EUR – General risk sentiment disappointed eur bulls seeing us clear the decks 1.2955-80 of the longs but gd demand seen again on that dip – I remain a buyer of eur dips (only wrong on a close below the 200 day which is now at 1.2835), however this recent move suggests that we are more rangey, rather than ready to push higher in an uptrend, so need to leave room to weather a deeper correction. Decent data risk today with Euro PMIs then IFO in the morning followed by FOMC later in NY. 1.2930/50 offers some support on the downside then 1.2880 below that – topside 1.3020/40 first resistance before that 1.3080/90 topside.
GBP – CBI data at 11.00. All about stocks yesterday and it will be again today no doubt. Sterling is a 3 dimensional market but alas, only 1 dimension at a time it seems. The USD legs followed the S&P future like a blind Labrador on the trail of a pork chop. Watch for a break of 1400 below today. European data, (IFO, PMI) may throw it off the scent for a bit but it’s sure to pick it back up again if the chop starts moving. Tech levels in cable, 1.5910, 1.5865 and 1.5850 support, with 1.5977, 1.6000 and 1.6034 resistance. EUR/GBP at the mercy of the USD legs but stops 0.8080-0.8100, below tech support at 0.8115. Resistance at 0.8188.
JPY – Lots of selling yesterday from rm and exporters met with a wave of diff lev and spec buying added up to a tight range with high volumes – It again like Friday weathered the risk sell off very well and technically it remains above the important lvls 200 day (79.47) – Short term looking at that 79.70 – on downside to contain some stops but demand should be 79.45/55 lvl again – disappointment would be a move back below 79.20 – topside good selling still 80.00/10 but a break of 80.10 for me suggests further buying towards 80.50 as we get closer to the BOJ meeting on 30th.
AUD (1.0315) – headline and trimmed mean both beat expectations overnight, this was good for a 8-10bp sell-off across the curve with spot rallying 50 ticks post data to our first resistance zone round 1.0320. Odds of a rate cut in Nov been reduced from 90% to 60% now, hard to envisage a situation where the RBA will need to cut more than once heading into year end. AUDNZD again the preferred vehicle for expressing AU-centric views, we saw good demand for the cross yesterday following the trendline break lower in NZDUSD which has taken us up to some very important resistance here round 1.2700. Stops are lurking above here, no real supply until we get closer to 1.28 figure. AUD book uninspiring at the moment, stops above on a clean break of 1.0340 (yesterday’s highs) with no real demand until we get back down toward 1.0260. Still have a bias to owning AUD gamma, directionally it looks tough as we continue to whip about in this 1.02-1.04 range. G’luck!
CAD – Just when you thought it was safe to be long USDs Carney tugs on that tight leash he has and USDCAD does a quick 180 and we lose 50 points on thin air on the back of *BANK OF CANADA SAYS HIGHER RATES `WILL LIKELY BE REQUIRED’. We saw some good real money selling pre retail sales around the highs yesterday between 0.9960/70 and then post BoC once we found ourselves at 0.9910/20 we bought a very large amount out of NYC for a leverage name and it didn’t even touch the sides. Where do we go from here? Well after a lot of chop and certainly positioning a lot cleaner, notably RM bailing on CAD longs I think we can see some CAD strength in the crosses EURCAD nice sell against 1.3000 trendline resistance and AUDCAD against 1.0275/1.0300. We have been playing funds from the short side for a while now to not much avail, I think finally given those comments yesterday and despite the sell off in stocks we continue to sell back towards 0.9950 with a parity chop and I think we gain some traction back to 0.9840/30. Resistance 0.9970 1.0000 1.0080. Support 0.9900 0.9880 0.9820.
Scandies – As we thought dips in EURSEK looking shallow into tomorrows Riksbank decision, Should be offers ahead of 8.65/66 and as such sitting small short at the moment but this morning is going to be dictated by consumer and manufacturing confidence. The orderbook has some interest to buy around 8.59/58 and as such will cover any short if we get below 8.60. I don’t feel like the Riksbank do anything massively dovish and as such still happy to sell EURSEK back towards 8.70 if we squeeze. EURNOK I suppose the only surprise at the moment, has been steadily bid since Friday and we did see some demand from several RM names through 7.42 and its looking like it might test 7.45 resistance. Few people pointing towards the slide in oil and also the upcoming decision on Norges bank purchases for November as the catalyst, either way still happy to buy the dip for now leading into next week and first buy zone comes in around 7.40 so will be looking to reinitiate longs if we dip. EURSEK support: 8.55 8.52 8.45 resistance 8.66 8.68 8.70. EURNOK support: 7.35 7.30 7.25 resistance: 7.45 7.48 7.50.
Barclays Capital