EUR – after the chaos to end the London session yesterday things have settled down somewhat in the single currency as we await NFP. We weren’t quite able to close above the key 1.3250 level but I imagine 1.3220 should support the downside pre the number. We have offers into yesterday’s highs and demand down to 1.3100 before the first real stops appear. Happy to sit on the sidelines ahead of the data but feel the risk is for more USD long liquidation. Support 1.3230-20, 1.3195, 1.3150 and resistance 1.3306, 1.3319, 1.3342. Gd luck.
GBPUSD – Touched as high as 1.5684 in late London, triggering all manner of stops above the previous range highs. With EURGBP likely to trade firmly around current levels, GBPUSD will take direction from other markets today. I am still positioned for lower levels in the 2-3m tenors, though have no real inclination to fade this rally in spot right now. A weekly close above 1.5606 would be a bullish development, and likely trigger more short-covering next week, meanwhile a close back below this pivot would suggest a near-term peak at 1.5684. Client activity has been rather light in the last 24h, but Corporate supply above the 1.56 mark has been somewhat of a theme.
EURGBP – Remains rather rangy, but should be well supported in the .8480 – .8500 band. European Corporates were noted buyers of weakness on Thursday, and I do expect this interest to remain in the near term. I am square here, but have a general preference for buying dips into the .8450 – .8500 band. Expect resistance on any approach to Wednesdays high of .8548.
JPY – Remains incredibly nervous, with a new low for the downmove having been set in Asia at 95.55. To my mind, risks are rather asymmetric to the downside today, with any upward correction likely to be met by forced selling (many are still caught long USDs in my opinion). Meanwhile, any downward surprise in US NFP will be jumped upon by the Speculative community, and another vacuum-type move is very possible. Below 95.55, the next material support is formed at 92.74, a previous low from early April. To the topside, expect resistance on the approach to the Asian highs at 97.52, and then at 97.85. In the last 24hrs we have been far better buyers of USDJPY for the Macro community, with only some light onshore demand for JPY evident yesterday afternoon.
CHF – 0.9206 is the big level to monitor should this USD sell off continue. Through there and I would expect a further round of liquidation. We have good leverage offers ahead of the 200dma that we broke through yesterday so 0.9355 is the first topside level to monitor. Obviously the move in either direction today will be driven by the NFP number but I feel the risk is for another leg lower. Support 0.9225, 0.9206, 0.9150 and resistance 0.9355, 0.9390.
AUD & NZD – The markets have properly loosened up after the USD/JPY panic yesterday with the rest of G10 showing signs of distress. Further position reduction is expected as accounts jockey for position into NFP’s and flows will dictate price action. AUD and NZD relatively orderly and have settled back into familiar territory after the initial scramble to exit long USD holdings. AUD in particular is tricky here, with possible retail exit from Japan in AUD/JPY on the radar going toe to toe with those aud/usd short exit flows. Timing is key as ever. Broad ranges, 0.9400-0.9650 for AUD/USD and 0.7900-0.8100 for the bird pre U.S data. Expect spreads to reflect the poor liquidity…..Fasten your seatbelts.
CAD – cleared stops in USD/CAD through 1.0250 in emphatic style, quickly trading 1.0201 then 1.0198 on second attempt, but one of few USD pairs where market seems happier to sit on the position, despite the clear USD weakness seen across G10. New Governor Poloz made a statement to parliament prior to the USD clearout, and market’s interpretation of the renewed focus on exports seemed to be some acceptance of a weaker CAD, though the usual provisions that exchange rates are determined by the market system remained. 1.0180/1.02 will now be key levels to the downside but beyond that we see good macro demand 1.0140-1.0100. Position now clear in USD/CAD but still favour being long and will look for opportunities to re-buy on dips.
Scandies – Norwegian manufacturing data at 09:00LDN likely to be the focus, with continued lev. demand for NOK against EUR and SEK. NOK/SEK has traded constructively with topside targets remaining at 1.1450, helped by EUR/SEK clearing stops through strong resistance 8.65/8.6550 and a subsequent close above there. Only concern in NOK/SEK now is positioning as real money and lev. accounts seem to be sitting long having added 1.13-1.1350 yesterday, but correct stop level remains 1.1235/1.12. EUR/NOK traded a high of 7.6420, but for now continue to see good supply on rallies and would expect 7.65/7.67 (May highs) to act as good patch of resistance.
Barclays