EUR – All eyes on NFP this afternoon, however regardless of the actual number, I think EURUSD will end the week higher. Our customer base were consistent buyers yesterday, both on dips towards 1.3520-50 and on break of 1.3640. On a strong number, we should get a dip towards 1.3580 to buy (EURYEN, EUR/EM. EUR/Commod prob the best way to play this), on a weaker number, just buy EURUSD looking for a re-test of 1.38.
GBPUSD – Rather sidelined for the time being, and in my view, this afternoons trading is unlikely to be notably directional for GBPUSD. I am pretty flat right now, but for choice, would look to buy GBPUSD 1.6270 – 1.6300. Overall, I remain bullish, but with EURGBP having corrected upwards, it seems a short period of consolidation is in order for GBPUSD. Client flows remain supportive, but volumes have fallen, and clients are being more-selective in terms of location. Expect resistance on the approach to 1.6400-10, with 1.6443 marking the high for the whole upmove.
EURGBP – For the time being, sellers are emerging above .8370, though my sense is a slightly deeper upward correction is going to develop. .8400-20 marks the new ‘sell-zone’ in my mind, and whilst the near-term case for EURGBP lower has stalled, I continue to believe this is a fair ‘sell on rallies’. Leveraged short-covering was the major theme post the ECB on Thursday, though I would expect these same clients to consider selling above the .8400 mark if seen. Support should be found at .8320 (Wed high) and then at .8293 (Thurs Asian low).
JPY – *GPIF SHOULD RAISE JAPAN STOCK HOLDINGS TO 18% NOW, ITO SAYS
*JAPAN GOVT WILL ENACT PANEL’S ADVICE ON GPIF CHANGES, ITO SAYS
*GPIF SHOULD REDUCE LOCAL BONDS TO AS LITTLE AS 35%, ITO SAYS
These headlines were enough to drag USDJPY back onto a 102 handle overnight having languished just ahead of 101.52 support for much of the NY/Asia session. Nothing new content wise per se, however Ito’s urgent tone caught the eye. NFP the obvious focus this afternoon with Barclays towards the bullish end of expectations at 200k (vs 183k exp) and 7.1% UR (vs. 7.2 exp). The positioning skew in USDJPY has changed in the last 72 hours following the 170 pip correction from the 103.38 highs and I feel more comfortable holding longs. Unless we get a print sub 150k this afternoon, I will look for 101.50 support to hold. 102.84 is the first resistance on top before 103.38.
AUD/NZD – The late USD sell-off forced the hand of some short-term AUD/USD shorts on the break-up through 0.9060 resistance but the rally has been met with better supply on the run up to 0.9078, and I would recommend selling rallies into 0.9145 with a stop above 0.9205. The AUD crosses taking a breather after AUD/NZD failed to close below 1.10 and EUR/AUD has unwound some of yesterday’s gains but whilst we hold gains above 1.5035 the picture remains bullish. NZD/USD stubbornly bid for now despite some good supply from RM names. The 200dma comes in at 0.8165 and beyond there the previous lows from 0.8084 should act as good support as the story remains the same that NZD should underperform AUD into year end.
Scandies – The NB met the markets expectations and despite the quick sell of in EUR/NOK to a low of 8.3118, NOK supply was forthcoming from fast money names and we have now comfortably held gains above 8.40. Norway IP data at 09:00LDN (IP manu mm cf. 0.3%) will be the next focus and any disappointing data from here will be met with more NOK supply. I think already some RM accounts are looking for the right level to sell EUR/NOK and because of that there is the risk of position recycling as liquidity becomes an issue into year end. USD/NOK tested resistance at 6.23 but the subsequent rally in EUR/USD kept the USD crosses in check but I would still be happy to buy dips in USD/NOK down to 6.13 on the day risking 6.09. EUR/SEK getting pushed and pulled around by EUR/NOK for now and I think SEK will stay under pressure now in the run up to the next Swedish inflation print on the 12th December. Support comes in at 8.82 while USD/SEK will be well supported against 6.47/48.
Barclays