Market Economics | Interest Rate Strategy - BNP PARIBAS ...
Market Economics | Interest Rate Strategy - BNP PARIBAS ...
Market Economics | Interest Rate Strategy - BNP PARIBAS ...
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Chart 2: US Dollar Index (DXY) – Double-top targets a decline towards 76.25<br />
DXY posted a doubletop<br />
during Nov/Jan, 89<br />
88.35<br />
now favouring a<br />
deeper medium-term 87<br />
decline toward the<br />
76.25 double-top 85<br />
83.55<br />
objective. Accelerating<br />
83<br />
bearish weekly<br />
81.45<br />
momentum risks an 81<br />
even larger dive<br />
towards 75.50 and 79<br />
80.10<br />
potentially 74. Use<br />
short-term rebounds 77<br />
towards 79.50-80.00<br />
75.65<br />
75<br />
resistance to initiate<br />
31-May-10 28-Jul-10 24-Sep-10 23-Nov-10<br />
DXY short positions.<br />
Source: <strong>BNP</strong> Paribas<br />
USDMXN has<br />
posted a sharp<br />
decline during the<br />
past 6 weeks<br />
breaking long-term<br />
12.0440 Fibonacci<br />
support and trading<br />
at levels last seen<br />
during the Lehman<br />
crisis.<br />
This decline saw<br />
USDMXN become<br />
deeply oversold. We<br />
now expect a rebound<br />
off the recent 11.9440<br />
low towards the<br />
12.17-12.23 area.<br />
Source: <strong>BNP</strong> Paribas<br />
USDTRY has broken<br />
sharply lower through<br />
November’s major<br />
uptrend support.<br />
The bearish trend<br />
reversal has been<br />
validated by the further<br />
break below 1.5375<br />
key support.<br />
We now expect a<br />
multi-week decline<br />
towards 1.5150-1.49.<br />
Use short-term rallies<br />
towards the 1.56-1.57<br />
area to enter sell setup.<br />
Chart 3: USDMXN – Rebounding off multi-year low<br />
13.60<br />
13.40<br />
13.20<br />
13.00<br />
12.80<br />
12.60<br />
12.40<br />
12.20<br />
12.00<br />
11.80<br />
11.60<br />
13.40<br />
31-May-10<br />
12.10<br />
13.20<br />
12.45<br />
28-Jul-10<br />
13.25<br />
24-Sep-10<br />
12.15<br />
Chart 4: USDTRY – Breaking lower through major uptrend<br />
1.65<br />
1.60<br />
1.55<br />
1.50<br />
1.45<br />
1.40<br />
1.35<br />
1.5965<br />
21-May-10<br />
1.6065<br />
1.4810<br />
20-Jul-10<br />
1.5355<br />
16-Sep-10<br />
1.3830<br />
12.60<br />
23-Nov-10<br />
1.5920<br />
19-Nov-10<br />
81.30<br />
20-Jan-11<br />
11.95<br />
20-Jan-11<br />
1.5935<br />
20-Jan-11<br />
Source: <strong>BNP</strong> Paribas<br />
Andrew Chaveriat 20 January 2011<br />
<strong>Market</strong> Mover, Non-Objective Research Section<br />
64<br />
www.Global<strong>Market</strong>s.bnpparibas.com