25D AUD
puts /JPY calls in vega-neutral amounts.
The technical set-up of the RV is appealing in terms of entry levels, and realized vol spreads look asymmetrically biased in the
direction of AUD/USD outperformance.
Selling cross-vol/buying USD-correlation also fits with a market environment that is likely to be dollar-centric in the early
stages of the Fed cycle.

8. Trade Positions
8 www.econotimes.com
EUR/USD USD/JPY GBP/USD USD/CHF AUD/USD EUR/GBP
RESIST3 1.0985 119.87 1.4355 1.0255 0.7087 0.7781
RESIST2 1.0977 119.08 1.4305 1.0200 0.7081 0.7756
RESIST1 1.0918 118.93 1.4281 1.0198 0.7033 0.7665
SUPPT1 1.0861 118.41 1.4224 1.0118 0.7001 0.7628
SUPPT2 1.0858 118.35 1.4175 1.0094 0.6992 0.7550
SUPPT3 1.0844 118.05 1.4080 1.0026 0.6951 0.7527
Strategy SHORT BUY SHORT BUY BUY SHORT
Price 1.0900 117.80 1.4300 1.0121 0.6955 0.7612
Target 1.0560 - 1.4105 - - 0.7425
Stop 1.1060 - 1.4405 - - 0.7695
EUR/JPY EUR/CHF USD/CAD GBP/JPY EUR/NOK EUR/SEK
RESIST3 130.75 1.1121 1.4246 184.65 9.7475 9.3445
RESIST2 130.50 1.1100 1.4209 183.95 9.7400 9.3180
RESIST1 130.00 1.1076 1.4156 183.37 9.7335 9.3152
SUPPT1 128.27 1.0993 1.4028 182.19 9.6145 9.2660
SUPPT2 127.85 1.0927 1.4003 181.04 9.5865 9.2595
SUPPT3 127.84 1.0910 1.4000 180.00 9.5125 9.2305
Strategy - LONG BUY SHORT SHORT BUY
Price - 1.1069 1.4040 182.62 9.7400 9.2610
Target - 1.1600 - 180.10 9.5250 -
Stop - 1.0850 - 184.30 9.7510 -
NZD/USD AUD/NZD AUD/JPY USD/SEK USD/NOK USD/ZAR
RESIST3 0.6558 1.0956 101.24 - - 16.6525
RESIST2 0.6532 1.0948 99.91 - - 16.6000
RESIST1 0.6464 1.0927 99.01 - - 16.4995
SUPPT1 0.6411 1.0899 95.17 - - 16.3315
SUPPT2 0.6348 1.0845 94.78 - - 16.3100
SUPPT3 0.6340 1.0801 94.00 - - 16.0485
Strategy LONG LONG - SELL - SELL
Price 0.6455 1.0735 - - - 16.4850
Target 0.6670 1.1260 - - - -
Stop- 0.6410 1.049 - - - -
Source: Aggregate trading positions of traders reported on Thomson Reuters FX matching platform

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Technical Analysis
We prefer to short EUR/CAD below 1.5265
Major support -1.52650 (trend line joining 1.4957 and 1.5225)
● The pair has made a low of 1.5255 yesterday and started to recover from that level. It is currently trading around 1.5345.
● EUR/CAD faces strong support around 1.52650 and any break below will drag the pair down till 1.521/1.5070/1.5000 in
short term.
● On the higher side major resistance is around 1.5400 and break above will take the pair till 1.5426/1.5470 level.
● Short term bullishness only above 1.5570.
It is good to sell below 1.5265with SL around 1.5310 for the TPof 1.5070/1.5000

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Trade Idea
We prefer to long EUR/USD at dips
Minor resistance - 1.0880 (trend line joining 1.09147 and 1.0971)
● The pair has broken minor trend line resistance 1.0880 and jumped till 1.09062 at the time of writing. It is trading around
1.09017.
● Break above 1.0880 will take the pair to next level around 1.09490/1.09800 in short term.
● Overall bearish invalidation only above 1.1000.
● On the lower side minor support is around 1.0860 (200 day HMA) and break below targets 1.08200/1.07800.
It is good to buyat dips around 1.08950 with SL around 1.0860for the TP of 1.09480/1.09800/1.100
RESISTANCELEVELS SUPPORT LEVELS
R1-1.0949 S1-1.0860
R2-1.0980 S2-1.0820
R3-1.1000 S3- 1.0780

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