EUR – The whippy price action continues within this 1.3250/1.34 range but today we have the euro area pmi’s to contend with – right now eur x’s holding up well, with eurjpy the standout, supported amongst other things by headline that Japans largest mutual fund will invest in EFSF bonds. Eurusd still looks too low in comparison but we need to respect the lvls. 1.3360-85 still offers topside , although stops continue to build 1.34+ – downside 1.3250/70 has contained the last dips and the orderbook is pretty balanced below this lvl.
GBP – 2nd tier data at 9:30 and 11:00 today. The big event will be the GDP data tomorrow. The market currently sits short of pounds and rightly so but I’m wary of a possible capitulation going into tomorrow. I still very much like being short of sterling but will be waiting for some kind of squeeze. Profit takers lurk in cable near 1.5800 and EUR/GBP seems to get hit every time it threatens to break up. This isn’t helped by a nervous EUR/USD market and supply noted towards 1.3400. I’ll look to pick up EUR/GBP on a move back towards 0.8380 and cable should be a good sell ahead of 1.5900-10, although stops will probably be waiting above there. Cable levels: Resistance, 1.5893, 1.5910, 1.5925 and 1.5960. Support at 1.5800, 1.5780 and 1.5750. EUR/GBP resistance: 0.8440, 0.8485 and 0.8506. Support 0.8378, 0.8365, 0.8355 and 0.8325.
JPY – Well the 87.80/88.00 zone held well and after that 2% dip from the highs usdjpy comes roaring back in asia – we saw consistent demand yesterday from a vareity of a/cs on the dip and while it took its time to feed through, the 10% apple slide not helping, asia buying helps us higher through stops 89.00/20 to a 89.46 high. Today I expect dips to 89.00/10 to be supported wrong on longs now back below 88.60 looking for a break of this 89.60 zone to target a fresh run at the highs.
AUD/NZD – the random walk continues, AUD still rangebound and whipping about no where. 1.0480 support, 1.0625 resistance. Stronger China PMI failed to get it moving, I know I sound like a broken record but I’m still struggling to identify a catalyst that will see this realise volatility. Dare I say it but at this rate 1m vol trading @ 6.5 looks rich. How times have changed. Orderbook still harbouring a skew to sell above, offers kick in 1.0560 and are fairly consistent all the way higher. Stops creeping in below 1.0480, but that’s a whole 40pts away from spot so chances of seeing that level today slim to impossible at the current run rate. NZD whippy as we walk in, headlines suggesting toxic chemicals have been found in NZ milk creating a bit of a stir. The levels above still hold, 0.8440 the first and then 0.8480 above. Stick with the ranges, I am still short the bird agst the latter but not looking for a great deal. First support level kicks in round the figure. AUDNZD broke support at 1.25 figure in Asia, we have failed to follow through though which is somewhat concerning but if you’re a believer in the move than re-selling it here on this squeeze represents a great opportunity if you missed it overnight.
CAD – Completely wrong footed in USDCAD yesterday, higher interest rates are ‘less imminent’ apparently and as such USDCAD had a quick move from 0.9930 up to parity. Despite not a huge amount being priced in pre BoC, around 10b.ps hike in q4 this year before yesterdays meeting, a combination of positioning and peoples relative expectation given some of the positive data recently helped galvanise the move higher and also dented my desire to be fading here for now. Will be more stops above 1.0030 and bids popping up in our orderbook around 0.9950/40. AUDCAD stops were taken out above 1.0520 as well and a few people arguing this could be decent sell zone in medium term which I don’t completely disagree with but my thinking is the same in USDCAD, unless we see an explosion of risk positive data/headlines I think there is some room to unwind some more CAD longs. US initial jobless claims and leading indicators this afternoon. Resistance 1.0010 1.0030 1.0100. Support 0.9950 0.9900 0.9880.
Scandies – Good demand for NOKSEK yesterday from a number of different clients amidst a backdrop of corporate supply of both EURNOK and USDNOK, took the chance to take off our NOKSEK long and will look to re buy 1.1650/60 if we see it now. I think 7.38/40 should be good support in EURNOK first off so not getting to bearish at these levels. EURSEK needs to get through 8.72 soon as another fail there yesterday not looking too good even though pull back was pretty shallow. Swedish data this morning though with PPI and unemployment up at 8:30 which should hopefully be a catalyst, for choice still like being long but binary impetus with data this morning. Any improvement in the data I think you fade EURSEK back to 8.65 with a 8.60 stop or buy the break of 8.72. 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