EUR – the USDJPY carnage continues leading to an offered greenback tone across the board. We continue to see RM and model demand over the past couple of sessions as shorts are unwound. We have good offers into 1.3400 and then again towards 1.3450. 1.3450 is the key level topside which is the trend line from the April 2011 highs and I am happy to fade any squeeze towards there. Support 1.3320-15, 1.3265, 1.3223 and resistance 1.3400, 1.3434, 1.3450. Good luck.
GBPUSD – Remains underpinned, as liquidation of longer term positions continues to grip markets. The 100dma does form some good overhead resistance at 1.5701, but right now, ‘top-picking’ in GBPUSD seems a tough proposition. We did note some Real Money demand on Wednesday, and that has been an ongoing theme in Sterling. I am square in spot right now, and await a clearer picture, before likely trying a short position. Expect some minor support on dips towards 1.5630-40, and more specific support at 1.5521 (Tues low).
EURGBP – Trades constructively, but is mainly a function of large flows through the individual legs right now. .8460 – .8595 remains the broader range, and I prefer to operate form the long side if at all. European Corporates remain persistent buyers of dips, whilst Real Money accounts have been noted sellers.
JPY – Capitulation continues in Asia after a break at 94.90 (payrolls Friday low 94.97) Nikkei down 6% and market in full defensive mode. 94.50 was the BOJ 4th July meeting lvl we opened in LDN and we have seen further selling below this lvl – low so far 93.75 – We starting to get to some pretty important lvls now and while I think a further flush possible 92.50/93 (pre 4th BOJ meeting) should provide gd lvls to rebuy again – Base of lifer range expectations also. Orderbook clear of orders now in the main for 1% either side of current mkt – topside lvls 94.90 key short term and a move back above 95.50 necessary to reduce the recent downside momentum.
CHF – so USDCHF finally closes below the key 0.9200 level so any squeezes back towards here should be toppy. There are no real levels on the downside now until we get to 0.9020-00. EURCHF approaching the 200dma at 1.2208 which has acted as very good support for a long time. Whilst it is tough being long EURCHF in this environment it’s probably worth respecting this first off with a cheap cut through 1.2200. Order books have been cleared out completely in CHF. USDCHF support 0.9020, 0.9000 and resistance 0.9200, 0.9225. EURCHF support 1.2223, 1.2208, 1.2197 and resistance 1.2287, 1.2303-10. Good luck.
AUD & NZD – Despite better headline employment data o/n, the market focused and the downward revision to the April numbers and with ‘risk off’ once again in the air, the pair couldn’t hold above 0.9500. AUD/JPY took a hit as 90.00 broke setting a new low for the year at 88.95. All eyes on usd/jpy and equities today, with the decent skew of flows recently less meaningful. Feels like we maintain a sell aud on rallies play today. Levels: RES, 0.9507, 0.9542 and 0.9568. SUPP: 0.9440, 0.9430 and 0.9406. NZD/USD, no shock from the RBNZ o/n and we continue to shadow the AUD. 1.1900-1.2000 range on the cross. NZD/USD itself should resist in 0.8000 after taking out stops above yesterday. Support 0.7900, 0.7860, RES 0.7965, 0.8000, 0.8024.
CAD – USD/CAD held support very well at 1.0150, trading a low of 1.0155, with corp. demand continuing to underpin the pair and that demand now emerging through XXX/CAD also. Still hold view that we sit in this 1.0150-1.03 range with the downside looking more vulnerable in the short term as real money supply now prevalent on any rallies 1.0240/60 region. For now though, focus is elsewhere in G10 but keeping a keen eye on AUD/USD after a solid employment report and starting to pick up some small lev offers in AUD/CAD ahead of yesterday’s highs 0.97-0.9720.
Scandies – EUR/NOK has finally cleared resistance through 7.70 (Q1 2012 highs) having stalled there twice on Tuesday, and with EUR/SEK holding support at the previous 8.6550 breakout level, NOK/SEK is under pressure and now in range of decent stops through 1.1235/1.12. We continue to see good supply of EUR/SEK 8.71/72 from lev. names but corp interest in USD/SEK and EUR/SEK in particular 8.66/67 is keeping pressure on SEK for now. Some comments from Ingves yesterday about ongoing debate in the Riksbank over inflation and macroprudential policy: INGVES: MONETARY POLICY MUST FOCUS MORE ON FINANCIAL STABILITY. INGVES: C.BANK SHOULD HAVE AN BIG ROLE IN MACROPRUDENTIAL PLCY, but unclear yet as to how this may effect SEK. Have now squared positioning but will look to reinitiate NOK/SEK longs around 1.1250 with a stop through 1.12.
Barclays