G10
EUR – So now the decks fully cleared – US holiday tomorrow so expect a holding pattern into the ECB on Thursday – 1.2550 held on the dip yest , 1.2610/15 was the pivot yesterday so expect some weak stops 1.2620/40 topside – ultimately 1.2550/1.2670 for now.
GBP – Construction PMI, money supply and mortgage approvals at 9.30. I still favour fading cable strength with 1.5730-50 short term supply acting as resistance. We have absorbed relative good news stories from Europe and I expect the market to refocus on continued bleak macro economic outlooks. 1.5800 above is now key resistance. Liquidity is sketchy and price action has gapped around in the last few sessions though, so I’m staying flexible with room to add on ‘stretch moves’. EUR/GBP demand still lurks sub 0.8000 as hedgers look to purchase, with support levels on the techs 0.7980, 0.7970 and 0.7950.
JPY – 79.20/30 continues to hold so well – weak ISM data yesterday and while people cut longs we never really tested the support – We walk in back on the highs with Trust names decent buyers o/n – for now 79.90/80.00 short term resistance before 80.30 then 80.70 – still rangey for now but with a bias for a deeper squeeze.
AUD (1.0267) – while the RBA did acknowledge the international risks that still persist, it was on the whole a fairly balanced statement with no major surprises. Price action post-RBA reflected such, and we now sit here with an impending US holiday and still largely rangebound. Stops do lie across the mkt above 1.03fig, though we remain better offered into these with the 1.0285-1.0310 level key for now. Being nimble will be key today, I don’t envisage any major moves in one direction or another.
CAD – grinds lower overnight following better risk sentiment and failing to take out stops back through 1.0200 yesterday. Support right here and then at 1.0120/25. Range today should be defined by 1.0120/80.
Scandies – SEK strength is a big story, with the Krona outperforming in the G10 space. We have slipped through the recent 8.8650-8.7430 trading range and are now eyeing up 8.7000 multiyear lows. Through there and the techy guys get excited for a much bigger move, (8.3400 target!). Most NOK/SEK longs have been flushed out but below 1.1575 some more stops could be waiting. Riksbank tomorrow will be eagerly awaited. Will they sight Krona strength as a reason to loosen monetary policy? Maybe it’s too soon but clearly they will be concerned about the recent bout of outperformance. EUR/NOK is being held up by NOK/SEK selling and the safe haven flows are much happier heading to Sweden right now. 7.4900-7.5650 broad range.
EM
ZAR – Quieter session in JHB yesterday after Friday’s pandemonium. USDZAR traded in an 8.1100 – 8.1958 range, largely tracking EUR but feeling heavy all day. We saw good USD demand by locals as the market seems not overly convinced that this move lower is sustainable. Taking over from Asia sees risk firmly on the front foot and from the get go USDZAR looks set to retest yesterday’s 8.1100 low. If 8.1100 goes 8.0800 becomes the next target before a correction back to the 8.0000 (200dma) comes into the crosshair. From here we prefer to trade from a short USDZAR bias, very wary of EU headlines that could change risk sentiment. On the day we have NAAMSA Vehicle sales locally and Factory orders out of the US.
RUB – RUB trades weaker on local offer, persisting for last couple days. Lower EUR weights on USDRUB as well, pushing it back to 32.60 lvl. Cash liquidity feels better and locals are back on track offering short term swaps, curve is generally better offered. OFZ opened bid, but the move was faded by local take-profit, still trade 2-3bps tighter.
Barclays Capital