EUR – Wild and choppy best describes yesterdays price action and we sit right in the middle of the range 1.3250/1.3400. Feels like these lvls are well defined and a clear break of either side will lead to further follow through. Right now try and play within these ranges so 1.3335/40 then 1.3370 sell zones topside – downside 1.3367 (yesterdays low) then key 1.3250. Bias is still to buy dips but after happy to wait and be flexible for now.
GBP – BOE minutes and labour market data at 9:30. Cable on its knees and EUR/GBP back above 0.8400 after the nasty chop session yesterday. Market rumours out of Germany proved to be unfounded but were enough to expose market position in EUR crosses and along with xxx/JPY liquidation, it was enough to set the EUR sliding. So today I expect more nervousness and erratic price action. GBP/JPY currently looking at this 136.40 level but cable sees demand from profit takers ahead of 1.5800 for now. I don’t expect any massive shocks from the minutes today but risks maybe slightly skewed to the dovish side. Any members voting along side Miles for extra QE or discussion about additional policy tools will be seen as GBP negative. I still look to play sterling from the short side. Cable levels: Resistance 1.5865, 1.5683 and 1.5909. Support: 1.5800, 1.5780 and 1.5746. EUR/GBP Resistance: 0.8416, 0.8440 and then 0.8506. Support: 0.8386, 0.8366, 0.8355 and 0.8325.
JPY – Turning into a deeper correction on long the rumour sell the fact post BOJ. We never managed to regain ground above the break lvl at 89.00 late yesterday and despite settling down from the mid morning quick sell off we have seen further reduction of usdjpy and x’jpy longs from leverage and spec community. Key support now is this 87.80 lvl that held so well on the dip last week below there 87.45 and then 86.82 (years lows) key. I do think this is a correction and that we should start to find support again 87.50/86.80 area so again looking to buy dips accordingly against these lvls. Topside short term resistance is 88.35 then 88.60 but only a break back above 89.00 would show the recent sell off is over.
AUD/NZD – AUD is fast becoming a nothing currency. A weakening domestic backdrop is being offset by the search for yield – as such AUD is stuck and moving no where fast. I struggle to see a catalyst, in fact I thought last nights CPI data might have been one but the price action post paints a clearly different picture. I have no view on AUD here, even trading it through the crosses is becoming somewhat futile as it is remaining pretty static agst the USD. Orderbook thinning out as a result, some interest to sell topside round 1.0560-80 with nothing below until we see some stops through 1.0510/00. NZD not much better, we are now at the bottom end of the AUDNZD 1.2520-1.2600 trading range so a small long with a chop down through the figure is on the cards. I don’t have a strong conviction here, just sticking with ranges until broken. NZD key levels are 0.8440 and then 0.8480, not much above to get excited about.
CAD – Decent two way in USDCAD yesterday, initially some more RM selling had us taking a look at 0.9915 first off before some USD strength across the board took us back to 0.9945 (close to Fridays high) but then with leverage names selling EURCAD off 1.3250 resistance we found ourselves back towards 0.9920 at the close. It’s the BoC today and I think there is still a good story to tell regarding CAD and as such sitting short USDCAD looking for a test of 0.9880 and then ultimately 0.9830 where those corp bids held firm last week. I think rates remain unchanged but the accompanying economic forecasts and rate guidance should hopefully kick things into gear. AUDCAD also looking like quite nice levels to re short against 1.0500/20, AUD CPI a touch on the soft side aiding this overnight but pure CAD focus today, short some AUDCAD as well as USDCAD for the day. BoC 15:00 this afternoon. Resistance 0.9950 1.0000 1.0030.
Scandies – EURSEK feels like it wants to break higher with decent bids it would seem around 8.6650/6600 and then the 50, 100 and 200 dma all basically between 8.64 and 8.60 so still happy to be long leaning against these support levels. Having said that clearly need to break above 8.72 for any further test higher. Ekholm in the background cited in Swedish papers this morning stating there is ‘quite a bit of room for further cuts’ which may get some traction this morning. Sitting long some NOKSEK which has held 1.1620/00 support on several occasion now and will look to buy the break of 8.72 in EURSEK if we see it. Straight EURNOK had a sneaky 4 big figure move lower yesterday, we saw corporate selling of EURNOK on break of 7.43 and also some model supply of USDNOK around 5.58, should be more stops through 7.40 and then people looking to buy around 7.38 which I still think makes sense in terms of playing the extremities of the range unless we see a big break out higher in NOKSEK. EURSEK support: 8.64 8.60 8.55 resistance 8.72 8.75 8.80. EURNOK support: 7.40 7.38 7.32 resistance: 7.46 7.48 7.50.
Barclays Capital