EUR – After 2 weeks off on holiday first thoughts on coming back is that eur hasnt done too much other than chop the mkt in a 170 pip range – yesterday no exception with stronger ifo print followed by a sell off 1.3385 to 1.3322 before a late squeeze back to 1.34 into ldn close – Improving conditions in europe met with tapering expectations in US have created a eur stuck in no mans land. As we go into the end of the month i prefer to play from short side against 1.3450 with a stop at 1.3510 but think dips to 1.3250/1.33 offer value to cover shorts – On the day pending home sales should provide some mkt moving data after the lower usd last friday on housing data.
GBPUSD – A topsy turvy day for cable yesterday with spec names pre positioning for the main event today and longer term RM names buying. The initial move in cable below 1.5500 look to be EURGBP led which started to break through 0.8600 but Middle East and RM demand inspired a sharp move back to 1.5550 in the afternoon. Carney speaks at 1:45pm and clearly will be a lot of focus on this, spec market is short pounds similar to previous Carney inspired risk events and given the disappointing nature of the forward guidance framework the market is justifiably looking for reassurance. Whether we get it from the governor in Nottingham today remains to be seen but no real colour would see the band of merry men sitting short disappointed and would expect a sharp rally back to 1.5600/20 area. Orderbook wise few stops above 1.5560/70 and some bids building 1.5440 then stops below 1.5420. Square for now expecting a lot of noise this afternoon but would resell around 1.5540/50 if we squeeze this morning,
EURGBP – Clearly some interest to buy EURGBP yesterday, few people citing VODAFONE: TAKEOVER OFFER ACCEPTED FOR 0.61% KABEL SHR CAPITAL as the reason but general GBP positioning before the Governor has his say today. We actually saw better European RM supply of the cross but all absorbed very easily on the break of 0.8600/10. Few stops building above 0.8670/80 and held 0.8585/90 nicely yesterday. Long EURGBP might be cleaner way of playing things today, stop at least below 0.8580. Best of luck.
JPY – With mkt in risk off mode in general usdjpy took a tumble as lev, spec and model a/c’s came to mkt selling – we saw good interest from Japanese names to buy the dip from 98 all way down to 97 but it only slowed the decline – Right now after the move to 96.81 o/n feel most of longs taken out of the mkt and looking for us to hold against that lvl on dips – 97.60 then 98.10 lvls to watch topside while a move below 96.50 would make me reassess. US data will be key later after we failed to rally yesterday on positive consumer confidence. For now though order boards clean and prefer to follow the japanese buying that we have seen.
CHF – Like usdjpy, chf suffered yesterday from general stock mkt/risk weakness – eurchf slipped lower below 1.23 taking usdchf from 0.9220 to current lvls – Looking at the June capitulation lows now as key support at 0.9130 area – and for eurchf the 200 day is now at 1.2275 zone – topside 0.9230 then 0.9270 res and 1.2330 and 1.2385 in eurchf – While above those key support lvls i would rather be long and reassess on a move below.
AUD & NZD – AUD/USD finally gathering some momentum, clearing stops through last week’s lows at 0.8932 as AUD/JPY sold of aggressively as concerns over Syria continue to emerge. We have seen the first signs of profit taking in London around the overnight lows just ahead of 0.89 and the orderbook is skewed the same way with good demand 0.8870-0.89. NZD/USD initially struggled to follow the move in AUD/USD as leverage demand for AUD/NZD around 1.1520 emerged but we have since cleared stops through 0.7765/70 with 0.77 now the big level of support which contained price action in July and August. Expect to see a bit of bounce in AUD/USD for now as profit taking takes hold but think you can continue to sell rallies up to 0.8950-70 with a stop through 0.9010.
CAD – More demand materialised in USD/CAD 1.0520-40 which feels like it may be indicative of month-end, but a late USD sell-off yesterday helped clear stops through 1.0480. However as concerns mount over Syria, oil remains well supported and that keeps USD/CAD under pressure despite USD/EM remaining bid and AUD/USD clearing stops through last week’s lows at 0.8932. AUD/CAD found support where it should at 0.9350 overnight and think this is probably a good level to start to build longs with a tight chop through 0.9280, and would be a nice way to trade a no action outcome from US/UK/French forces in Syria. Holding on to the core long in USD/CAD having reduced positioning and will look to add again on dips 1.0460-80 risking 1.0440. To the topside 1.0520 and 1.0560 will be resistance.
Scandies – More strong data from Sweden this morning (Manu confidence 100.1 vs cf. 95.4, Econ tendency surv 98.8 vs cf. 96.8) keeps the pressure on EUR/SEK as we test support at the bottom of the recent range around 8.65. 8.62 was the low for August and that will be the bigger level of support if we can clear light stops through 8.65.Flows have lightened up in NOK considerably now we have consolidated above 8.00 with some macro demand for USD/NOK still ongoing but still don’t think positioning is completely clear as some longer term accounts still hold onto their shorts. I’m playing EUR/NOK from the long side with a stop through 8.00 as I think there is still more pain to the topside, but keeping one eye on US10y yields back through 2.70. Swedish retails sales tomorrow 08:30LDN (cf. 0.1% mm).
Barclays