EUR – So another fail at 1.3070/80, a weaker Italian auction and strong US retail sales led us to an unwind of long eur and eur x positions. Eventually clearing that lvl at 1.2950 and trading to 1.2923 low but the follow through has been lacking since in late NY and Asia. I remain short from selling the break at 1.2950 yesterday i will add at 1.2990 with a stop at 1.3030. Looking for 1.2885 initially.
GBPUSD – Has not lost ground in the way I expected post US Retail Sales, in the main because EURGBP has been so persistently soft in the last 24h. Flows this week have been skewed towards short-covering, but for now the 1.4965 – 1.5000 band is proving very strong resistance. I have reinstated shorts, expecting a relapse towards the lower end of recent ranges, but this strategy will most likely require EURGBP to hold the 10dma at .8663. To the downside, expect some support between 1.4880 and 1.4890, where lots of volume changed hands on Tuesday. Meanwhile the broader downside targets are located at 1.4832 (2013 low), 1.4803 (23.6.10 low) and then 1.4687 (22.6.10).
EURGBP – Curiously weak since this time yesterday, this move has caught me by surprise. The market is clearly long of EURGBP, and the technical failure ahead of .8815 was somewhat damning. Overall though, I prefer to keep attempting to buy dips, unless a breach of .8637 develops (Asian low Fri). In the last 24h we have been better sellers of EURGBP for Spec accounts, which is a shift in the recent pattern of flows. From here, my order book has a slightly bearish tilt, but not enough to change my bullish preference.
JPY – All eyes on the BOJ leadership upper house vote tonight now for USDJPY. I think it remains well supported on dips holding 95.45 in LDN and 95.70 in Asia o/n, however this 96.25-30 has capped us in the last couple of sessions. I look for usdjpy today to be range bound 80/30 and would expect a retest of highs at 96.70 as long as Iwata is elected.
AUD & NZD – If only the ENG vs NZ cricket was as exciting as AUDNZD overnight, the double whammy of dovish RBNZ and some fantastic AUD employment data sent AUDNZD from 1.25 to a high of 1.2684. First off the RBNZ left rates unchanged but Wheeler highlighted that there was scope for easing due to currency strength, a big move in NZD rates sent NZDUSD from 0.8260 to 0.8160 with leverage names notable sellers. The first leg in AUDNZD was up to 1.26 with stops taken out on break of 1.2550. Feels like NZD weakness should prevail but sitting near some big support levels around 0.8100 so not too excited to sell a dip. The employment data out of Oz was very strong and a swift move from 1.0320 to 1.0380 on the back of further short covering from the China bears at start of the week. I think you can still play extremities in AUDUSD which would mean selling around 1.0400 but think downside complexion changed somewhat after last nights data.
CAD – Up and down like an up and downy thing as the old saying goes, USDCAD yesterday sold off from 1.0280 to below 1.0250 after the storming US retail sale print but it felt this was primarily a function of European RM names (of which we saw a few) selling a large amount of EURCAD from 1.3340 to 1.3280. USDCAD managed to rebound fairly sharpish back to 1.0290 where for now there does seem to be good interest to sell funds ahead of 1.03. USDCAD feels a little caught at the moment between the US growth removal of QE story and whether or not this will filter through as a positive multiplier for Canada itself. I think immediately USD strength should prevail in which case continue to buy USDCAD pullbacks despite the positioning however I think without any further Canada specific data deterioration we will struggle to breach 1.0350. Support: 1.0230 1.0215 1.0200. Resistance: 1.0340 1.0350 1.0400.
Scandies – EURSEK struggling to sustain a break of 8.30 at the moment, had a wobble yesterday in Asia as stops were taken out below 8.28 to a low of 8.2550 but we retraced that whole move over the course of London with the market trying to cling onto SEK longs. Unemployment data today out of Sweden followed by the Norges Bank decision, so could be a NOKSEK day in the ilk of AUDNZD overnight. Comfortable reselling EURSEK around 8.35/36 on but equally think market will be quick to aggress below 8.30 again if this data today is much better. For Norges bank in line with Olsens holistic few on kroner strength he has vocalised this year I think lower fwd rate guidance might see some NOK sellers and NOKSEK still looks very soft and market awash with long recs. Danger for people long EURNOK is I think on a relatively balanced outcome market will look to buy NOK in similar vein to SEK and other EURxxx weakness recently. 7.40 has been very good support and 7.50 has been a level locals have been looking to sell above. Find ourselves slap bang in the middle this morning at 7.45, for choice I think we test higher and this is helped by further selling of NOKSEK. EURSEK support: 8.25 8.20 8.10 resistance: 8.35 8.42 8.48. EURNOK support: 7.42 7.38 7.34 resistance: 7.54 7.60 7.65.
Barclays