EUR – Still in this 1.3030-1.3110 range – yesterday good lev/spec selling into 90/00 met with similar buying at 1.3040-50 below from corp/rm. Today, 1 day away from ECB/Draghi tomorrow, we have European PMI service data and mkt still looking vulnerable to a squeeze to topside on a break of 1.3110. Orderbook light with some small stops 1.3030-00 below and mixed topside stops 00-15 offers 1.3110-50 – feels like room to 1.3150/80 to clear shorts out the danger pre ecb to leave decks clear for tomorrow’s meeting from ecb. I think against 1.32 into the meeting can look to fade any eur squeeze.
GBP – Services PMI at 9:30 and that print will be important for the pound, packing a much bigger punch than yesterday’s construction number. Just as relevant though is the ADP number from the U.S later. I still think that cable eventually trades lower but will be much happier if we can achieve a close sub 1.5270. Today could be the day. I run short but so does the market in general. I’ll be very wary going into important data points later, reducing USD exposure especially into ADP. After what happened on Monday though, the market will be quicker to pick up cheap USD’s on the reaction. I’ll be waiting also. Levels in cable: Res 1.5343, 1.5376 and 1.5410. Supp: 1.5270, 1.5235 and 1.5160. EUR/GBP still 0.85-0.86 until further notice.
JPY – Disappointment seems to be the theme after ABE unveiled his ‘growth strategy’ little talk regarding investments from the pension fund and not enough on labour mkt flexibility. Nikkei leads usdjpy up but straight back off – Low has been 99.38 so far and bounce limited to 99.60 so far in LDN – with Nikkei down 4% pressure is back on the downside and leads greater focus to the ADP/ISM data from states later today – we jumping around this 100 lvl in usdjpy looking for confirmation whether we in the 97/100 or 100/103 range – Mkt will try and hold on I think and wait for US data to confirm things – orderbooks are clean 98.80/98.50 provides support zone and has bids on order book – stops are below that lvl at 98.40-00 – topside offers now 99.90/100.30 stops only appear above 100.50.
CHF – Holding in but little traction for now back above 0.9500/30 area – eurchf as well holding in against support at 1.2330 but capped for now towards 1.2420/50 – looking for US data to provide a clearer picture – think we on the pivot for usd chf here and mkt will look to cover more usd longs on weak data or add and rebuy on stronger news after the recent clearout – 0.9410/0.9455 support or 0.9530 then 0.9590 resistance
AUD & NZD – AUD stands out and looking weak as we walk in this morning with the USD losing ground in most pairs but the Oz under real pressure. A slightly weaker GDP print o/n in a backdrop where price action was soft anyway, sees AUD crosses underperforming. Some decent levels right near here which look likely to get tested. AUD/USD support at 0.9584, AUD/NZD at 1.1958, EUR/AUD resistance at 1.3644 and GBP/AUD at 1.6000. It feels like they all get tested, especially as the short term market got toasted on the 0.9792 shake out on Monday. So continue to play AUD from the short side. AUD/USD sell zone at 0.9650-70, risking 0.9710 on the day. I am cautious though of U.S data in the form of ADP later. The market is hyper sensitive to U.S number right now and will move on an out of consensus print. I will look to re-enter USD longs on mildly worse data. For NZD/USD, we had a weak milk powder auction yesterday but aud/nzd sellers have kept the bird above 0.8000. I’ve taken back the last of my AUD/NZD short just ahead of the 1.1958 level that I mentioned above. Levels in NZD/USD: Supp, 0.7976, 0.7940. Res: 0.8030 and 0.8065.
CAD – Levels remain clearly defined in USD/CAD with 1.0250 the key level to the downside, then the 50dma around 1.02 and 1.0180/60 where we house some real money/corp demand. Canadian trade data disappointed slightly yesterday, particularly exports which the BoC has identified as the leading growth prospect, and we saw some real money demand for USD/CAD post-data in the same 1.03/1.0320 region which has been prevalent over the past week. Market poised for the ADP employment report this afternoon (13:15LDN) which will dictate where we go from here and expect tight ranges until then, but stops to the topside through 1.0380 have increased overnight and corp supply remains 1.04/1.0420.
Scandies – a weak Swedish services PMI to start the day off fuelling expectations for a rate cut and NOK/SEK continues to be the favoured pair to express this view with Norwegian IP data to follow on Friday. Stops likely to remain in NOK/SEK through 1.1240 but continue to see interest to buy the cross below 1.13, further supported by good corp. demand for USD/SEK 6.55/6.56. EUR/SEK looking to test resistance at 8.65 post-data but flows remain light in this USD dominated environment. Some macro supply of EUR/NOK starting to crop up on rallies ahead of resistance 7.64/7.67 (May highs).
Barclays