EURUSD – 1.30 held nicely yesterday on the dip as the mkt still in cover mode for short positions mode into the weekend. We saw gd demand there from mid east, spec and RM names. Today feel that the late ny squeeze yesterday above 1.31 has cleaned positions again and that we should settle 1.3040-1.3130 as we go into a busy week next week.
GBPUSD – Failed ahead of yesterdays Asian highs again (1.5193), potentially marking out the short-term range highs. I have a preference for a small short position only, mindful that the dust is yet to really settle following Wednesday nights brutal corrections. On Thursday, we noted two way-interest, with macro clients having been both sides. My balance of interest was for buying GBP however. To the downside, expect some good support between 1.5060 and 1.5070, as was the case on Thursday.
EURGBP – Has drifted back into a range, having spiked as high as .8694 overnight on Wednesday. I am square here for now, but prefer to operate from the long side. .8575 – .8600 forms the short-term buy zone, with resistance likely to be found between .8670 and .8694. Recent flows have shown a preference for clients buying dips, but as has been the case in recent months, volumes remain very low by historical standards.
USDJPY – Settles down in Asia – supported above 98.50 by Japanese investors while lev supply into 99.20-50 region caps the topside. Expect us to maintain this range today and then reassess into next week where we have Bernanke speaking. 98.20 then 97.60 support 99.50 then 100.30 resistance – Still have a long usd bias especially much of recent positioning has been taken out.
AUD&NZD – Liquidity issues and EUR/AUD interest have made AUD/USD particularly hard to play short term. The market still runs short of AUD against the USD and I would expect most of those medium term positions remain intact, possibly saved only by the weaker employment data. Huge EUR/AUD buying appears to have gone through from just prior to FOMC but good tech resistance 1.4325-1.4415 should cap the topside. O/N we have seen mainly AUD buyers both against the USD and EUR, with a ‘China growth package’ the latest market chatter. Today expect another session of chop. AUD/USD range 0.9110-0.9225 for now. NZD/USD should ghost the OZ, unless the cross makes a proper move below 1.1640/50. 0.7765-0.7900 today.
CHF – Failed to move back above 0.9530 yesterday afternoon with lev and rm selling capping us – I still favour upside usdchf but as people still cutting longs we are unlikely to progress higher in short term – If we can hold the week above 0.9400/20 area i still favour a rally next week – 0.9530 resistance then 0.9580 while support is 0.9420/0.9380
CAD – Still remaining relatively liquid, USD/CAD is the teacher’s pet amongst the commodity currencies. Two way interest throughout most of yesterday kept it real. 1.0342-50 should support, with the one sharp move to 1.0326 representing a small glitch in the matrix as stops got punched out. I expect to see buying re-emerge as the market calms down. I look to buy on dips with yesterdays spike high of 1.0436 due another look. Only below 1.0290, will I be concerned that the sentinels will get me.
Scandies – Yikes, liquidity is a real issue, especially in the NOK this week. We’ve struggled to clear risk repeatedly on both sides of the market, with price gaps of 50-100 pips not uncommon. So today we start bang in the middle of the 7.8500-7.9500 range that should contain price action in EUR/NOK. USD/NOK sellers saw 6.00 yield before buyers popped up and reversed price action. That level should hold now. EUR/SEK a little calmer and again we sit broadly in the middle of 8.65-8.75, expected trading range. We are void of domestic data from Sweden for a couple of weeks, with only trade balance next week from Norway to look forward to.
Barclays