EUR – Mkt caught offside with Draghi’s downgrading of growth/inflation forecasts yesterday and as we took out support at 1.3010/25 we dragged more people in – lev, rm and spec all hitting eur and eur x’s – Today we under pressure again through fibo support at 1.2950 as germany downgrade their gdp forecast – Mkt trades like still unwinding the recent buying of the last 2 weeks Key now will be this 1.2880/00 on the downside. Going into payrols any dip to that lvl should offer good value – topside 1.2990/1.3010 will be toppy initially. Upside momentum definately gone for the time being – now we looked to payrols.
GBP – focus has been on the cross for the past 24 hours, we open the session round good support with both the 55/200dma’s coming in between 0.8051-58. This should serve as good support into the IP data at 9.30AM LDN time; I don’t see us breaking this level beforehand. Book remains largely uninspiring, most of our resting interest was taken out on the aggressive move yesterday with mkt participants happy to sit on the sidelines ahead of payrolls. We have a few bids appearing in cable round 1.6020, topside fairly thin for the most part. I am small long EURGBP ahead of the aforementioned support, will look for a small squeeze into the IP data later.
JPY – Payrol day is usdjpy day – its holding up in the face of eurjpy downside pressure – 82.20 first support (yesterdays ldn lows) then 81.65 key on the down. Topside 82.60 but really 82.85 key – Offers ahead of 83 are lighter so i think on a better print we cant test 83 and higher – A worse print and with the pressure from eurjpy lower, moving back below the weekly cloud top at 106.67 we could easing test back to that 81.65 support. For choice i own some monday upside usdjpy looking for a rally as we get closer to the elections in japan.
AUD – quiet session o/night, level above remains 1.0500/20 with a few offers building round here following the failure to ascend higher yesterday. I think we remain 1.0455/95 into payrolls, after I still have a slight bias to see this higher but my conviction is fading with every dip we see in EURUSD. EURAUD remains topical, we took out some decent stops through the 200dma yesterday with the price action only one way post. Next level remains 1.2260 (100dma), not a lot in between. Fairly square cash here, not a lot of inspiration to get involved ahead of payrolls.
CAD – USD/CAD finally breaks 0.9905 with some good selling into the 4PM fix to make a new low of 0.9892, but on a daily basis VolT suggests the dip was on low volume so should be held with caution. Stops through 0.9890-80 remain intact, but the 50dma average at 0.9918 caps us on the small pullback overnight. On the downside 0.9872 now strong support which were the November lows. The market still feels very short and with oil still looking like it has some downside in the short term, any weak data out today could see a short squeeze. I still like to sell rallies but now have some stops through 0.9930 along with offers which have been lowered now 0.9930-0.9980 (previously 0.9950-1.0025). CAD/JPY has come into focus with USD/JPY holding 82.20 now looking to test the Thanksgiving high at 82.84 and USD/CAD looking to test stops through 0.9890-80, ideally get the opportunity to get long in CAD/JPY back down towards 82.50 with a stop below 82.20.
Scandies – Swedish budget balance at 8:30, Norwegian Production data at 9:00. Both pairs trading at the lower end of ranges as general EUR weakness proliferates. EUR/SEK suffering as rumours of lhs usd/sek and eur/sek M&A related flows circulate around a market that sits long awaiting PPM flows next week. I think the M&A chatter is rubbish but PPM is real. Stops though, below 8.5900 and 8.5700 are in danger. I look to take advantage of any stop related sell off and buy into it risking 8.5500. EUR/NOK trading around support at 7.3200 but further demand should kick in ahead of 7.3000.
Barclays Capital