EUR – Lots of 2 way in eur yesterday without really much movement – rm and corp sellers but spec and model buyers kept us in a 30-70 range – Expect something similar today with nothing much on the data front again. Support is 1.3220/30 and then 1.3190 below that. Orderbook has some stops below this lvl now. while resistance is 1.3280 and 1.3310 – Topside the trendline off the highs from august (1.3452) comes down to 1.3310 so while we have stops now above there i think its a nice fade with a stop above 1.3340.
GBPUSD – Continues to find resistance ahead of the range highs at 1.5752 (1.5744 was Tuesdays high). I remains positive on GBP, but I am loathe to be long GBPUSD here into this area of natural supply. A close above this pivot would be very encouraging for those holding longs, and indeed I hope for a break to help my EURGBP shorts. In the event of a downward correction, I would advocate buying into the 1.5603 – 1.5650 band, and would highlight 1.5810 and then 1.5845 as the next levels of interest to the topside. Systematic demand has been noted in the last 24h, though focus is largely on other GBP crosses right now (namely EURGBP and GBPJPY).
EURGBP – Softening, after the correction from .8392 ? .8454, Friday to Tuesday. I have a cash short and also own short-dated .8400 puts, predicated on the potential for a fall in the UR rate today (Barclays Economics go for 7.7pcnt), and the potential for tomorrows appearance of Governor Carney before the TSC, proving GBP positive. .8392 marks the recent low, but what is really required to increase confidence is a close sub .8400, which is the lower end of the traded range since January. To the topside, .8465 – 90 marks out the short-term sell zone, and we do note some offers in this area. Client flows remain skewed towards selling, though EU Corporates continue to buy consistently on each downdrift also.
JPY – Dips limited yesterday supported by the general risk move, Abe confirming gvmt measures by end of month and some consistent buying from rm, lev and model a/cs. We got a close above 100.30, taking out heavy exporter selling on the way. O/n in Asia we have taken stops out above last of exporter offers at 100.50 but retail a/cs sold taking profit keeping us with a high at 100.62. To confirm the uptrend into the new range 100-103 I would like to see usdjpy dips hold above 99.90/100 and eventually regain ground above 100.50.
CHF – Eurchf benefitted from positive risk sentiment yesterday taking out the corp offers 1.2375/85 and trading to the next resistance area at 1.2415/20 o/n in asia. Usdchf held well in face of some decent RM and model selling after the stop clearout monday down to 0.9302. I think that usdchf, like usdjpy, should continue to do ok in this risk buoyant environment and look for a move back towards 0.9390/0.94 again – eurchf dips now to 1.2370 again expect to hold and see if we can clearout offers 1.2415-20 and trade to next target at 1.2465.
AUD/NZD – No decent pullback yet in this rally in AUD/USD. 0.9320 has topped out a few times now though as new sellers look for value in the old trend. Things have changed a bit though, with China picking up on the data front, Oz OIS curve starting to price out another cut and the predicted fall in base metals failing to materialise to any great extent. Oz employment data tomorrow is becoming a key event and today will see accounts placing their bets. For me, a stronger correction is still on the cards and I would expect 0.9330/0.9350 resistance to get tested soon. 0.9406, the 2009 high and acceleration point on the move down is a big level to consider. Support on the day at 0.9242, 0.9222 and 0.9187. Hourly trend support is taking form, with support near 0.9280, depending on how thick your pencil is. I run small short and look to add on dips. We will get a clearer view of short term direction post employment data. NZD/USD again a little sidelined as flow dries up completely. RBNZ tonight but that isn’t teeing up to be a big event. I expect price action to ghost the Oz with support 0.8034 and 0.8000, resistance 0.8058 and 0.8076.
CAD – A painfully slow grind lower in USD/CAD yesterday as the pair cleared trend line support around 1.0350 and went on to trade a low of 1.0331. Local names and corps seen buying off the lows but the pair remains under pressure as commodity currencies remain in demand despite the sell off in oil and gold, as it seems the potential for US action in Syria wanes. 1.0320 is now the next level of support and don’t see the pair running away as good demand builds in the orderbook 1.0280-1.0320. To the topside expect to see some short term stops through 1.0380 while 1.0440 remains the bigger level of resistance. I think at most we trade a 1.0280-1.0440 and I still prefer to play it from the long side. Will look to buy any dips down to 1.03 with a stop through 1.0280, but I think 1.0320 should hold for today at least.
Scandies – The perfect storm yesterday for NOK/SEK with weak Swedish IP (-5.2% vs. cf.-3.6%) followed by a strong Norwegian inflation print (-0.1% vs. cf. -0.4%) which was followed up by very strong lev. demand for the cross, for many those are fresh longs 1.09-1.10. EUR/SEK price action post-data was disappointing as the pair couldn’t really gain any traction above resistance at 8.70 with the bottom of the range at 8.65 still the first level of support. As a result EUR/NOK sold of heavily and we have seen leverage accounts continue to add to their long NOK positioning 7.85-7.88. Now looking at 7.80 as the next level of support and where I will square up the remainder of my short position. I think the next 5 big figures should be harder work as expect to see shorter-term guys take a bit of profit, but with a light Norway data calendar for the rest of the week I don’t see anything to upset this trend. Swedish unemployment and inflation 08:30LDN tomorrow.
Barclays