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Daily FX View: Data Boost ZAR, Weigh SEK, USD/MXN Falls Further

Dec. 10, 2013 7:27 AM ET
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USD/MXN nearing key support, view is contrarian bullish.

• ZAR outperforming 22 major FX peers
Mfg. prod. for Oct. 6.9% m/m vs est. 3.1%, tied for 4th-highest pace since 2000; mining prod. 6.5% vs est. 2.1%
USD/ZAR -1.16% at 10.2802, session range 10.2722/10.3946
View: Lower
Daily momentum reversing downward
Failed test of Aug., Nov. highs
Failure at 76.4% rebound of 2008-2011 decline

• SEK underperforms 21 of 22 major peers after soft industrial production
Oct. IP -1.7% m/m vs est. +0.9%; Citigroup's economic surprise index remains at -44.00, near troughs for series
Markets pricing 25% odds of rate cut at Riksbank meeting Dec. 17; 6 of 14 economists surveyed by Bloomberg also expect cut
EUR/SEK +0.21% at 8.9910, session range 8.9697/9.0321

• JPY mixed among major FX
Machinery tool orders for Nov. 15.4% y/y, pace trending higher during 2013 into top half of -40% to +60% range in place since late-1980s
USD/JPY -0.11% at 103.16, session range 103.07/103.39
View: Bearish
Negative momentum divergence as technical signals drop while USD tests higher
Marginal new high since May; next resistance 103.74 May 22 high

• GBP mixed vs major FX
BoE's Carney says U.K. eco. needs policy support, pledges vigilance vs potential housing bubble
Oct. ind. prod. 0.4% m/m, as expected
GBP/USD +0.14% at 1.6453, session range 1.6419/1.6466
View: Cautiously bullish
Overbought with negative divergence: RSI high since Oct.; stochastics lower from high since Sept.
New high since 2011; next resistance 1.6618 Aug. 2011 high

• MXN gains vs 18 of 22 major FX peers
USD/MXN -0.23% at 12.8255, session range 12.8176/12.8595
View: Contrarian bullish
Oversold: MACD differential around Oct., Nov. troughs; RSI around lows of Sept. , Oct., Nov.
Nearing support 12.7626 76.4% retrace of Sept.-Oct. rally, 12.7481 Oct. low

• NOTE: TJ Marta is an FX strategist who writes for First Word. The observations he makes are his own.

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