EUR – very little pull back in Asia following the break of 1.32 yesterday, this still remains firmly buy-on-dips for now. We should not trade back down below the figure today, any dip towards here I will be buying more. Books have thinned out quite a bit as we approach holidays next week, some t/p interest up toward 1.3300 though nothing overly material. Small bids are creeping in 1.3220/15. As we mentioned earlier this week, EUR typically trends well when we have the 100dma cross the 200dma and this has certainly been the case thus far. 1.3280-90 remains the next key level for me, this corresponds with the highs set in late April of this year with some interest to sell emerging round these levels. Remain long and will add more should we dip down to the figure on the day.
GBP – BOE minutes at 9:30, CBI reported sales at 11:00. Cable in focus now as we breach first resistance at 1.6270. Major year highs at 1.6300-09 are in danger as price action remains solid and pullbacks shallowing out. Still feels like heavy longer term USD sales continue to dominate into year end and Real money flow is starting to get dragged in the same direction, especially against the EUR. I will look to buy cable, (despite my macro head telling me otherwise) on either a break of 1.6300-10 or on a pullback to 1.6245-50. I still have net supply though in my cable order book, (nothing huge). EUR/GBP should remain sure footed for now as EUR/USD leads the chase higher against cable. 0.8165 is the danger point for a snap higher. 0.8115-20 is the buy zone should we see it on the day. I’ll look to play the minutes as I see them and react rather than pre-position.
JPY – Still the focus of G10 with a strong close in USD/JPY above 84. Expect to see some profit taking 84.50-60 but any dips likely to be met with good demand and this is reflected in our orderbook with leverage demand 84.00-83.60. Stops lurking below 83.60/50 which is where the market closed on Friday and subsequently retraced to on Monday. A lot of xxxJPY focus particularly in GBPJPY, as GBPUSD approaches important levels at 1.6270 and 1.63, 1.63 capping the rally twice in 2012, 1.6309 the high for the year. 140 still the target in GBJPY (Q2 2011 highs), stops will be about in the market through 134.50/134.00.
AUD – not a great deal to add, we saw some good real money selling of AUD overnight though 1.05 figure provides good support for now. This really is the first buy zone, especially if EUR continues to perform as strongly as it is there is no reason AUD should weaken significantly from here. We see some good interest to buy 1.0500-1.0480, not a great deal topside until 1.0550/60 where we see a mix of stops and t/p. EURAUD topical, I unsuccessfully tried to sell this yesterday though was promptly stopped out following the break of 1.32 figure in EUR. Am square AUD here, better action to be had elsewhere in G10.
CAD – USD/CAD back to trading very narrow ranges with 0.9820/0.9800 still the first level of support. We continue to collect good offers in the orderbook 0.9890-0.9920 which held firm earlier in the week. Still look to sell any rallies up to 0.9900 looking to ultimately test 0.98 with a stop above 0.9920. EUR/CAD has sustained its break of 1.30 following some good leverage EURxxx demand yesterday, and would expect to see stops below this level. CAD has also been offered through AUDCAD where we saw good real money demand for the pair through 1.0360. This CAD supply could see us test the first offers in USD/CAD up towards 0.9890 but would expect them to keep a lid on any CAD weakness for now, especially as we head into Christmas looking for a fiscal cliff deal out of the US. CA Wholesale trade data at 13:30GMT.
Scandies – Swedish cons conf, manu conf and economic tendency survey at 08:00. Norway rate decision at 13:00. EURSEK nudges back towards 8.7000 support, which should hold us for now and I look to play 8.70-8.80. NOK/SEK bids down to 1.1760 should help with both EUR/SEK support and EUR/NOK resistance, still unbreached at 7.4150. I don’t expect any shocks from the Norges at 13:00 and I don’t think the market has any particular position on with this event in mind. So continue to play ranges, although general EUR demand may pressure the topside in EUR/NOK. I’ll be looking to exit shorts quickly above 7.4150.
Barclays Capital