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

Dec. 10, 2013 7:27 AM ET
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TJ Marta is Founder and Chief Market Strategist of Marta on the Markets, LLC. He is Editor and Publisher of the daily Morning Minute and a regular contributor to several notable investment publications. TJ is a respected strategist and speaker with more than 20 years of Wall Street and business experience. TJ has served as a US trading floor economist, fixed income strategist and G10 currency strategist at two of the largest financial services firms in the world: RBC and Citigroup. He has been positioned on trading floors for some of the most historic events of the past few decades, including the Crash of ’87, Asian Crisis, LTCM, 9/11, the Internet Bubble, and the Great Deleveraging that began in 2007. Marta uses his technical knowledge, market experience and passion for history to provide not only context for global developments, but more importantly, the investment implications of those developments. TJ is routinely sought after worldwide as an expert speaker and commentator on market and economic developments and is regularly quoted in top‐tier media outlets, including BNN, Bloomberg, Reuters, CNBC, Fox Business News, Barron’s, Forbes, Investor’s Business Daily and MarketWatch. His professional affiliations include the National Association for Business Economics and the Money Marketeers of NYU's Stern School. Marta holds a BS from the University of Pennsylvania's Wharton School and an MBA from the Stern School at New York University.

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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