G10
EUR – Weak PMI’s, especially Germany, disappointed the market yesterday and built on the general increased bearish sentiment on Europe and European yields of the last 3 trading sessions – European corps took advantage to buy the dip yesterday but once filled we made a new low in NY at 1.2042 – IFO today and first support will be the 1.2040 lvl then the barriers/ psychological 1.20 lvl – topside 1.2090/00 then 1.2160 resistance – remain short for now targeting a break of 1.20 – wrong in the short term above 1.2160.
GBP (1.5502) – After a quiet day yesterday, we should have a bit more action from 9:30 onwards with GDP data likely to set the tone for the rest of the days trading. Market consensus is -0.2%, anything worse and expect to see GBPUSD trade through the 1.5480 support lvl which has held well thus far. Beyond that 1.5380-1.5400 remains key, draw a trendline from the ’08 lows and you can see it’s fairly powerful indeed. After yet another day whereby the EUR was battered, I prefer to play a negative GBP view with a long EURGBP core position and will be looking for EURGBP to move back up and test 0.7820 lvl and 0.7860 beyond that. We see decent stops through 1.5480 in cable, GBPJPY stops coming in through similar levels in cable with EURGBP supply not hitting the books until 0.7815-20. Good luck!
AUD (1.0224) – pre-CPI dump saw us take out support round 1.0200, though this did prove to be short-lived as we saw a wave of profit taking in the wake of the number. 1.0240 remains the resistance level, Asia failed here first time and I say we will struggle first attempt too. I squared shorts established on the spike yesterday, have re-sold agst this 45/50 level this morning but again more out of principle than harbouring any strong views. Orderbook has a decent number of stops now through the Asia lows at 1.0170, nothing meaningful topside until 1.0265/70 where we hit some resting supply. AUDNZD at pivotal levels right here; a clean break of 1.3070 will mark a continuation of the trend higher. I am short, will stop through 1.3080. Good luck!!
CAD – USDCAD was steadily bid yesterday amidst the back drop of claret covered equities and flight to quality in fixed income, 1.0120/40 forming nice short term support and we find ourselves back above 1.02 having traded up to 1.0230 overnight. Approaching upper part of the recent range in USDCAD where I am tempted to fade but wary given the current sentiment in stocks, orderbook has offers in EURCAD around 1.2380/1.24 for a variety of different names and still think fading a squeeze in this makes sense. If we see a real summer slump in US bourses ie S&P through 1280 then I think CAD will suffer but for now respecting the ranges and still feel EURxxx weakness is prevalent. Good luck.
Resistance 1.0230 1.0260 1.0300
Support 1.0130 1.0050 1.0000
Scandies – Quiet day in scandies yesterday, but the one thing of note was a few long trade recs appearing from a few people in EURSEK. Not sure I can fully get behind this at the moment despite the ferocity of SEK appreciation recently. I am not sure we can rely on being long on a pure Riksbank cut basis as September seems like a lifetime away but the labour survey and consumer confidence data tomorrow is important given the significance the Riksbank have placed on Swedish growth as a catalyst for a potential rate cut. If tomorrow is a disappointment then Ill be more comfortable being long but if not then I think there is still room for EURSEK to extend lower, 7.45 first sell zone with stop above 8.50. EURNOK a similar scenario still feels like a sell above 7.40 and for now I am core short with a 7.43 chop, think there is still room to see 7.30 and we have seen some decent systematic supply over past couple of sessions. Good luck.
EURSEK support: 8.35 8.30 8.25 resistance: 8.45 8.55 8.60
EURNOK support: 7.30 7.25 7.20 resistance: 7.40 7.45 7.60
EM
ZAR – More bad news out of EZ kept Risk + ZAR under pressure throughout the course of yesterday and the local ccy traded 8.4200 – 8.5525 against the greenback. On the day we saw good demand by both local and offshore names and ended better buyers of USDZAR.Taking over from Asia this AM and risk remain offered. Equity markets in the East reflect the risk averse sentiment and if this is anything to go by we are in for another day of pain for ZAR. That being said USDZAR is off nearly 5% from Thursday’s lows and if we can get a break from EZ headlines we should see a correction back to the 8.4500 level. On the day we’ll buy dips back to 8.4500 to add to our long USDZAR position, remaining bearish on risk and aiming for a push towards 8.6500. On the data front we have IFO data out of Germany and MBA Mortgage Applications and New home sale out of the US..
Barclays Capital