EURUSD – Early short covering in the morning yesterday saw some heavy volume at 1.2880/1.2898 area but it was telling that we never went higher and as we ticked back off in the afternoon we gathered momentum – especially post comments from asmussen reiterating the fwd guidance from draghi at the ecb. We are into a big support area now for the eur at 1.2740 (years lows) 1.2765 (base of weekly cloud) and certainly no surprise that we didn’t break yesterday in ny (1.2755 low) even with a fitch downgrade of Italy. Today those lvls are key 1.2740/65 area and i have squared short spot position, leaving myself just downside options. I will sell again on a break at 1.2740 or 1.2850/60 area and i think stop now short term is 1.2955. FOMC minutes and Bernanke speaking later, and although I don’t think much expected seems mkt happy to take some profit on long usd positions so room for a squeeze back to 1.2830 initially in eur.
GBPUSD – Correcting from yesterdays 1.4814 lows, my feeling is we may see a little consolidation on the day. 1.4925/30 should offer some near-term resistance (this was the spike low ahead of NFP on Friday), and I have sold some GBPUSD around current levels ahead of this area. The broader gameplan of selling rallies remains appropriate, and should a deeper correction develop, the next area I would recommend fading would be yesterday’s highs of 1.4982. To the downside, 1.4814 and then 1.4687 will offer some support. For at least a few hours post UK IP, client flows were exclusively GBP negative yesterday, though since then some longer term Real Money demand has emerged. On balance, though, we remain far better sellers, and expect this pattern to continue.
EURGBP – Touched as high as .8669 on Tuesday, and has suffered as a result of broad based EUR cross selling. For choice, I would rather be long here, attempting to play an .8570 – .8670 range. More interesting opportunities lie elsewhere though, and that is represented in the low volumes amongst our franchise. We have noted some Systematic and option related demand this week, though the bullish bias my order book had held in the last week or so, is now neutral.
USDJPY – Little disappointing that we roll back over below that 100.80 (daily cloud top) lvl easily in asia as a wave of lev and spec profit taking on longs see us trade a low at 100.29. Support now here at 100.20/30 then 99.75- If stocks remain relatively stable then i think usdjpy should hold here and regain a footing back above 101, but the FOMC minutes later may be key now for mkt confidence. Topside 100.80 short term then 101.50 the lvl.
AUD&NZD – More erratic trading o/n as headline China trade data is weak but the breakdown with Australia was seen as AUD positive. 09180-0.9125, off, 0.9218, stopping just shy of tech resistance at 0.9222. It seems some more capitulation of USD longs is filtering through the market and looks set to continue ahead of tonight’s FOMC. With other pairs getting hit against the USD, (cable sets a new 2013 low, EUR/USD through tech support) but failing to make progress, I think we maintain choppy ranges with a slight bias to the topside in AUD/USD and NZD/USD. 0.9222 and 0.9260 resistance in the Oz but if we get frisky on the topside I’ll look to fade risking 0.9310. NZD/USD a little sidelined but 0.7900-50 is the fade zone there.
CHF – The trend towards top of this 0.95/0.9800/40 range continues with RM names continuing to buy on the move up above 0.9650 yesterday. I continue to think we can push on from here and support now 0.9670 then 0.9620 while resistance 0.9750 (yesterday’s highs) then 0.9800/40 the previous highs. Eurchf pushed on from breaking that 1.2385 break to make a new high at 1.2465, just ahead of resistance at 1.2470. Today that 1.2385 support then 1.2330 below that – i think room towards 1.2525 before we start to run out of steam again topside.
CAD – The Looney still treads a familiar range but threatens to retrace lower as USD longs scale back. My order book is skewing for a move lower and hourly support kicks in at 1.0507 on my map today. A move through 1.0500 suggests further weakness to 1.0450 or 1.0426 support, the later being my chosen level to start accumulating USD’s. Topside resistance remains at 1.0580 and 1.0610.
Barclays