G10
EUR – Quiet o/n with eur failing to push on above 1.2330 lvl despite stops in the market – Still not huge clarity coming from the EU finance ministers meetings although comments from Schauble regarding use of ESM/EFSF funds ‘without warning’ suggests that they may stand ready to step in if Spanish and Italian yields do start to rally hard. Only thing of note out is the german courts ruling on ESM but unlikely to cause to much of a shock there. So looking at orderbook 1.2250/60 support 1.2330-60 resistance.
GBP – Production and trade data at 9.30. Trading ranges contract as the market waits for the next thread. Positioning in EUR/GBP has increased and the market sits shorts, which makes me reluctant to add to shorts at these levels. I expect demand to increase as price action dies and European exporters still run under hedged. However, the overriding theme is intact and running short of Euros continues to be plan A. I look to play 0.7910-0.7950 range today. Cable has been a little sidelined but maybe this mornings data releases could change that, all be it momentarily. My research is calling for above consensus IP, (0.3% m/m v -0.2% cons) and manufacturing to have risen 0.9% m/m v cons -0.1%. Strong car production driving our high forecasts. I’ll look to fade Sterling strength in cable at 1.5550 and EUR/GBP 0.7900-10.
JPY – We couldn’t rally back up through 79.80 yesterday so we try the downside today with US yields struggling and Mkt a little long ahead of the BOJ – There are stops in the mkt 79.20 down – so room to push lower if we do get below the recent range lows however still seems to be some gd bids in the mkt 30-40 for now – Japanese names the bids assuming for lifers – currently short wrong in short term above 79.80.
AUD (1.0175) – still stuck in this 1.0150-1.0230 range, we tried to test lower in Asia but again the follow through was disappointing. I added to shorts overnight above the figure, will keep a chop through 1.0230 for now. The CH data is a concern, and for mine we will get weak domestic employment data later in the week which should see the pressure on AUD remain. I think it’s merely a matter of time before the bids below round 1.0140-50 get absorbed, should it eventuate I will add to shorts on a clean break of 1.0140. AUDJPY looks particularly vulnerable after breaking trendline support in Asia, this too should see AUD trade with an offered tone today. Offers ahead of the figure for now, bids 1.0145-50 with stops below 1.0140.
CAD – USDCAD not particular the focus at the moment corp bids lurking 1.0140/60 and few stops building above 1.0230, on the whole game plan remains the same as yesterday look to sell EURCAD if stops get done above 1.2590 and play extremities of 1.0150/1.0280 range in USDCAD if we get anywhere near it which seems unlikely at the moment, CA housing starts this afternoon.
Resistance 1.0240 1.0280 1.0350
Support 1.0140 1.0100 1.0080
Scandies – Overall quite a tame day in scandies yesterday, EURSEK continues to struggle ahead of 8.65 and some RM and leverage demand for NOKSEK sub 1.15 has kept EURNOK soft which has traded down to my target from yesterday at 7.47. Industrial production out of Sweden this morning and CPI out of Norway and on the whole barring any real negative outliers I still favour being long NOK and happy to fade SEK weakness certainly ahead of 8.68/8.70. Levels remain the same, EURNOK support comes in around 7.43 and orderbook has a few offers around 7.53/55. EURSEK a little quieter but should be some bids ahead of 8.60 and stops in NOKSEK above 1.1575. Still short EURNOK and looking to add above 7.50. Swedish IP 8:30 and Norway CPI at 9:00. Good luck.
EURSEK support: 8.61 8.59 8.40 resistance 8.68 8.70 8.74
EURNOK support: 7.48 7.43 7.40 resistance 7.55 7.60 7.6650
EM
ZAR – Lack of data or headlines kept G10 well behaved yesterday and USDZAR bounced between 8.2435 – 8.3040 all day in JHB. On the day we saw sizeable offers by both local and offshore names towards 8.3000 with offshore names active buyers below 8.2500. Taking over from Asia this AM sees risk on firmer footing. USDZAR feels heavy at the start and a break of the 8.2000 opens the door for a pullback to 8.1500 with topside resistance coming in at 8.3200. We are short USDZAR at the open but cautiously so, lacking any real conviction at these levels. On the day we have Industrial and Manufacturing production numbers out of EZ.
Barclays Capital