EUR – Painful best way to describe yesterdays moves, with Draghi dovish and a break to marginal new lows at 1.2744 providing what we were looking for before eur fully reversed 200 pips as everyone, me included, scrambled to cut shorts and follow eurjpy to the topside. I remain bearish the eur on the back of the weaker data that, for me, leads to further stimulus from the ecb in the coming months. On the day the close above 1.2890 (200 day) suggests caution at selling eur this morning pre payrolls although up around 1.2950 area i would initiate a short with a stop at 1.3020 looking for a move back below 1.2890 targeting 1.2820 on the day.
GBPUSD – A rather brutal reversal on Thursday off 1.5034 lows, to trade 1.5245 in NY. Taking a step back though, rangebound conditions remain overall and unless the high from last week is breached meaningfully (1.5280), I am happy to be short GBPUSD at current levels. Naturally today’s event risk requires come caution, and so I am keeping positions light for the time being. Real Money short-covering was the noted theme yesterday afternoon, and my suspicion is, similar Leveraged activity was ongoing also. To the downside, some support will be evident around 1.5159 initially (Wed high), and then around Wednesdays low at 1.5076. the 1.5000 – 1.5027 band continues to form the lower end of the recent range.
EURGBP – Fell back into the .8411 – .8500 range, having threatened a break to the topside. My preference here is to buy dips into the .8411 – .8440 band, and the pattern of our flows are consistent with this type of strategy – Corporates are consistent buyers of weakness. A close above the .8500 mark would be needed to somewhat open the topside, but overall, focus will remain elsewhere for the time being.
JPY – crazy overnight session in Asia, we have done stops both sides of the market as this price action is becoming not so user-friendly. The moves were not limited to FX, the Nikkei and JGBs both experiencing similar volatility as the market digests the most recent BoJ actions. Right now I think we buy another dip below the figure, probably round the 95.75/80 level with a stop below 95.40. Liquidity has dried up with spot realising such high volatility, spreads are slightly wider but I think we will calm into payrolls and from there it is anyone’s guess. Consensus is 190k on Bloomberg, I think the real number is more in the 175-180k range especially in the wake of the recent ADP and Jobless Claims data. As expected, our book has been cleaned out both sides so little skew to start the morning. Maintaining a buy on dips mentality for now, more broadly I would start to worry should we trade back below 95 figure.
AUD/NZD – Price action yesterday left many scratching their heads and difficult to explain even with the benefit of hindsight. Yen selling was the main thread and filtered into cross yen to produce a load of strange moves and position squaring. AUD/JPY now above 100.00, taking out generous supply/barrier protection in the process. No significant topside level there until 104.50. EUR/AUD caught in the jet wash of EUR/USD and took out shorts above the 200 dma at 1.2410, including mine. For straight AUD/USD though 1.0380-90 remains good support with the 200dma there keeping us sane. Today I would expect a volatile session with JPY once again the lead car in the rollercoaster. For EUR/USD and cable, most of the damage has probably been done and a lot of the AUD and NZD cross orders have been executed. I wouldn’t be surprised if a lot of yesterday’s moves, (excluding the JPY) were simply reversed today. NFP’s of course the focus and we could get a big move on an out of consensus print, with risks more symmetrical going in. Range for AUD/USD, suggest 1.0380-1.0500. NZD/USD, once again underpinned by rumoured GBP/NZD selling, should hold again into 0.8355-60, with domestic supply into 0.8450.
CAD – Important day for CAD with dual employment data out at 13:30, lots of connotations and potential outcomes this afternoon however if last month is anything to go by where two storming prints instigated the first real sell off in funds having touched 1.0350 more focus should be placed on the Canada number. I still believe that RM names are clinging to CAD shorts so this could be the breach of the last bastion today if we get another good Canada number. Stops are placed below 1.0100 just below corporate demand and offers around 1.0180/1.0200. Not positioned at the moment and really looking to play it as I see it, I think if you look recently at the performance of AUD and NZD combined with the residual positioning in CAD I think the move with most pain is lower. Support: 1.0120 1.0090 1.0000. Resistance: 1.0200 1.0230 1.0300.
Scandies – Trading in the wake of the Draghi’s pessimism but then EURUSD resilience yesterday. Initially people were happy to sell around 8.40 as we heard the potential news that a rate cut was on the horizon however a nasty squeeze in EURUSD between 1.2820 and 1.2949 and also some more stop loss activity in NOKSEK between 1.1200 and 1.1300 sent EURSEK up towards 8.4450. I think as long as we remain below 8.46 I still have a desire to be long SEK but patience is always going to be tested! Focus elsewhere today for sure, USDSEK could come back into the fore but nothing really of note on the board, stops above 6.54 and a few bids around 6.47. EURNOK stagnating a bit around 7.45 but considering the move in NOKSEK holds in very nicely, if your pockets are deep enough for a 7.41 stop I think this is a buy around 7.45/46. Plan in EURSEK is to leave offers between 8.43/46 and stop out through 8.50. EURSEK support: 8.30 8.28 8.20 resistance: 8.46 8.50 8.55. EURNOK support: 7.42 7.40 7.34 resistance: 7.50 7.56 7.60 .
Barclays