BNP Paribas Momentum signals EUR & CAD weakness

03 February,, London – After analysing the financial market ahead of Thursday’s BoE interest rate decision, BNP Paribas has shared the latest G10 Momentum signals based on the strength of a currency’s trend in which it takes into account FX price action, equities and rates.

Momentum signals EUR & CAD weakness

The USD’s broad bullish trend continues with a score of +76 out of +- 100, supported by bullish trends in FX, rates and equity markets. The strongest USD trends are versus the CAD, EUR and NOK.

“The strongest momentum signal remains long USDCAD, although the strength of the signal has declined as USDCAD has retraced lower,” BNP Paribas added.

Momentum signals EUR & CAD weakness Source: BNP Paribas analysis

Second in line is the JPY, scoring +42, which is supported by the FX rates as investors keep the safe haven currency bid in the current risk-off environment, despite the BoJ interest rate cut into negative territory on Friday.

Meanwhile, the EUR exhibits a bearish trend with a score of -28 out of -100. Mostly weighed down by interest rate momentum, which is very bearish for the EUR. Equity momentum is slightly bearish and FX momentum is slightly bullish.

USDJPY not done yet

BNP Paribas continues to favour USDJPY upside based on STEER and Positioning models.

“We expect US yields to continue to adjust upwards, while long JPY positioning remains large at +27. In addition, BNP Paribas STEER this morning triggered a bullish STEER trading signal targeting 124.27,” BNP Paribas advised.

Momentum signals EUR & CAD weakness

It is interesting to note that rates market price action indicates that the market views the USD gains, after the BOJ’s decision, as likely to further curtail Fed prospects for further interest rate hikes. BNP Paribas would point out, however, that the JPY has only a modest weight in the Fed’s TWI.

Consider reading: Bank of America: Trading the BoE

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