EUR – The reaction to the weaker US data and the aggressive squeeze to the topside capped perfectly at the lvl at 1.2930 area and was met with fresh selling from spec and lev names and the comments from non voter Williams was enough to send us tumbling back off to this 1.2840/50 support zone. I continue to prefer to fade moves to the topside at 1.2900/30 with a stop at 1.2965 – this morning I have covered shorts again as we hold 1.2840 and have seen some early corp demand against the Asia lows.
GBPUSD – Remains rangebound, largely led by other markets for the time being. Market positioning has been greatly reduced in the last 24h, with stop-loss activity above 1.5272 and then 1.5310 having squeezed the less committed out of the short trade. Overall I remain bearish, though I did reduce to my short position to a core yesterday afternoon. Should a close below the 1.52 mark be achieved, I will happily add to shorts, though pre-positioning for that event does not seem very good risk-reward right now. A close below 1.52 should see the downside develop to 1.5034 (4.4 low) next, whilst resistance will now be found on any correction into the 1.5300 – 1.5321 band. Client flows were muted on Thursday, though Hedge Fund and Systematic selling remains the broader theme.
EURGBP – Continues to drift around within the .8398 – .8516 range. I have no directional bias at current levels, and prefer to fade extremes within that range for now only. A close outside these parameters should see an extension, but with the USD trending so well against other G10FX, focus is unlikely to move back to this cross any time soon. Systematic sellers have been the theme thus far this week, though volumes have been very low.
JPY – The wobble on US data was met with RM demand and we again held that 101.80 lvl well with the stops below left untouched. Topside lvl at 102.70/80 now becoming important as that has capped us 3 times now in the last 2 sessions. Price action remains bullish and target is still 103.50 and then 105.00 but expect more choppy range play until we can crack either 101.80 or 102.80 for now.
CHF – Some strong lev buying in the morning at 0.9670-00 area and 1.2450-80 in eurchf was met with stop and profit taking in the afternoon which saw us sell off back to 0.9585 before the 1 way rally in ny and Asia. I think the weaker data definitely took out a few of the longs and the fact we held 0.9585/90 is confirmation that for now the trend is still to the topside. Long through options and ultimately while we stay above 0.9480 i target a break of 0.9750 and a move towards the old highs at 0.99 handle.
AUD & NZD – The slide continues, with AUD/USD getting hit hard o/n by fresh systematic selling. Quality buyers had their bids filled but the market just cant let go of the Fed tapering story and comments by Williams to that effect put the market in a tail spin. So, is that enough now? To be honest, I thought that yesterday and now we are yet another big figure lower. As I power up this morning, I’m getting lifted for AUD/USD by a variety of accounts but price action still feels heavy. I also only have buyers both sides of my order book. Techs don’t get compelling on the downside until 0.9660 and 0.9610, (trend support from the 2008 lows). Topside 0.9800 and 0.9850 are the resistance levels. NZD/USD properly through 0.8150 now but lags the move in AUD. Record high milk powder prices as a result of drought conditions and supply issues has had no impact on the bird, despite the ccy’s previous highly sensitive nature. 0.8120 and 0.8150 now resist, with support 0.8053 and 0.7980. Keeping it tight today and let the USD do its thing.
CAD – USD/CAD held support at 1.0150 almost to the pip yesterday and played catch-up overnight with continued RM demand for USDs vs. commodity currencies. Canadian CPI at 13:30 LDN should give us chance to see the wood from the trees after the weaker US IP earlier in the week somewhat distorted price action in USD/CAD, even though it was USD-on elsewhere across G10. Resistance in USD/CAD first off right here at 1.0250, then 1.0295/1.03 which acted as strong resistance through mid-April. Overnight I bought some AUD/CAD on the dip down to 0.9950 with a stop below 0.99. AUD/CAD has traded five lows 0.9902-0.9950 over the past 2 ½ years, and with AUD/USD approaching oversold territory, looking at this for a bit of a kicker on the USD/CAD long which we continue to hold.
Scandies – Less focus on Scandinavia, with all eyes on the USD. I have nothing to suggest apart from range trading these against the EUR today. EUR/SEK 8.55-8.6200. EUR/NOK 7.4800-7.5550. NOK/SEK should remain a buy but stops lurk sub 1.1370. The 1.1410 level has been trampled all over and is less significant now.
Barclays