EUR – Eurusd caught upto the general USD uptick in spectacular fashion trading 1.3390-1.3235 from 3pm yesterday into asia this morning. We sit here now on the support lvls at 1.3235/50 area as we await the PMI’s this morning as a lead into further eur weakness below the asia lows or a bounce back. Orderbooks pretty much wiped clean with just some bids 1.3200/20 and stops below 1.3190 – topside 1.3300/20 the support lvl that we broke through in ny and that should provide decent resistance first off. After the recent choppy price action this week I wont fight a break below 1.3230 area as could easily lead to a further clearout towards 1.31 – that said any move above 1.3310 will hurt the asia shorts. So we take the lead from the PMI’s and judge from there.
GBP – Touched as low as 1.5130 in Asia, and having achieved a clear close below the 2012 lows of 1.5235, a shift into a new, lower-range now seems highly likely. With EU dataflow on the calendar for today, focus may shift to EURGBP for 48hrs, but overall my preferred expression of a GBP negative view remains in GBPUSD. For a day trade, I am happy to be short here, risking the 1.5250 mark, and note that below the 1.5125/30 support, the next meaningful level in GBPUSD is located at 1.4965. Meanwhile EURGBP should find resistance in the .8759 – .8784 band, with buying interested likely between .8685 and .8650. Client flows have had a bearish skew to them in the last 24hrs, though some evidence of profit taking has also been evident from those fast money accounts who have captured a large part of the recent GBP weakness. PSNB data due at 9.30 Ldn.
JPY – saw a lot of buying yesterday, absolutely no follow through whatsoever despite the seemingly ‘hawkish’ Fed minutes. Not really trading heavy, not really trading bid – doing a whole lot of nothing whilst we remain stuck in this 93.00-94.00 range. I sold out my long overnight, have little conviction that this goes higher this week now. Have a slight downside bias, given the broader move in the DXY I am surprised by the lack of follow through in USDJPY. Stocks took a beating, Nikkei included which certainly didn’t help proceedings. Stops are building now below 93.10, they are fairly consistent all the way down to 92.50 where we start to see the first signs of buying interest emerge. PMI numbers out of Europe this morning the focus for EURJPY.
AUD/CAD/NZD – ‘Many’ have concerns it seems regarding the costs and risks related to the great QE3 experiment, as such the greenback continued to gain ground yesterday evening after getting a foothold in London. In the commodity ccy space this is basically uniform USD strength with the AUD, NZD and CAD all continuing to suffer. We saw very good model and RM supply of AUDUSD around 1.0300/1.0290 pre FOMC minutes then leverage supply in the wake of the minutes which saw us trade down to 1.0230. This is an important level of support on the day encompassing previous lows and a fibo level which if breached should see us target 1.01. As such short AUD and will add back towards 1.03 on any squeeze, 1.0320 should be good resistance. NZDUSD struggled to rally yesterday in the wake of the Wheeler comments despite seeing some sharp RM profit taking between 0.8360/8370, on the whole more attention on AUD at the moment but if USD does start to claw its way back no reason why NZDUSD shouldn’t be a sell as well. Some good two way in USDCAD at these levels with a few profit takers coming out of the woodwork ahead of 1.02 resistance. Was sold into the WMR fix yesterday but I still think there is interest to buy funds on any pullback and as such long looking for test above 1.02. More offers building around 1.0220/30 and I think this would be a lot of people’s initial targets on this move so think this should be sticky at first.
Scandies – Some fresh selling of EURSEK and GBPSEK yesterday (GBPSEK 9.72 to 9.62 thanks to Kings QE desires), we saw some RM selling of EURSEK into the WMR fix but this was met with local demand around 8.40. Should be stops below 8.40 and game plan really remains the same to sell the never occurring rally back to 8.50. USDSEK had a small correction over night in line with general USD strength think people still look to sell it around 6.40 with stops above 6.45. NOKSEK continues its descent to 1.12, with EURNOK taking out a few weak stops above 7.42 but offers building 7.45/46 which I think looks like a good level to sell if you are that way inclined. EURSEK support: 8.40 8.30 8.20 resistance: 8.50 8.53 8.55. EURNOK support: 7.38 7.30 7.20 resistance: 7.44 7.46 7.48.
Barclays