EUR Wobbles but it won’t fall down…….yet
Yesterday saw EURUSD come under the most intense pressure from all angles; negative official statements, stock markets and metals hit hard and the USD generally being in demand for most of the day.
However, despite this, EURUSD held very well at 1.4120 on a big late push lower in Europe. Having held there, weight of short positioning then took over, and it has not looked back since; reaching a 1.4287 high overnight.
AUD & NZD hit hard yesterday. However, it was noticeable that we saw demand for both during the move lower, and ultimately both turned higher well before metals and stock markets began recovering from their losses.
USCAD was a similar picture.
USDCHF remains in bullish trend, so remain a buy on dips lighten on rallies. Despite USDCHF trading heavy all day and ultimately lower, we still saw decent demand making it tough for us to sell longs, but crossing into long EURCHF (As mentioned in the update yesterday) ensured we remained P&L neutral.
USDJPY similar to USDCHF strategy, but sold most of longs into the rally, crossing remainder into EURJPY, as we did with USDCHF longs and as mentioned in yesterday’s update.
GBP experienced a classic “buy the rumour, sell the fact” scenario yesterday. The market buying aggressively on talk of a high CPI, having a little more traction after number did come out higher, before GBPUSD and EURGBP both retraced over 100 ticks from their relative GBP peaks. Squaring GBP longs before and after the data, enabled re-entry at much better levels.
Sentiments & Views
– Both Citibank and Deutsche have put out GBPCHF “SELL” recommendations in the past 48 hours. Fundamentals and interest rates are cited, and probably anticipation of the MSCI semi-annual rebalancing mentioned in Gareth Berry’s “Postcard” this morning. There has been talk of a 1.20 target. The reasoning is all very sound, however we remain a buyer on dips.
– EUR negativity clearly still remains, with further selling into rallies likely. However, 1.4340 could well be threatened today purely on extent of short positioning that has been increased this week. We remain long from yesterday looking for test of that level.
– AUD and NZD contnue to confound. AUDUSD upside could be another “pain trade”.
Core
– Neutral GBP at these levels.
– Long and Bullish EURUSD
– USDCHF & USDJPY remains “buy on dips, lighten on rallies” with both crosses remaining “underpinned” for the time being with EURUSD firmer.
– Bullish AUD in light of similar weight of market positioning, particularly after yesterday’s moves.
Yesterday saw EURUSD come under the most intense pressure from all angles; negative official statements, stock markets and metals hit hard and the USD generally being in demand for most of the day.
However, despite this, EURUSD held very well at 1.4120 on a big late push lower in Europe. Having held there, weight of short positioning then took over, and it has not looked back since; reaching a 1.4287 high overnight.
AUD & NZD hit hard yesterday. However, it was noticeable that we saw demand for both during the move lower, and ultimately both turned higher well before metals and stock markets began recovering from their losses.
USCAD was a similar picture.
USDCHF remains in bullish trend, so remain a buy on dips lighten on rallies. Despite USDCHF trading heavy all day and ultimately lower, we still saw decent demand making it tough for us to sell longs, but crossing into long EURCHF (As mentioned in the update yesterday) ensured we remained P&L neutral.
USDJPY similar to USDCHF strategy, but sold most of longs into the rally, crossing remainder into EURJPY, as we did with USDCHF longs and as mentioned in yesterday’s update.
GBP experienced a classic “buy the rumour, sell the fact” scenario yesterday. The market buying aggressively on talk of a high CPI, having a little more traction after number did come out higher, before GBPUSD and EURGBP both retraced over 100 ticks from their relative GBP peaks. Squaring GBP longs before and after the data, enabled re-entry at much better levels.
Sentiments & Views
– Both Citibank and Deutsche have put out GBPCHF “SELL” recommendations in the past 48 hours. Fundamentals and interest rates are cited, and probably anticipation of the MSCI semi-annual rebalancing mentioned in Gareth Berry’s “Postcard” this morning. There has been talk of a 1.20 target.
The reasoning is all very sound, however we remain a buyer on dips.
– EUR negativity clearly still remains, with further selling into rallies likely. However, 1.4340 could well be threatened today purely on extent of short positioning that has been increased this week. We remain long from yesterday looking for test of that level.
– AUD and NZD contnue to confound. AUDUSD upside could be another “pain trade”.
Core
– Neutral GBP at these levels.
– Long and Bullish EURUSD
– USDCHF & USDJPY remains “buy on dips, lighten on rallies” with both crosses remaining “underpinned” for the time being with EURUSD firmer.
– Bullish AUD in light of similar weight of market positioning, particularly after yesterday’s moves.