EUR – Quiet in the main yesterday although remains firm on a 1.33 handle as we approach FED tomorrow – ZEW out later this morning could possibly add some volatility to eur, which has held well at these lvls, before US cpi later this afternoon. – despite eur holding well demand seems to be getting less at these higher lvls and so feel that we are due a correction towards 1.3250 again to clean positioning into fed. I have sold here with an initial stop above 1.34 looking for 1.3280 then 1.3245.
GBPUSD – Peaked just above the 1.5750 mark on Monday, completing a 5pcnt upward correction since the end of May. As outlined in my noted yesterday, we are now at levels, that I feel comfortable edging into shorts again. Conviction is low for the time being, but should encouragement be added from this week’s UK and US dataflows, then I will add to the position aggressively – there is plenty to aim for in terms of downside targets. Recent flows have been almost exclusively in favour of the Pound, and have emerged from the US and UK Real Money communities. I am watching closely for any signs that the pattern of flows may change.
EURGBP – Remains rangebound, oscillating around the .85 mark. I maintain a general preference for buying weakness into the .8450 – .8480 band, but a close above .8550 is required in order to encourage some further upside interest. European Corporate demand continues to largely offset Real Money buying.
JPY – Volatility in this 94-95.30 range continues with a move that looked likely to take us back to the Friday Asia highs (95.80) yesterday in NY above 95.10 correcting fully on a 1 way capitulation back below 94.50 before stabilising – Asia has found support again below 94.50 yet 95.00 remains capped as investors (bidding) run into exporter (selling) – Remain of the opinion that 93.50/94 provides good support going into FED where we will await Bernankes view on tapering for further guidance on whether or not we can push back higher towards 96.00/96.30 area.
CHF – Eurchf remained supportive yesterday around 1.2300/10 and had that late ldn squeeze upto 1.2360 zone mainly on lev and bank demand – we ran into offers there but seem supported still on dip, i expect this to remain the case into FED/SNB meetings – Usdchf looking at 0.9190/10 as support on the day before that key old lows at 0.9130 area – topside 0.93 then 0.9340 lvls to watch.
AUD & NZD – RBA minutes the highlight o/n, with the market taking the release as net bearish for the AUD. Reinforcement that the inflation outlook may leave scope for further monetary easing and that the drop in terms of trade could lead to a lower AUD/USD were the key points. The reaction in AUD/USD was orderly though and it felt like the market had second guessed the RBA tone, selling the pair hard on the London close. 0.9500 seems to harbour some demand, failing to trade below for now. The main focus now switches to the FED. I still prefer to play the AUD from the short side. Techs: supp, 0.9500, 0.9480 and 0.9435. RES, 0.9530,0.9575 and 0.9620. NZD/USD took a bit of a hit yesterday as AUD/NZD buyers reloaded longs. 0.8010 is the short term sell zone with 0.7970 and 0.7800 support. Watch out for GDP data tomorrow night as the market is vulnerable to a reaction in either direction.
CAD – USD/CAD remains well supported by corp. demand 1.0130/50 but tight ranges prevail in the run up to FOMC. To the topside, 1.0220-60 should be a decent band of resistance with Real Money noted sellers towards the end of last week on the few rallies above 1.02. With USD/CAD subdued for now, AUD/CAD in range of stops through 0.9650 following the RBA minute’s published overnight. Intraday I’m happy to sell any rallies in USD/CAD looking to play 1.0150-1.0220 range, until we get some further direction from the FOMC tomorrow.
Scandies – EUR/SEK back testing the top of the recent 8.50-8.6550 range with a few market players now feeling the pain as we chop back and forth through the 8.6550 level. This little run higher helping to support NOK/SEK, ahead of stops through previous lows and trendline support 1.1230/40 and I remain long and happy to add back down to 1.1240 with a stop through 1.12. Busy couple of days ahead with Swedish data and the Norges Bank rate decision, and the short CHF/NOK trade gaining a lot of headlines as a way to play NOK from the long side, if you sit in the camp that the SNB are set to announce something. EUR/NOK taking a bit of a back seat as market seems happier to play long NOK via other channels, but 7.70 remains the level of resistance.
Barclays