EUR – USDJPY lead dollar weakness saw the single ccy trade back to the key 1.3300 resistance level in Asia which has so far capped topside momentum on the past few attempts. Happy to continue to respect this level so short with a chop through 1.3305 makes sense. The order book confirms this game plan with offers into 1.3300 before stops appear. The downside is light with the first demand appearing closer to 1.3100. We do continue to see RM buying on dips so I will be looking to take shorts back around the o/n lows. Support 1.3177, 1.3104, 1.3054 and resistance 1.3292, 1.3306, 1.3319.
GBPUSD – Continues to recover, with Real Money liquidation of shorts the dominant theme in recent trading. I remain short via options, for the July and August periods, but have no strong directional view in the shorter-term. For choice, I would sell any strength into the 1.5600-30 band, risking above the recent high at 1.5684, but frankly, there are more interesting opportunities elsewhere right now. Flows from our franchise have been mixed thus far this week, with UK Corporate supply, having been met by Real Money demand with our NY colleagues. Support 1.5495, resistance 1.5630 and then 1.5684.
EURGBP – Trading with a firm tone overall, but really, focus lies with USD crosses right now. EURGBP seems to have held the higher, .8480 / .8600 range fairly well, and I would prefer to buy dips. Clients have also shown a slight preference to buy weakness, with European Corporates active to an extent. Volumes have been generally low however, and a genuine GBP theme will need to re-emerge before topside traction can really be regained. UK IP is due at 9.30 Ldn, where 0.0pcnt m/m and -0.6pcnt y/y are the expected outcomes (Bloomberg consensus).
JPY – Disappointing, (think I started my last update with that word) BOJ, with unchanged policy puts the Yen higher, with USD/JPY having a snap sell off to 97.80, before settling for the rest of the session broadly within 98.00-98.50. Eyes on news wires as I type, with traders watching for something from Kuroda in his press conference. I think we are in for another session of chop and gappy price action as flow hit the market. Last weeks clear out has left the market much lighter in position but fresh longs on the week are probably feeling a little cautious after the move again last night. Having said that, I expect support to kick in around 97.80 and 97.00 despite a few stops probably lurking at both levels. Overall it feels like I want to get short Yen again if USD/JPY gets back towards 97.50, or we get a new reason to buy USD’s. US 10 year creeping higher again could be one of those reasons. Topside resistance, 98.50/60, 99.10 and 99.30. EUR/JPY resistance at 130.70, 131.41, 132.14. Support 130.00 and 129.50. With EUR/USD looking to push through recent highs, it feels as though we will be well supported on dips for now.
CHF – EURCHF took a look above 1.2400 but couldn’t sustain the move as RM names hit USDCHF. Still like playing EURCHF from the long side and 1.2350 should hold on the downside. Much the same game plan in USDCHF and like to buy dips. 0.9250-00 is big support so happy to lean against there. The order book houses stops in EURCHF through 1.2350 and USDCHF demand down to 0.9200. EURCHF support 1.2350, 1.2307, resistance 1.2420, 1.2440. USDCHF support 0.9305, 0.9250, 0.9225 and resistance 0.9350, 0.9395, 0.9418. Good luck.
AUD & NZD – Disappointing data in the form of home loans from Oz and market chatter of a rate cut from the PBoC, once again set a heavy tone in Asia for the AUD. We took a peak through the 2011 low, (0.9388) to trade 0.9381 but no real momentum in the move. Feels like we need a more solid run up to crack that level properly. 0.9440-0.9460 is probably the sell zone on the day risking 0.9480 or 0.9530. Support levels below the o/n low are 0.9328 and a little vague until 0.9222. NZD/USD has settle nicely sub 0.8000, with 0.7940 setting up as good resistance. 0.7808 is the level to crack below and expect the bird to shadow the AUD.
CAD – Strong House starts data yesterday saw USD/CAD have a go at post-payrolls lows (1.0166), trading a low of 1.0168, but corp. demand hit real money supply head on 1.0190/1.02 yesterday afternoon and price action has remained stable since. 1.0150 remains the key level on the downside and some stops now starting to emerge beyond good corp. bids 1.0140/60. Topside feels limited with offers 1.0240/1.0260 but with AUD/USD continuing to make new lows, USD/CAD is playing along with the commodities block somewhat and for now remains supported ahead of 1.0170.
Scandies – Data continues to be the driver, with strong Norwegian inflation data giving confidence to the NOK bulls as a rate cut seems to be well and truly off the table now with some camps even discussing rate hikes. NOK/SEK has cleared stops through 1.1450 but leveraged profit taking late in the afternoon has put a cap on the move for now, with focus Swedish CPI coming up at 08:30LDN. EUR/SEK well established now beyond the breakout level of 8.65 and if Swedish CPI disappoints, topside target at 8.79 now comes into focus but some RM supply of USD/SEK starting to appear on rallies 6.58-6.60. EUR/NOK still stalls ahead of upcoming resistance 7.6450/7.6650 but while EUR/SEK and EUR/USD remain well supported I prefer to play long NOK through NOK/SEK.
Barclays