EUR – Eur x’s supported eurusd yesterday and we saw some general short covering from lev and spec a/cs helping us to trade 1.2778 high. That 1.2770/80 was the lvl we were looking for and so square again now. I think decks a little cleaner and so can play the wider 1.2650-1.2820 range – Today like to sell a rally towards 1.2790/00 with a stop above the 200 day (1.2815) at 1.2850 – Downside some bids 1.2700/10 then around that daily cloud base at 1.2650.
GBP – Retail sales at 9:30. Well cable breaks down through 1.5850 but someone threw a bucket of water over the fireworks as price action wallows around the level. We’ve hardly moved overnight, despite seeing selling interest, spurred on by the more dovish tone and specific mention of exchange rates by Mervin King. I sold pounds during the report yesterday and tried shorting on the south side of this 1.5850 but have been quick to take those back as price action dies. So who’s buying? Well maybe there is some recycling going through but the market was short and taking positions back. EUR/GBP is probably the best way to express a short GBP view but again EUR/USD fails to inspire on its break back through 1.2740 topside resistance. In the cross, tech resistance at 0.8050, 0.8068, 0.8082, (200dma) and 0.8100. Support at 0.8020, 0.8000 and 0.7980. I will look to play from the short side today, (GBP) specifically on a weak retail sales print this morning.
JPY – Well another gap move up in Asia on some ABE (Ldp) headlines talking aggressive easing – We take out that 80.65/68 area (weekly cloud top/payrol high) Added to longs this morning looking for us to sustain this break – dips should be to 80.40, ideally holding above 80.65 – Topside some selling against that 80.95/81.00 before stops 00/15 and then selling again 20-40. Definitely mkt getting the kind of headlines it wants but still 4 weeks till the elections on 16th dec – so need to be flexible still to allow for dips , although I don’t expect usdjpy back below 79.80.
AUD/NZD/CAD – We finally realised some volatility, hallelujah! 1.0350 remains the first support level, below here it opens up down to the figure and then the bottom of this recent range round 1.0160-1.0200. We bought GBPAUD cash yesterday, ended up rolling this into a 6d 1.5275 so have now some decent gamma to trade. Still favour this cross higher, though admittedly most of the markets focus was on EURAUD with this providing better bang for your buck (with EURGBP rallying yest). 100dma in GBPAUD comes in at 1.5316, above here the 200dma at 1.5361. Bird was resilient in the face of the move in AUD, we sold some cross yesterday on the spike up to 1.2830 and it has never looked back. We still have a good skew to sell above, I’ll stay short as I really think the market is getting excessively bearish on NZ for the wrong reasons. CAD – zzzzz. Offers 1.0035-50, bids parity and below. Really struggle to get involved with it trading as lacklustre as it is. Better action to be had elsewhere.
Scandies – Swedish Unemployment at 8:30/Norwegian trade balance at 9:00. EUR/SEK the focus as we continue to trade with a bid tone. I’m a little surprised we’ve come so far, (15 big figs) on the back of a weak data release. 8.6450 was my level to start shorting but price action feels too robust for now to get heavy. 8.6980-8.7200 remains heavy tech resistance though and shorts should respect any move above there. NOK/SEK also getting some traction above 1.1766, with 1.1880 daily trend resistance coming into focus. No doubt the short term market will be playing this cross form the long side now. EUR/NOK gets some tow from the EUR/SEK move but price action muted. I still favour shorts here, risking 7.4150 resistance.
Barclays Capital