G10
EUR – Mr Draghi was all it took to turn a mkt on its head yesterday – struggling on the days lows at 1.2118 ‘we will do whatever it takes’ ‘managing yields’ – and eurusd never looked back – We saw heavy buying from all quarters 1.2170-1.2280 and have held up well overnight not dipping below 1.2270. Going into the weekend difficult to see how the mkt sells off too much barring some German contradiction – so looking for support 1.2250/70 zone if we see it – level topside is clear at 1.2330 – stops building above there – an early break i think can yield 1.2400/30 before we take a breather
GBP (1.5692) – an impressive squeeze higher yesterday, really did prove the extent of short positioning in cable at this point in time. I would have said in the wake of the GDP print being short was fully justified, but in an irrational, illiquid summer market anything can happen and we really did go some way to squeezing out a lot of short-term punters. I actually see better offers in the books all the way from spot to 1.5800, they become particularly thick round yesterdays highs at 1.5725/30. EURGBP whipping about no where, when you get a USD move of this magnitude it is hardly surprising that there is little value in taking it out of the equation all together and trading crosses. Market really is confused on this at the moment – we see stops on the downside below 0.7815/20 now, stops topside above 0.7860. Am small long the cross here. G’luck!!
JPY – Some big buying of x jpy o/n from japanese investors lends support to usdjpy – 77.90-78.10 remains stubborn support as we come to US GDP later today – topside 78.50/60 decent resistance before 78.90/00 lvl – Still remain long usdjpy staggering bids down with a stop below 76.30 – topside books clean till a break of 78.60/70.
AUD (1.0430) – it really was a nothing session in Asia, we were net RHS AUD on the day but nothing material with the grind higher on very light volumes. I took off the remainder of my AUDNZD short in late NY, still advocate selling rallies above 1.3015/20 for now. Stops above 50 here in AUD, it does feel like these will be tested at some point but I don’t think we see a big follow through post. Downside is limited on the day, I cannot see us testing anywhere below 1.0375/80. Am small long from overnight, will take profit into the s/l above 50 otherwise I’m fairly square for the most part. Good luck!!
CAD – Whatever it takes…well its going to take a lot. But the short risk positions that have been so prevalent took a battering yesterday, USDCAD a little peripheral to this but with US GDP today and FOMC next week a fresh dose of QE would be just what the market ordered to keep the USD sell off continuing. With this in mind straight USDCAD approaching some important levels, 1.0050 is key pivot support today and I think on a weak number the market will attack this, our orderbook has a few stops below there and then corp bids ahead of parity. Stand out flow yesterday was some model demand around 1.01 which was absorbed very easily. Given the move in EURUSD yesterday and the fact it’s a Friday I am a little wary of selling EURCAD this morning even though 1.2400/20 is the first sell zone. Square for now but will be selling USDCAD if a bad number prevails this afternoon. US GDP and U of Michigan confidence this afternoon. Happy Friday.
Resistance 1.0150 1.0230 1.0260
Support 1.0050 1.0000 0.9800
Scandies – On the whole a better set of data out of Sweden, consumer confidence positive and the tendency survey a mixed bag but then employment slightly better. Overall not exactly a set of data that screams for a rate cut and as such EURSEK sold off for most of our session topping out ahead of 8.47 when it was bought along with other EURxxx after Draghi hit the tapes. From here we have retail sales this morning and quite simply I still feel like selling EURSEK, better number sell through 8.40/8.38 and worse number happy to fade against 8.45/46 with a 8.50 chop. EURSEK weakness aided by some USDSEK selling through 6.90 where some stops were triggered, sitting right on 200 day in USDSEK at 6.8380 at the open and with NOKSEK now back below 1.14 these pairs could be the catalyst for EURSEK lower, NOKSEK support comes in at 1.1330/1.13. EURNOK not trading at all but on the whole anything above 7.41/43 should be sold with 7.45 looking like strong resistance at the moment, if NOKSEK breaks lower we may get our chance to reinitiate EURNOK shorts. 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 – Tough day in the trenches yesterday as EZ headlines cause havoc in currency markets. Comments yesterday by ECB President Draghi stating that the “ECB stands ready to do whatever it takes to stabilize Europe” saw USD get smashed across the board. USDZAR collapsed from an 8.4510 high to trade to an 8.2450 JHB low post the comment. On the day we were much better sellers of USDZAR as a host of names gave us USD on the move down. The last week has seen USDZAR trade from 8.1125 to 8.5500 and this morning we open 8.2250. To say headline risk remains a threat is a laughable understatement and for the time being ZAR remains pegged to this Euro circus. We are square here but USDZAR feels heavy at the open and I won’t be surprised if the pair tests lower levels. On the day a move back to 8.1500 looks like a good level to reload USDZAR. Scattered data out of EZ through the day but US GDP this afternoon will take centre stage.
Barclays Capital