EUR – Another day of chopping/consolidation stuck 30 pips either side of 1.29 – My view remains unchanged with a bias to the topside – I remain long looking for an eventual break of 1.2970/1.30 to confirm the recent selling pressure is over and we again target a deeper squeeze. ECB today and payrolls tomorrow should help provide further clarity to this view – Ultimately only back below 1.2800 would I change my view back to neutral. Intra day downside 1.2865/70 (held 4 times now on the dip) important then 1.2800/25. Topside 1.2970 line to watch but 1.30 break for the confirmation – Order book light until 1.28-1.2750 mixed and 1.3030-80 which is dominated by selling.
GBP – BOE policy decisions at noon. The broad consensus and house view is ‘maintain course’ from the BOE today, with the next window for policy easing at the November meeting. So, today the pound continues to trade on the heavy side with limited bounce so far. In cable 1.6110 and then 1.6130 resist, with 1.6060 and 1.6030 first levels of support. EUR/GBP holds well above 0.8000, despite some profit takers appearing and looks set for a steady move towards 0.8068 and then 0.8100. I still sit short pounds and look to continue to play ranges and avoid getting sucked in to selling on weakness.
JPY – So mkt continues to pour back into usdjpy longs supported by better US data and hope of more BOJ easing in the meeting tomorrow and then a stronger payrolls Friday – i have started to lighten up longs based on view that my first target at 78.60 reached and now look for a move to 78.90/00 at some stage – While thinking 78.10/20 should hold well on dips for now. Key will be if we can clear 79.23 (old high) 78.25 (cloud top) but thats post payrolls for me so sticking to plan as usdjpy has a habit of disappointing.
AUD (1.0226) – focus in Asia was the retail sales number, another weak print saw a quick flush out sub 1.0200 though importantly strong support round 1.0160 still holds for now. We sold a very decent chunk of AUD on the lows, it was certainly bid and I expect it to remain this way anywhere below the figure heading into payrolls tomorrow. 1.0255/60 should cap any rallies above, we are already picking up supply here so I don’t envisage a wide trading range over the next 24 hours. I imagine the market got quite short following that print, I prefer to remain square here and sell into this pain should we squeeze at any stage today. G’luck!!
CAD – We saw some good two way in funds yesterday with RM names selling and a few Asian leverage names buying, ultimately still sidelined but focus returns onto American concerns over the next 24 hours with Factory orders, jobless claims and FOMC minutes this afternoon and of course payrolls tomorrow. Think there is still value in being short USDCAD with a stop above 0.9900 but sentiment clearly will be dictated on data events over next couple of sessions. Orderbook has a few corp bids back to 0.9820/30 and there will be stops below 0.9790, sitting core short for now and will add back to 0.9880. Good luck..
Resistance 0.9900 0.9930 1.0000
Support 0.9820 0.9750 0.9680
Scandies – One way traffic in EURSEK yesterday with unfortunately people short against the 100 dma which came in around 8.5950 being stopped out on break of 8.60/61 trading just shy of 8.64 in the afternoon. Dips have been virtually non existent this week and dare I say I think we may be a touch over stretched here in SEK and as per yesterdays update have gone short here with a stop above 8.66, this afternoons festivities clearly dependant on ECB though. We saw a bit of profit taking in NOKSEK above 1.16 and as such EURNOK decided to play some catch up trading through 7.40 back up to 7.43. Few offers back to 7.45/46 and then some stops above 7.48, less inclined to fade EURNOK in the short term because I think it can catch up a bit more but will look to buy NOKSEK again back to 1.1520/30. Good luck.
EURSEK support: 8.59 8.52 8.45 resistance 8.65 8.6650 8.70
EURNOK support: 7.35 7.30 7.25 resistance: 7.45 7.48 7.50
ZAR – Not surprisingly, better USD buyers seen through yesterday’s session as labour unrest continues to dog local sentiment. Fears of contagion effect on real economy etc all playing out in investors’ minds as speculators prefer to be short ZAR in current environment. USDZAR consolidating above 8.4000 level overnight with 8,4500 then 8.5000 resistance levels. Line in the sand level seen at 8.5500, above which things could get messy for ZAR. On the support side we see 8.3800 then 8.3200. We prefer to buy against 8.3800 level on the day.
Barclays Capital