BofA’s MacNeill Curry warns that “several major FX, commodity, and bond markets are flashing warning signals of a change of trend.” Specifically, he notes that JPY is set to resume its devaluation path (USDJPY bullish) with a 106.00 target; US 10Y Treasury bonds are “at risk” of a bullish turn on a break back below a yield of 2.802%. This would suggest the charts are beginning to price in a “Taper-on” story (as USD repatriation flows cease and allow the JPY to weaken and bonds rally back on ‘moar printing’) and perhaps that is what fits with his view that the Indian Rupee melt-down is showing signs of stalling.
Via BofAML’s MacNeill Curry,
USDJPY Set To Resume Its Bull Trend
For the past 3 months, USDJPY has been confined to a well defined contracting range. Now that range is just about complete and NEAR TERM WEAKNESS MUST BE BOUGHT. Upside targets are seen to 106.00/105.80, potentially 109.80.
US 10yr Note futures at risk of a bullish turn
We have been and remain US Treasuries bears, targeting 3.045%/123-02 in 10s. However, evidence for a bullish turn in trend is RAPIDLY INCREASING. Specifically, the persistent Bullish Momentum Divergences and Friday Bullish Reversal Candles across much of the curve all warn of an earlier than anticipated turn in trend. For now we remain bearish, but a break of 2. 802%/125-09 in 10s would force us to change our view.
USD/INR shows signs of exhaustion
USDINR is showing signs of stalling. The Daily Candlestick against weekly and daily channel resistance and bearish momentum all point to a near term turn. WATCH US Treasuries. A break of key resistance (2.802%/125-09) would likely be the catalyst for a move constructive near term outlook for the Indian Rupee.
And while these 3 ‘expectations’ would appear a “Taper-off” story; it seems, judging by copper that the money will be flowing from China anytime soon…
A top is approaching in Copper
Copper is fast approaching levels from which we would expect a top and resumption of the bear trend. Into 7474/7534 we look for a top and turn lower for 6602/6635 and below .
Which makes sense since we remain confident that recent copper strength is as much about the cash-for-copper financing deals (which will likely be suppressed) as it is any fundamental-based demand for the much-vaunted economist-metal.