G10
EUR – Well yesterday turned early on 1 headline regarding the ESM banking license and never looked back – Weak UK data, IFO all mattered not in the face of cutting from lev , spec and ctas – Today we in this 1.2110/1.2170 range in the short term – We never got back below 10 post the IFO move up so that will act as a stop pivot downside – topside we ran weak stops to 1.2170 but no further follow through so watch for stops 1.2175-1.2220 on a break – Ultimately cleaning the decks higher feels the more likely today before fade against 1.2250
GBP (1.5480) – Much weaker GDP data set the tone for yesterday’s trading, with cable breaking the 1.5480 level but finding some intermittent demand in the 50-70 area. EURGBP was the main beneficiary, breaking through the week’s highs and looks set to re-test the 60 level today. Unsurprisingly we have stops above here, and our flow early doors has suggested it’s only a matter of time before we see a resumption of this mini up-trend. No UK data of any significance out today, so the main event risk lies in US GDP. I still maintain a bearish cable bias – as such, I will remain short cable and will be looking to sell more on rallies above the figure. Am small long the cross here, will look to add on dips below 40 or with the stops through 60. Good luck!!
JPY – Still quiet in the same range as i think the market caught between intervention/further BOJ easing and the possibility that weak US data leads to QE3 For now bids 77.90/78.10 region holding us for now 77.65 key support downside – topside 78.50/60 first resistance – still stagger my buying on dips with a stop at 76.30.
AUD (1.0333) – some decent corporate/exporter demand yesterday saw AUD trade well off the pre-CPI lows, of concern to me though is the lack of pull-back in the wake of this rally. It really does feel like corporates/sovereigns have an insatiable appetite for AUD at the moment; this will all end in tears at some point, but certainly not in the foreseeable future. I am square cash here, really do not see any opportunities at present with this omniscient bid causing all sorts of headaches. I remain short AUDNZD, having survived my self-imposed 1.3080 stop by the skin of my teeth yesterday. RBNZ statement was nothing new in my mind, but given the beating dished out to NZD (especially agst AUD) in recent weeks the mkt construed it as somewhat hawkish and this set the tone for Asia o/night. Orderbook is a ghost town – scrappy offers all the way above, small stops back below 1.0300. Good luck!
CAD – Corp supply above 1.02 has won out again in funds with QE3 expectations rearing its head again, have no real interest in getting involved with USDCAD around 1.0150 which is where we open this morning. My desire to sell above 1.02 ahead of 1.0250 more galvanised now given our orderbook skew and still feel EURCAD is a sell around 1.2360/1.24, should be a few bids ahead of 1.0120/1.0100 in USDCAD and we really need to get through 1.0050 support to galvanise CAD bulls, until then happy to wait and sell rallies. US durable goods and Initial jobless claims this afternoon. Good luck.
Resistance 1.0230 1.0260 1.0300
Support 1.0120 1.0050 1.0000
Scandies – Important data day in scandies today which kicks off a series of data which the Riksbank will be looking at to determine whether a cut is necessary in September. Despite the severity of SEK appreciation recently I do not think a cut is that certain and will we need to see deterioration in employment and growth to fully justify action from the Riksbank. After we dipped our toes below 8.40 on Monday we have been steadily bid since but yet to take out 8.50 resistance. Square for the moment in SEK and will react to the data my gut says SEK weakness should still be faded as September is a lifetime away at the moment, but I think we will get some more short covering on worse data above 8.53 but I expect 8.55/8.60 to be toppy. USDSEK looks like quite a nice buy if the data disappoints against 6.90 especially with EURUSD near sell zone around 1.2180/1.22. Not too much to report from NOK, today’s sentiment should be dictated by NOKSEK on the whole still like selling against 7.40 which has held quite nicely. SW Consumer confidence 8:15, PPI and employment 8:30. Good luck.
EURSEK support: 8.40 8.35 8.30 resistance: 8.53 8.55 8.60
EURNOK support: 7.30 7.25 7.20 resistance: 7.40 7.45 7.60
EM
ZAR – Once again EZ headlines keeps market whipping between risk on and risk off. USDZAR felt overdone at the open yesterday and Comments by ECB Council Member Nowotny just gave risk the little nudge it needed to gain lost ground. After trading to an 8.5500 high USDZAR felt heavy throughout the course of yesterday’s session and ended up trading to an 8.4125 JHB low. On the day we were small better buyers of USDZAR but overall saw good 2way flow. Risk extending its gains overnight and USDZAR traded to an 8.3900 low. With headlines flying about it’s difficult to get a firm conviction on markets and for the time being we keep positions manageable. Its really just a question of time before the next bad headline out of Greece/Spain sends markets crashing down but in absence off bad news risk could rally further. For USDZAR 8.3300 (55dma) becomes the next downside level to watch and should be met with decent bids, topside 8.5500. Today sees the release of local PPI as well as Durable goods and Jobless numbers out of the US.
Barclays Capital