G10
EUR – Painful day as we close in ny where we opened in ldn yesterday – Dips below 1.22 still remain wanted currently so after 3 goes and 3 nasty bounces it suggests to me we have put in a decent base for now – currently we are in this 1.2150-1.2450 range and aggressing short at the low end of this range isn’t working so we looking for better levels to sell – topside levels to watch 1.2320/1.2360 and 1.2430 – order books suggest a break of 1.2320 could lead to a quick spike before 1.2360/80 should cap us in the short term.
GBP – Labour market stats and BOE minutes at 9.30. We walk in this morning after the ‘head fake’ USD move higher post Bernanke and the subsequent sell off out of nowhere in NYK. Equities turned hard out of negative territory and a market long of USD’s squealed. It feels like positions are light and commitment low, making for choppy conditions on the day. EUR/GBP though, remains stable, in a heavy kind of way, which makes me think there is still strong supply. It feels like one large transaction is being slowly poured into the market. My long yesterday failed to deliver and the position is unwound. Support though still at around 0.7830. Resistance now at 0.7880. In cable I sit square, looking to play volatility around the data releases at 9.30. Levels to watch-Topside 1.5680, 1.5722, 1.5780. Below, 1.5623, 1.5550 and 1.5520 support.
JPY – 78.50/79.50 range I think since the move to 78.70 2 days ago the decks are cleared of longs and look for more consolidation in this lower range – Bernanke didn’t have too much effect on it yesterday so today we look at 78.70 as key support topside 79.20/50 has some 2 way but with Japanese offers towards the top end of the range.
AUD (1.0303) – fairly orderly overnight session, nothing major of note to report. Today I am going to focus primarily on AUDNZD, as this seems to have been the sleeping dragon and it is only now showing signs of finally awakening. We broke the 200dma yesterday, this was in the wake of poor NZ CPI data and less dovish RBA minutes. As we mentioned yesterday, there was another weak Fonterra result and this coupled with the moves we are seeing in FI (decent interest of late to pay AU rates / receive NZ rates) saw the cross finally break its recent trading range. 1.3000-50 remains key topside, above here and we are in a new range and the cross will look constructively bullish. I was stopped out of my short position yesterday and went long on the break of the 200dma, I don’t want to mess with these levels too much so my stop on the downside will be exactly at my entry level. This should serve as the first decent support level below. In AUDUSD, the book still harbours a skew to sell above with offers lining up from 1.0340-80. Market has stops in the same vicinity, so we should see some decent 2-way up round this level as it serves as a very important short-term pivot. Bids below round yesterdays low at 1.0250-40.
CAD – Rates on hold from BoC, balanced statement acknowledging US and European woes but mildly constructive on Canadian prospects in conjunction with Bernanke not giving much away in his statement but outlining the policies at his disposal in his Q and A causing the USD to do a full 180. Net net USDCAD a little sidelined over all this, traded up to 1.0170 after BoC but now we find ourselves back to 1.0100 support and ultimately key 1.0080 support. For now happy to play the range in straight funds, ill buy it back to 1.0100 with a 1.0080 chop with orderbook skew housing corp bids at these levels. EURCAD seems to be taking a lot of the interest at the moment trading from 1.2480 to 1.2400 in a straight line along with EURUSDs sell off, still think this is a sell on rallies like most EURxxx at the mo but had my fingers burnt break trading 1.2450 so will look to sell back to 1.25 for now. US housing starts and building permits this afternoon along with BoC monetary policy report.
Resistance 1.0190 1.0260 1.0280
Support 1.0100 1.0080 1.0000
Scandies – The Riksbank minutes hit the tapes yesterday and the September rate cut is by no means assured with the acknowledgment that members will continue to look at growth data for guidance on whether a rate cut is needed. Short Swedish rates popped on this and EURSEK was offered for the rest of the session trading down from 8.63 to 8.56 with a host of different names selling, we saw corp supply of USDSEK and also some spec supply of NOKSEK. I think EURSEK should be supported around 8.51/53 but still happy to fade SEK weakness as mentioned yesterday with that in mind will look to sell back towards 8.60 initially. NOKSEK through yearly low at 1.1415 might be impetus for me to give a bid in EURSEK. EURNOK immensely quiet with a fat finger yesterday afternoon the highlight of the session telling the whole story, paid up smalls with NOKSEK soft after Riksbank minutes but on the whole as long as we stay below 7.50 I think we drift lower, core short EURNOK looking for test of 7.42/7.40.
EURSEK support: 8.55 8.53 8.40 resistance: 8.65 8.70 8.74
EURNOK support: 7.43 7.40 7.38 resistance: 7.52 7.55 7.60
EM
ZAR – USDZAR remained range bound and after spending most of the day sub 8.2000 yesterday, it traded to an 8.2400 high as comments by Bernanke lent a bid to USD across the board. On the day we saw decent USD demand as locals and offshore names paid us in chunky clips. So Bernanke disappoints, USD goes bid, and when we get back in the office everything is where it was yesterday morning. USDZAR staging a strong performance overnight, trading to an 8.1625 low as risk regains traction. For now we respect the 8.1500 – 8.3000 range until we have stronger conviction on direction. On the day we have CPI and Retail Sales numbers out locally, MBA Mortgage Applications out of the US and of course the second day of Bernanke’s address to congress.
Barclays Capital