EUR – So eur caught up yesterday as mkt cut long usd positions post payrols as we wait for the fed next week – What started as a slow grind 1.3180-1.3220 turned into a stop short cover upto 1.3281 – buying was consistent through the day and orderbooks now cleared. We open at the highs and with target reached on the squeeze – looking at areas to fade eur and like to sell 1.3290/1.3310 trendline resistance from the 1.3452 highs comes in at 1.3320 so thats first lvl topside like to put a stop at 1.3360. Support now should be 1.3230 wrong if we go back below 1.3190. Expect ranges now pre fomc as we sit and wait.
GBPUSD – Touched as high as 1.5733 on Monday, and did find supply where I had expected (ahead of the multi month highs at 1.5752). I think this area will remain sticky for the time being, though I also think GBP will remain underpinned overall. I don’t have much GBPUSD risk on right now, but would advocate buying weakness between 1.5603 and 1.5650 and selling ahead of 1.5752, until something clearer emerges. Tomorrows UK Employment data and then Governor Carneys appearance before the Treasury Select Committee on Thursday, remain the major local focuses this week.
EURGBP – Has corrected quite sharply from the lows seen on Friday (.8392). The gameplan remains the same here – I suggest holding core shorts and selling upward corrections. From here, that sell zone will be between .8465 and .84905, which represent the highs seen on Thursday and Wednesday of last week. Client flows have been quiet thus far this week, though the recent pattern has been one of Leveraged and Real Money supply on rallies. I expect this to continue.
JPY – Only usd to hold in yesterday as the mkt was supported on dips 99.30/40 – With exporters and lev selling into the early move higher yesterday on tokyo winning the 2020 olympics supply was met with fresh demand once states got in from spec/rm names. Today as usd stablises usdjpy making fresh highs back towards 100 – Demand 99.60-90 has come from model/cta and lev names but now we into the exporter selling again which should slow the move 99.90-100.30. Positive news on Syria, with russian trying to broker a deal and abe ordering fomulation of gvmt package by end of sept all supportive of buying, however these lvls need to be respected and with offers on the books i prefer to wait for a break of 100.30 topside – back to neutral from thinking usdjpy would eventually come back lower yesterday.
CHF – Once we cleared the 200 day at 0.9345 yesterday we stayed offered as rm, stop selling and specs cut positions – We have since held 0.9300 area and above that 0.9285 support zone. With Positive news on syria with russia trying to broker a deal and eur clearing shorts out yesterday usdchf feels free to go back up – 0.9300/50 for now but prefer a break back towards 0.9380 – eurchf holding nicely at 1.2330 area back against resistance at 1.2385 – few corp offers here before 1.2420 next resistance.
AUD/NZD – AUD/USD has finally pushed through resistance in the 0.9222/0.9233 band but price action yesterday was like repeatedly slamming my fingers in the cupboard door. Break trading AUD is still far from easy buy the firm close after stamping around on the levels should encourage longs, (kind of). Stronger Oz business confidence data and another beat from China underpins that close. Support now should kick in back at 0.9222/33, (with a load of noise) but 0.9187 is a safer level to risk. Topside I still fancy a push to 0.9330 resistance before 0.9406, (2009 high) caps the move. I run long still and will try and add if we get back into the 0.9220’s. NZD/USD appears even more static, apart from a futile attempt to break 0.8058 resistance o/n we are back to near yesterday close. Support at 0.8000 and 0.7960 on the day. Pretty light on data today, with Norway being the pick of the prints, so we’ll try and dodge Syria headlines.
CAD – Trend line support at 1.0355 holding in well overnight (56 low) as we have seen some interest to buy this dip from macro names with fresh stops building accordingly below 1.0340. A strong building permits print yesterday (20.7% vs. cf. 3.5%) added some pressure to USD/CAD but as oil retraces some of its recent gains and Russia making attempts to cool US action in Syria, it seems arguments shift once again back towards tapering, so I think we are firmly back into buy dips mode. Buy dips down to 1.0350 with a stop through 1.0330 looking to re-test 1.0440 where I expect to see some profit taking.
Scandies – A late stop run last night as EUR/NOK broke down through support at 7.98, with some leverage names using the opportunity to add to USD/NOK shorts through 6.03. It was confirmed overnight the Conservative Party, as expected, will attempt to form a government with the Progress Party which many in the market are taking as a small NOK positive with expectations of a looser fiscal stance. Norway CPI at 09:00LDN will be the focus of today’s session and yesterday’s flow suggests the market is expecting a strong print. 8.00 will now be the first level of resistance followed by 8.05 while to the downside there are a few light CTA stops through 7.95, a level which acted as good resistance multiple times through July. Swedish IP is up first at 08:30LDN and although EUR/SEK cleared support through 8.70 yesterday I think we are still sat comfortably within the 8.65-8.75, while 8.78-80 remains the important band of of resistance. I sold the break of 7.98 in EUR/NOK yesterday and will hold that into CPI risking 8.02, predicated on the view that a strong CPI should put an end to any remaining calls for a rate cut from the Norges Bank.
Barclays