EUR – Trading the range extremes well this week. Failure at 1.2880 Monday saw 2 days of decent short covering and corp demand which pushed us to that key 1.3020/30 resistance topside. We failed there on back of a mixture of month end eur supply and disappointing greek trokia headlines. Today cta and stop selling see us trade a low of 1.29265 currently however running into some early buying here ahead of 1.2920 from spec and range players. Plan the same, play the range 1.2880/1.3030.
GBP – Manufacturing PMI at 9.30. Sterling a little back in favour with fix buying seen at month end in cable, contrary to model predictions. EUR/GBP still within its 0.8000-0.8080 range and my first thought is that I’ll look to buy at around 0.8010 today. Cable, I’m not so sure about, with the USD still a little random. The medium term market probably does still run short but we’ll need another lunge higher in EUR/USD, (so probably higher equities) for another leg higher in cable. Congestion still at 1.6137-43 and then 1.6180/1.6200. Short term support 1.6110, 1.6080 and 1.6060.
JPY – Higher on the back of some strong x buying and month end demand yesterday and it continues to maintain a hold at higher levels o/n in asia, trading 80.13 so far. I thought we would get a chance to buy a dip towards 79.00/20 at least and have been proved wrong to date. That said i still releuctant to go long at current lvls rather wait and see what ADP, today/payrols tomorrow brings and trade the data. Support for usdjpy is 79.65/70 on the downside – 80.30/40 (previous highs) key now topside. This move higher doesnt seem to be supported by risk appetite, US yields or the BOJ so pure flow driven from Japanese demand. Month end demand is over so now we get a clearer picture of whether these lvls can be sustained from the data events.
AUD/NZD/CAD – exhausting work watching AUD do absolutely nothing at the moment, 1m vol trading at levels not seen since 2007 totally justified at this rate. I have nothing else to add but to re-iterate 1.02-1.04 remains the range. Trade it accordingly. NZD following suit for the most part, I struggle to identify an immediate catalyst that will change proceedings. We still have decent supply lurking immediately above here, nothing below until we get to 0.8180 where see some stops building. USDCAD equally as boring, we have a decent skew to sell above so coupling this with our topside offers in AUD and NZD it makes sense to be short some AUDCAD and NZDCAD at current levels. Payrolls the next major catalyst for markets, I am still not convinced this will break the shackles so for now I sit reasonably square in G10. G’luck!!
Scandies – EUR/SEK trading on the loose side. We moved from 8.6200 to an 8.59 handle yesterday on fix selling, sat below 8.6000 through the Asian session and have now just jumped back in a blink on the weak Swedbank PMI survey. It feels like some recent shorts are in at bad levels but 8.6400-50 is the first sell zone with the big 8.70-8.72 ceiling still intact. 8.5500 is still the first target on renewed SEK strength. EUR/NOK grabbed some focus yesterday but price action disappointed. So the Norges bank postpones foreign currency purchases for a month and were unchanged in their rate decision, with expected rate path not far away from market expectations. Level wise, 7.3500 is decent support, with 7.44 and 7.4850 resistance. PMI at 8.00 will no doubt see a quick algo related re-price should we print away from consensus, (49.5). Overall, I’d sooner play within ranges and fade, rather than try and push us into new territory.
PLN – Better PMI v’s bad news that Fiat (biggest car factory in Poland)looking to work at half capacity keeping the EURPLN in a lacklustre range, but holding support well (4.1250). We are still long EURPLN and expect more range play today – 4.1250-4.1550. Polish holiday today.
HUF – Quite a choppy day yesterday, but again support held well. The bond auction didn’t go well, underpinning HUF. USDHUF also held ST trend line at 317.50 well. All points to a lower HUF. Hungarian holiday today.
CZK – After the worst PMI out in 38 months – it was one way traffic for EURCZK, breaking the 200dMA but stopping short of the pivotal 100dMA (25.11). We squared up 75% of our longs, hoping for a pullback towards 25.00 ahead of the repo rate announcement at 12.00 BST. We are expecting a 10bp cut, but more importantly, the possibility of verbal intervention. Although, personally, I’m unsure how much impact that would have at these levels.
TRY – After the weak trade balance figures yesterday TRY hold above trend line support 1.7920 pretty well but given the lack of momentum and stamina to go higher we have exited our long USDTRY position. We will monitor the market today and might give TRY a try because it looks a little bit heavy and too many players relying on the range to hold. Turkish PMI release today which usually isn’t a market mover.
ZAR – Range trading continues in lackluster fashion. Flows remain relatively subdued with local 2 way flows main theme for the day yesterday. We continue to favour to buy USDZAR on dips against 8.6000, looking for a breach of topside resistance at 8.7200 and 8.7500.
Barclays Capital