G10
EUR – Mkt has been on the defensive this week worried about being caught on a squeeze that has never really come with 1.2330/40 providing stiff resistance – Eur x’s remain soft but market for now remains comfortable with the tail risks removed to continue on this path – today fomc minutes later the only real thing of note – looking at 1.2280/1.2310 short term resistance downside 1.2225/35 support – orderbook has only small bids and offers 50 pips either side of current spot stops though below 1.2205-1.2080
GBP – Lack lustre price action continues but Euro crosses continue to grind lower in general. EUR/GBP takes out barrier interest at 0.7900 and I expect a continuation. This changes my Cable view a little and makes fading into 1.5550 a little less appealing. A few stops should be vulnerable above there and I look at 1.5580-1.5600 to enter shorts. Support at 1.5473, tested yesterday, is still intact. EUR/GBP is a fade/add on rallies with support 0.7810-30 but 0.7695 and lower are the focus from the techie squad. I don’t see any fast moves without any major news. 0.7950 and 0.8000 good resistance now.
JPY – Bounced off that 79.20 yesterday but doesnt rally above 79.50 currently so short term pointing down still support is 79.10 (trendline support) and 79.20 range lows – stops still about 79.10-78.80 – we would need to squeeze back above 55/60 to relieve the short term pressure – with the BOJ tomorrow it feels like boj aggressive easing necessary to push us back above 79.80/80.10 zone – if we do get that sell off still like to buy 78.50/65 zone with a stop below 77.50.
AUD (1.0228) – at a loss to explain the current price action, really has me confused. Is the market expecting some from the FOMC mins tonight? Surely not. Given the insatiable demand we are seeing in the screens, it wouldn’t surprise me if a weak employment # this evening is met by a kneejerk move lower, followed by an aggressive rally higher for no apparent reason whatsoever besides the market is bulled up to ++ AUD. Orderbook paints a clear picture of current positioning –> stops higher, bids lower. Stops being lowered, bids being raised. The former kicking in on a break of 1.0260, the latter now down round 1.0210/05. Am small short here, not a strong conviction but sticking with the range for now. I will chop with the herds.
CAD – EURxxx shorts still the summer darling trade, we saw some good selling of EURCAD through both voice and ecomm yesterday from a variety of different accounts and this certainly seems to be the cleaner way of having a CAD position on with USDCAD broadly 1.0150/1.0250 still. Should be a few stop lurking above 1.0230/40 in USDCAD but orderbook still houses those corp bids around 1.0140/50. Maybe tempted to buy break of 1.0230 in funds just to see whats up there if we see it today but ultimately EURCAD should remain heavy with 1.2450 key support in the crosshairs, certainly a crowded position though so wary of squeeze back to 1.26 where I would be looking to get fresh short. Trade balance data and FOMC minutes this evening.
Resistance 1.0240 1.0280 1.0350 / Support 1.0140 1.0100 1.0080
Scandies – Stars aligned yesterday on the data front in Scandies to weigh on NOKSEK with much better than expected IP out of Sweden and poor CPI from Norway dictating the tone for most of the session. Saw some RM buying of EURSEK around 8.60 post data which couldn’t stem the tide of model and spec selling, took back our short around 8.56 yesterday and from here difficult to say with any real conviction where support comes in. Our tech gurus pointing to 8.5480 a trendline back from 1970s but ultimately looking for 8.05! Square for now and will look to resell rally back to 8.60 if we see it, EURSEK does look a little overcooked on RSI’s but still in sell rallies mode for me, NOKSEK through yearly low at 1.1415 and ultimately 1.14 maybe catalyst for move lower in EURSEK today. Our strategy pointing towards supply side factors notably cheaper electricity prices explaining yesterdays weaker CPI out of Norway, on the whole EURNOK price action after data encouraging for NOK bulls, still happy to fade above 7.50 if we see it where orderbook has good offers.
EURSEK support: 8.5480 8.50 8.40 resistance 8.60 8.65 8.70
EURNOK support: 7.47 7.43 7.40 resistance 7.52 7.55 7.60
Barclays Capital