EUR – Whippy mkt yesterday with Spec names early sellers despite stronger European PMI’s taking us down to that 1.2950 support – The weaker ISM put an end to the selling and while it took a while to work through selling 1.3030/60 area once we broke we saw lev, spec and gamma related buying pulling us back to that key resistance at 1.3110 which capped us nicely – O/n calm in Asia and expect 1.3020/30 to provide decent support on dips initially and then 1.2950 below that now key – topside 1.3110 held a break above there confirms that we into a higher range and should lead a deeper squeeze as reluctant as mkt maybe to want to buy as we head into ECB later in week.
GBP – PMI construction at 9:30. So USD longs felt the heat yesterday as momentum swung violently and positions were cut as fast money ran for the exit. I think the market will look to play from a long USD standpoint once again but will be nervous of U.S data later this week. 1.5322 and 1.5360 were my levels yesterday and I cut my shorts, all be it with a load of slippage. I think those levels will still be in play today but flow and liquidity will dictate until we settle down. 1.5270-80 is still a key level and if we can get back below there, the favoured play of short cable will be back on. Sub 1.5200 and another look at 1.5000 is on the cards. We still run short cable via options and still believe in the trade medium term. EUR/GBP was at the mercy of the USD legs yesterday but 0.8500 held leaving the broad 0.8500-0.8600 range intact. Overall, I look to play extremes favouring long USD’s once again.
JPY – Yesterdays move post ISM looking more and more like capitulation with all stops cleared from books on the downside leaving only bids 98.50/98.80 area – The comments late ny ABE ADMINISTRATION TO URGE PUBLIC FUNDS INCREASE HOLDINGS OF RISK ASSETS, INCLUDING EQUITIES AND FOREIGN ASSETS – SOURCES – proving timing to stem selling and with Nikkei up 2% o/n allowing us to squeeze back to the topside cleaning any weak shorts out – Resistance now at 100.50 (yest high) then 100.80 – Support should be 99.50/70 area initially – I think we should hold above 99.60 on dips now as we await ADP tomorrow.
CHF – Like usdjpy, full on capitulation yesterday below that 0.9480/0.9500 base that had held so well. Feels now that the books been cleaned out in the main and that we now 0.9480-0.9530 range while we await what comes from US data later in the week. Early we seeing some lev and corp supply in usd/eurchf here at 0.9500/1.2410 area – sucked up by locals.
AUD & NZD – The USD squeeze yesterday post U.S data left a trail of devastation as accounts scrambled to cut positions. AUD/USD itself traded 2 big figs from low to high, with price gaps as fast money made the most of poor liquidity. The RBA overnight left rates unchanged as expected and commented that policy was appropriate for the time being. Further comments stating that the AUD remains high considering decline in export prices, despite recent depreciation put AUD/USD on a weak footing again. We currently trade back below 0.9710, the first break out level on the top side. I wouldn’t be surprised if we retrace a lot of yesterday’s moves and in my mind not much has changed, although the market isn’t so long of USD’s anymore. ADP and NFP data will be key, strong prints will see another rush to buy USD’s, with U.S 10 year still sitting above 2.10%. I’m going to try and play AUD and NZD from the short side again today, but with smaller postions to offset probably wasp in a jam jar price action. 0.9750-0.9800 should contain another run for cover but ultimately 0.9850 is key in AUD/USD. NZD/USD a little looser, with liquidity a real issue yesterday. 0.8120 resistance but 0.8060 should be enough to top us out. I currently run short AUD/NZD on a tech basis whilst below 1.2150.
CAD – Cleared stops in USD/CAD yesterday through 1.0280 after the broad-based USD capitulation, which leaves 1.0250 as the last barrier before we take a run at 50DMA at 1.02. Persistent macro and RM demand 1.03/1.0320 continues to support USD/CAD and now all hangs on ADP/NFP and with a light data day ahead, ranges should remain pretty constrained and while corp. offers remain in place 1.04-1.0420 now picking up some leveraged stops below that 1.0365-80, which are the first seen topside for some time. Canadian trade data at (13:30LDN).
Scandies – Strong PMI prints from Sweden (51.9 vs. cf. 50.2) and Norway (52.0 vs. cf. 49.5) yesterday kept NOK/SEK in check but market positioning remains long and would expect to see stops through last week’s low at 1.1240 before we hit patch of support 1.1150-1.12, but with Norwegian manufacturing data to come on Friday the position continues provide the right risk reward looking to retest 1.14/1.1450. EUR/NOK found good support again 7.55/7.58 with leverage demand popping up on dips, but flows remain light as the USD story remains centre stage. Macro demand for USD/NOK and USD/SEK prevalent this morning, after demand from same sector in USD/NOK yesterday around 5.84 but with a light data day ahead I think we hold pretty tight ranges today in the USD crosses. EUR/SEK did manage to clear last week’s lows through 8.5540 but broader 8.50/8.65 remains intact.
Barclays