EUR – Choppy yesterday but despite early selling through 1.2690 and a weak ZEW the mkt failed to extend to even test that 1.2650 cloud base on the daily’s. I saw strong corp and rm demand on the dip yesterday initiating a long at 1.2675 which i have reduced on this move to the important 1.2740 resistance this morning. We have seen gd buying again this 15-25 and i think we can still extend to 1.2765-80 where i look to sell the remaining longs and fade against the 200 day (1.2815) – Eurjpy and eurgbp have bounced back well in the last 24 hrs adding support to eurusd – 1.2740 for me remains the focus initially this morning – 1.2690 then 1.2650 on the downside
JPY – So the reports were true Noda calls the election o/n and usdjpy reacts accordingly – Mkt has had a big wash out since the highs at 80.68 at the start of the month so definately feels the mkt is chasing to catch back up. We have seen gd buying in asia from the 79.50 lvl and that continued on the ldn open 75-90. First resistance is here at 00/10 lvl and thats backed up by offers on the book. Above there 80.40 before the key lvl at that 80.65/68 (weekly cloud tol/old payrol high). Downside i expect dips to be bgt 79.60/65 then 79.10/20 becoming key focus on downside. Mkt sentiment is to push usdjpy higher on basis that this election signals the start of a long road to japan becoming more aggressive in terms of inflation target/easing. I am long here from the ldn open looking to add on dips.
GBP – Labour market data at 9:30/BOE inflation report at 10:30. Pairs still locked in ranges but cable feels like it has demand creeping in ahead of important 1.5850 support. Topside levels to watch 1.5920, 1.5930 and 1.5955. EUR/GBP pops back onto a 0.80 handle as European corp demand soaks up sellers but resistance 0.8020-30 should cap us on the day. The inflation report later this morning will be eagerly watched and yesterdays higher than expected prints, together with some volatile growth/production numbers will make the report an interesting read. I still think that the banks overall view will be of global weakness and a willingness to ‘act’ should they feel the economy slipping again. A higher short term inflation path does not take any of the banks stimulus measures off of the table in my view.
AUD/NZD/CAD – most of our resting supply has now been cleared, this leaves 1.0480 as the only real level of note above. It has been a very boring past few weeks in AUD, ranges are tight and with vols as low as they are the market has certainly got itself long gamma. Unfortunately this has depressed the ranges with a 30-40 tick intraday range now seen as decent. I am square here, better action elsewhere to trade. NZD remaining topical, the data seems to be getting worse and worse though the curve only moved 2-3bps following the o.night retail sales print. RBNZ (namely the new Governor Wheeler) remain quite hawkish, and if anything I think the Dec meeting is a pay with ~7-8bps of cuts priced. I don’t see them cutting this year, to me this is a decent trade. AUDNZD is nudging against some decent resistance round 1.28 figure, we have small offers above though nothing material. I have a feeling there will be stops above here, so will wait until these are cleared before looking to sell the cross. USDCAD was whippy yesterday, though again we hold resistance round 1.0025/35 with more offers building at these recent range highs. Not much more to add here, some AUDCAD supply resting above though for the most part this currency is a snoozer.
Scandies – No significant data today from the region. EUR/SEK continues to drift higher as some real money accounts get long. 8.6450 resistance in the pair may be enough to cap us as we bounce more than 10 figs from recent lows. USDSEK 200 dma at around 6.7893 also providing some supply. Domestic data has been a massive driver of the SEK recently and the Krona still feels back footed after the last worse than consensus print. The next significant data is unemployment tomorrow but we get PPI/trade data, retail sales and GDP towards the end of the month for the real signals. I will look to fade EUR/SEK into this 8.6450 for a short term play. EUR/NOK still quietly offered with 7.35 and 7.4150 resistance and 7.2500 mutilyear low target.
Barclays Capital