EUR – Powerful day yesterday as a dip to buy never came instead it was buying the break at the top of the recent range at 1.36 that stimulated further interest – seems to be now that the US debt problems have been kicked along the road mkt is coming round to thinking that so will tapering – Eur interest increased from lev, rm and spec above 1.3650 and now focus will be the years highs at 1.3711. Going into next week and the start of the delayed US data support now will be 1.3630 then 1.3590 – topside 1.3711 then 1.3770. Overal expect a grind higher into the end of year now as tapering expectations are pushed back and people look at improving fortunes in europe – Counter of this at some stage will be concern at the ECB on eur strength but thats for at least another 2 weeks and ecb.
GBPUSD – at its highest levels for two weeks, and now the recent high at 1.6260 is back in sight. My approach remains the same – I expect the gains in the last 24h to be the beginning of a trending move, and I am long spot and mid Dec 1.6450 calls. Client demand did not really emerge until 1.6080+, though since then the interest has been growing swiftly. My feeling is the market is currently under-positioned, and the broader risks remain on the downside for the USD. To the downside, buying interest will emerge around last week’s high (1.6124) and then again at the high from Wednesday (1.6064).
EURGBP – Drifting lower, as GBP becomes more and more popular as a ‘go to’ for a USD bearish view. Shorts remain attractive here, since the recent high at .8510 is marked as the clear ‘line in the sand’ to the topside. To the downside meanwhile, momentum should increase on a close below .8420, with the recent low at .8333 being the eventual downside target. Leveraged clients have been rather persistent sellers of EURGBP this week, and I expect that pattern to continue. I am square right now – choosing to focus my efforts on GBPUSD, but I would much rather be short.
JPY – Reacted to the generally weaker USD yesterday selling off towards 97.74 but it was an orderly decline – With risk buoyant i expect this 97.50/70 area to hold and to bounce back towards 99 later next week. Starting to fade into a long at current lvls leaving room to add towards 97.50. Payrols next week now on tuesday i think there is room for a squeeze back towards the top of the recent range.
CHF – All the way back to this recent support zone against 0.8995-70 -RM sold yesterday as well as corps and with eurusd firm it remained under pressure. Expect there to be bids again 0.8970/90 with stops below 0.8940 – Topside resistance now 0.9070 area – Eurchf 200 day is at 1.2320 and expect bids 1.2300/20 area supporting dips, especially with risk in general firm – topside focus remains 1.2385 then 1.2420.
AUD/NZD – So, the USD is out of favour now and all of a sudden everyone wants to ditch it. AUD and NZD flows haven’t been particularly heavy over the last few sessions with little macro or real money activity. I guess we play these from the USD short side again but I’m a little wary. I look at cable for instance and remember how one way and broad based the selling was below 1.5000 and how crowded the trade became. Similarly, the buying is broad based now and we trade bid, just shy of the years highs. Another crowded trade coming up? It seems to happen very quickly and all so often. That said, I’m not going to fight it in general and look to buy into 0.9605 in AUD/USD for the day, adding to small longs from yesterday. 0.9701 resistance will be enough for me today though. NZD/USD, surprisingly has stuck out to be one of the few USD pairs where I have seen USD buying and AUD/NZD has got some legs as a result. Still, NZD/USD is trying to ghost AUD/USD higher with the general theme. 0.8450 support with 0.8534 resistance there. As for the cross, 1.1200-1.1430 recent range still intact but expect the topside to get tested on further USD weakness if the dynamics mentioned above continue. Daily trend resistance has set up at just below 1.1400 now and a break of that should see us clear 1.1430 and focus on 1.1462 before a 1.16 handle beckons.
CAD – struggled against support at 1.0280 late yesterday and from here USD/CAD feels like it has got some catch-up to play on the USD sell-off yesterday. 1.0315/20 then 1.0350 are resistance while downside if we can get through 1.0280 it should open up some room towards 1.0250. I am short USD/CAD and will reduce through 1.0320 and clear the balance through 1.0350.
Scandies – USD weakness continues to dominate – made quick work of support at 5.95 in USD/NOK and 6.45 in USD/SEK. No local data again today and it feels like the theme can continue. 6.40 is the level to clear in USD/SEK. 5.87/88 should be good support in USD/NOK as NOK continues to be the favoured currency with more RM supply yesterday 5.93-95. The EUR pairs holding in tight ranges for now but 8.8250/8.83 remains strong trendline resistance in EUR/SEK. I am running short of USD/NOK and USD/SEK and will risk 5.95 and 6.45 respectively.
Barclays