G10
EUR – Few little eur negatives this morning – first being the failure again at 1.3170 lvl – twice now we have had aggressive pullbacks post heavy buying – combine that with political issues in Portugal and no bank deal for Ireland and it feels enough to have eur retrace closer to the 1.30/1.3020 support/break up lvl – I like to buy that dip again. Topside we need to get back above 1.3120 and ideally close above 1.3170 to continue the deeper squeeze.
GBP – UK Inflation data at 9.30. The market in general seems to be trying to catch its breath after the last bout of risk on price action. Is it a case of all the good news is priced in now? Certainly some negatives are getting some attention, with Ireland and Portugal raising some concerns and tension between China and Japan simmering in the background. I think the next fast move will be back lower for EUR. It just depends on the depth as to weather any potential mini trend for Q4 is squashed. EUR/GBP has drifted back below the 2010 low at 0.8068 and I have supply creeping in on a 0.81 handle. 0.8000-0.7970 though offers good tech support for now. Cable seems a little sidelined now, as USD plays dwindle and the EUR focus re sharpens. Resistance is setting up 1.6256, 1.6273 and 1.6300. Support 1.6200 and 1.6167. Inflation data will only cause a stir on an aggressively higher above consensus print. If that happens, QE hopes could be scaled back short term and give the pound a knee jerk boost. Good luck today.
JPY – Big rally for usdjpy yesterday with Japanese off on holiday and eurjpy fully on the charge – we took out the resistance at 78.60/80 but topped ahead of 79.00/10 which is trend line res and contains the 100 day m.a – sold all longs against options yesterday taking advantage of the rally – with 10 yr yields backing up and so much placed on the BOJ easing tomorrow I cant help but think we get disappointment – support is 78.20 then 77.90 downside – resistance 79.00/10.
AUD & NZD – A healthy correction from the 1.0625 high post FOMC. The RBA minutes showed an easing bias with acknowledgment of the recent weakness in the commodity space. AUD has remained weak in the crosses noticeably EURAUD extending its gains to a high of 1.2537. Against the USD we are approaching a band of technical support, 1.0435 is the 61.8% from the recent 1.0365-1.0625 move, 1.0425 was the low pre FOMC and 1.0405 is the 50dma, this region will need to hold for the up move to resume. For those bearish, AUDCAD and AUDNZD offer the best expressions, AUDNZD has now closed below the June lows and looks set to target 1.25. I cut my AUD longs overnight and I expect further weakness this morning, I am holding longs in xxxJPY but mainly expressed via options. Top tier data is now light until next the start of October, looking at the order book we have light stops building from 1.0410-1.0380 with the topside clear until supply above 1.0540. We have been better sellers of AUD over the last 24 hours for real money accounts, Support 1.0435-25, 1.0405 and 1.0380, Resistance 1.0487, 1.0563 and 1.0625. Good luck.
CAD – USDCAD not the real focus, EURxxx short covering but then EURUSD failing around 1.3170 conspired to keep straight funds 0.9700/0.9760 and a little choppy in between. The BoC declining to intervene on C$ strength and the move in oil overnight muddying the waters but the real catalyst is the EURCAD buying which took us from 1.2730 to 1.2800 yesterday and up 3.5% on the month. Feels like given the abundant rm positioning in EURxxx then this trend looks like it may have legs and not getting too excited about fading this move here. Would much rather still sell USDCAD back to 0.9800 but more medium term thinking and for now USD short covering seems to be the theme at the start of this week. Good luck.
Resistance 0.9800 0.9850 0.9900
Support 0.9700 0.9680 0.9650
Scandies – A day of consolidation in G10, EURSEK and EURNOK hold onto their recent gains and still technically look like they want to test higher. EURSEK as mentioned yesterday will have to overcome some pretty good resistance around 8.70 and 8.74, crucial levels on the summer sell off. Risksbank minutes today may prove interesting, not expecting an acknowledgement of any further rate cuts which might be mildly SEK positive but think this should be faded and you can buy EURSEK back to 8.55/58. EURNOK finding a bit of short term resistance around 7.50 but will be interest to buy back to 7.45 and already few offers building in the orderbook around 7.53/54. Core long NOKSEK still and will continue to add back to 1.1450 for the time being. Good luck.
EURSEK support: 8.58 8.55 8.46 resistance: 8.65 8.70 8.7450
EURNOK support: 7.45 7.42 7.20 resistance: 7.50 7.55 7.60
EM
ZAR – ZAR remained under pressure at the open yesterday as uncertainty in the mining sector weighed in on sentiment but positive afternoon comments saw the pair drop back below the 8.2000. USDZAR ultimately trading an 8.1872 – 8.2915 range on the day. Flow wise it was a busy one with RM buying sizable clips of USDZAR prior to the comments and leverage names selling USDZAR post. From the get go risk is under pressure this AM with USDZAR opening up at 8.2700 as EUR dips back below 1.3100. News that negotiations to end the mining strikes are finally making headway with a possibility to clear up the strike towards the end of the week is good news for the Rand and on the day we could see a pullback to 8.18. That being said, until this mining strike is officially over USDZAR will remain under pressure and continue to trade in a volatile and erratic manner. On the day we have Consumer Confidence numbers locally with German ZEW and current account numbers out of the States.
Barclays Capital