EUR – As the 200 day capped us nicely on topside at 1.2890, weaker PMI’s were enough to set the tone yesterday for the move lower. While we have ADP and ISM later today focus remains on Draghi tomorrow and whether he acknowledges the weaker data and talks dovish or whether he gets hung up on Cyprus. Either way today I think eur should be capped 1.2830/50 topside and I remain short looking for 1.2750/60 to square these positions. Orderbook in the main has bids 1.2740/70 downside and on the day I think this lvl should hold. Topside a few stops 1.2855-75 now but offers again above there.
GBPUSD – It’s unclear to me, why yesterday’s losses were so sharp. Fortunately, the move suited my position and I have now reduced to a core short only. From here, I would advocate selling any rally, back into the 1.5140 – 60 band, and feel as if 1.5259 – 1.5280 has been confirmed as the upper end of the range. To the downside, the next target will be 1.5027 (20.3 low), with very good buying interest then likely between 1.4965 – 1.5000 (very significant resistance on the 1.4832 ? 1.5280 rally). We have been better sellers of GBPUSD thus far this week, but volumes have been modest, considering the width of the ranges.
EURGBP – Benefitted from Corporate and Real Money demand on Tuesday, but remains within a defined range. On the day, I prefer to be short at current levels, seeking to exploit the recent .8411 – .8494 range. Looking further ahead however, my sense is any outsized move can come to the topside, and I am impressed with the resilience of EURGBP below .8500 (given recent EU newsflow), where we have seen a significant skew towards buying interest.
JPY – calm before the storm perhaps? Was certainly a quiet overnight session, little to detract from yesterday’s themes with USDJPY maintaining a modest bid tone for now. We are seeing supply hit the books in the 93.65-85 region, I think we will struggle to move above 94.10 today and if anything favour a small dip back toward 93 figure. ADP will be in focus, I think for the most part though this will be a non-event with today all about pre-positioning ahead of the BoJ. Downside support comes in round 93.10, we see a few bids here and again round 92.70.
AUD/NZD – Very quiet with no notable flow o/n. Oz trade balance came in much better than expected but the AUD showed no significant reaction. 1.0480 and 1.0500 resistance with 1.0440 and then 1.0400 support. NZD/USD received another boost yesterday, triggering stops in AUD/NZD near 1.2400. A large GBP/NZD sell order was rumoured to have been executed but I saw no direct evidence. It certainly looked as though a large flow had gone through. Support now at 0.8400 and then 0.8355. Resistance now at yesterdays high of 0.8446 and then 0.8500-20. I look to trade ranges with a bias to short USD’s in both.
CAD – A slow and steady supply of funds yesterday trickled through the market as we broke through 1.0150 triggering stops and filling corp bids in our orderbook down to 1.0125. European RM names were also notable sellers along with leverage on ecomm. As mentioned yesterday, I think the RM names are important because this is where the majority of the residual CAD shorts are. Contrary to what we saw in London US names were better buyers of USDCAD forcing us back towards 1.0150 in the afternoon. The move lower looks like it could be a grind for now so happy to await further catalysts ie employment data Friday. I think you play extremities of the1.01\1.02 range which should frame us until then. Support: 1.0120 1.0090 1.0000. Resistance: 1.0200 1.0230 1.0300.
Scandies – Another good piece of data out of Sweden yesterday saw EURSEK trade from 8.35 to 8.31 as we saw fast money names sell EURSEK and NOKSEK. Happy to still play this from the short side in EURSEK with offers now building around 8.35, focus turns to NOKSEK today though with Norway PMI out very soon and a number below 48 will NOKSEK below 1.1100 very quickly. EURNOK sitting in no mans land ahead of this number, would be happy to buy it back to 7.42/41 which should be good support and equally pre ECB there is interest to sell any EURNOK and EURSEK rally. My stronger conviction lies in being long SEK however we are not too far away from some big support levels and perhaps a shift in the vocalisation of the kroner strength, 8.20 I think is a short term line in the sand. For now, happy to be playing EURSEK from the short side and will add NOKSEK short if the Norway PMI this morning disappoints. EURSEK support: 8.30 8.28 8.20 resistance: 8.42 8.46 8.50. EURNOK support: 7.42 7.40 7.34 resistance: 7.50 7.56 7.60.
Barclays