G10
EUR – ECB day has arrived, although much was leaked yesterday afternoon sending the eur a quick 100 pips higher. Eur x’s big beneficiaries from the sterilisation and also from the talk on seniority – So today we await the exact wording from Draghi. 1.2560 good intraday lvl then that 1.2470/00 key support downside – topside 1.2640 will be the next stop trigger lvl topside and the key question on a spike is how far can we push on – price action at 1.2720/50 will be key as that’s the top of this recent range band we have moved back into.
GBP – Halifax house prices at 8.00, BOE at 12.00. Today has the potential to wake a few people out of their slumber, with all eyes on Mr Draghi. My prediction for the fight? Well, I think he has to bounce off the ropes and hit the market with an accurate combination. Anything less and the EURO risks hitting the canvas….and he knows it. EUR/USD will run the show but longer term EUR/GBP shorts are probably still out there. Cable will throw in the towel and follow any spike move in EUR/USD, shaking itself clear of this 1.5910 area. As far as the BOE announcements today, I don’t expect any shocks and agree with consensus, as do my in house research. I’m going to favour running long EUR/GBP, looking to pick up any cheap ones into 0.7900 pre ECB. 0.7880 is the downside risk level for me there. Topside 0.7970-0.8000 should contain stop buyers, although I don’t have much. Cable has stomped all over 1.5910 since breaking. 1.5935, 1.5965 and 1.6000 are the next levels to consider above. 1.5850 and 1.5780 are supportive. Best of luck.
AUD (1.0233) – Aussie event risk has run its course for the week, it really was disappointing for those expecting some decent volatility on the back of these numbers. AUD remains firmly in sell-on-rallies mode, this 1.0300/20 level remains key for now. We have very decent stops building above, but it will struggle to break on a day where the real focus is elsewhere in G10. I will sell this round 1.0270/85, a chop above the 200dma at 1.0317 makes perfect sense to me. EURAUD will be the focal point today, but for the most part it will remain a lower beta means of trading EURUSD. G’luck!
CAD – We saw some decent buying of USDCAD yesterday morning off of 0.9870, systematic and RM guys all buying pre BoC. As expected rates unchanged and a few comments catching peoples attention, noticeably the acknowledgement that China is decelerating more than anticipated and the persistent currency strength hurting Canada exports. The afternoon EURxxx buying helped USDCAD that next leg higher above 0.9910 with EURCAD trading from 1.2440 to 1.2520. Still think you can sell USDCAD back towards 0.9940/50 but ultimately focus isn’t here today. EURCAD will lead the way over ECB and my gut says there is still room for these EURxxx to squeeze higher so wont be standing in the way of EURCAD. Then its ADP and jobless claims in the afternoon. Good luck.
Resistance 0.9940 0.9950 1.0000
Support 0.9870 0.9840 0.9800
Scandies – Riksbank finally upon us and the swaps market telling us that it boils down to a coin toss. 50/50 for a rate cut today and after such an aggressive rally in spot since the start of this week 8.32 to just shy of 8.50 this morning its clear what the market wants to see. Either way now, unchanged or cut the price action will be volatile to say the least, a 10 big fig move either way I think is more than feasible. My gut says they don’t cut just yet, more a case for October but with the ECB this afternoon regardless of Riks decision going to be difficult to predict where EURSEK finishes the day! 8.60 should be ok resistance to start with and then 8.70 which is more important, 8.40 and then 8.35 first support. Not positioned now, will look to react as quickly as possible. EURNOK trading higher yesterday in line with other EURxxx demand should be some offers ahead of 7.38/40 but initially this morning about Riks and NOKSEK, 1.1635 resistance in NOKSEK but will be tested on a cut, 1.1500 first level of support. Best of luck.
EURSEK support: 8.38 8.30 8.28 resistance: 8.50 8.60 8.70
EURNOK support: 7.28 7.25 7.20 resistance: 7.38 7.40 7.45
EM
ZAR – As expected, volatility picking up as we approach the main risk events of the week and the first after the summer holidays. USDZAR ranged between 8.3650-4680 with some very whippy price action later in the afternoon as the newswires hotted up with pre ECB headlines from the various commentators. Unfortunately this is probably only the start and we expect this to intensify leading to increased volatility and causing some dislocation in mkts in the next few sessions. On the day we were better sellers of USD for local exporters running into some good supply around the 8.4500 level. Makes sense given the recent ranges we have seen. Offshore accounts were notably quiet as today’s event risk keeps speculators sidelined. Pre ECB, we see USDZAR continue to range trade 8.3500-4500, our bias is more positive risk post ECB, so would probably be going in small long ZAR.
Barclays Capital