G10
EUR – While we remain soft below the post Greek election lows at 1.2520 the follow through is currently very lacklustre with the market unwilling to aggress too far ahead of the European meetings Thursday/Friday – I think we still rangey 1.2430-1.2580 but prefer to sell the rally today – there are some stops 1.2530-50 so room for a mini squeeze but I think mkt is hanging on for something better from Europe and still unlikely anything comes.
GBP – Levels still intact from yesterday but markets find a footing despite good EUR/USD, AUD/USD selling yesterday. I still look for equities to remain fragile and fading cable 1.5600-50 is plan. I have some supply in that region and coupled with demand in the cross 0.7990-0.8000, the pound should struggle to rally. Public sector finance data at 9.30 shouldn’t get too much attention later as the macro story seems of little interest.
JPY – Cleared the decks yesterday as buyers of previous 2 days went away and profit taking above 80.00 led to stops going off 79.80-79.426 low with no bounce at all – we have rallied today on the passing of the consumption tax and i agree we stay firm now 79.40/50, at least until the consumer confidence data later. Topside 79.80/90 will again be pivotal if then 80.20 and then that 80.70 we topped at in Asia yesterday – still prefer to buy the dip but think we in a range still 78.50-80.50
AUD (1.0030) – some decent exporter/corp interest to buy overnight saw us take out the stops through 1.0025/30, but there really has been little follow through post. We saw a wave of selling on the break of parity yesterday, most of these participants placing ST stops above the mng highs round 25/30 in an attempt to opportunistically get short. We did remain below parity for quite some time, though ultimately it proved a failure with the ensuing squeeze as slow and dull as the perceived break that preceded it. I have sold some AUD here, and will be selling more round 1.0040/50 today, putting a stop through 1.0075/80 as this remains a very important short-term pivot. Books are quite thin, offers immediately above with new stops again down through parity. G’luck!!
CAD (1.0276) – some decent corp supply above 1.0300 seems to be capping the range for now, though I think its just a matter of time before this breaks and we carve out a new range. Can we do this ahead of the EU summit? I am not so sure, but certainly hope we start to realise some volatility. We see stops immediately below round 1.0265/60, with smaller offers round 1.0305/10 in the books for now. Stops through 1.0320 in the books. Square cash here, will look to job the range. G’luck!!
Scandies – Similar game plan to yesterday, I continue to fade these moves higher in EUR/SEK and EUR/NOK for now. In the former resistance 8.8500-8.8650 should hols us for a look lower, with 8.7800 and 8.7500 support areas. EUR/NOK was pulled higher by USD/NOK stops yesterday through 6.0000 but Supply is noted 7.5250-7.5350 and tech resistance at 7.5450-7.5500 should cap us. NOK/SEK buyers are still anticipated on a move back to 1.1700-20.
EM
ZAR – Global risk sentiment continues its downward spiral and for USDZAR yesterday was another tough day in the office, trading 8.4091 – 8.5313, closing at the highs. We saw decent 2way flow from both local and offshore names but ended the day better buyers of USDZAR. Taking over from a quiet Asia session this morning sees risk clawing back some lost ground and USDZAR opens 8.4600. USDZAR has come a long way from Wednesday’s 8.1480 low and looks set for a correction back to the 8.4000 level. That being said today sees the start of the ANC policy meeting so local headline risk will be high. Of particular interest to investors/business community would be policy stands in regards to land grabs and nationalization of mines and negative headlines would be met with a decent amount of ZAR selling. On the day we’ll use dips back to 8.4000 to rebuild a long USDZAR position, ultimately looking for a retest of the 8.5500 level. On the data front we have SARB Leading Indicators out locally and Consumer confidence numbers out of the US this afternoon.
Barclays Capital