G10
EUR – Late wild finish to the week in ny with a new high (1.2390) followed by a 100 point retracement – Data all back loaded this week starting with FED (wed) before ECB (thurs) and payrols (Fri.) and let us not forget month end tomorrow – Certainly feels like the decks are a lot cleaner in the short term and that the high pre FED is in place – Today we look at 1.2240/50 low from Friday as the first pivot below that 1.2180 – topside 1.2340 then 1.2390/00 resistance – with the measures being discussed now looking more like easing it feels like the downside first.
GBP (1.5702) – I continue to sell this ahead of 1.5850, there are a host of technical levels above and I see no reason for this to be trading at current levels. We failed at the 200dma on Friday, but for me the 100dma at 1.5783 is more important with this 1.5800-1.5850 level shaping as as pivotal in the interim. A lot of event risk on the horizon this week – PMI and BOE the domestic catalysts, I am long some some 1-2week downside ahead of such. EURGBP cannot maintain any sort of trend – after taking out the anticipated stops above 0.7860 on Friday, we sharply retraced all these gains in late NY as the EUR tumbled a big figure in thin liquidity. We now see stops through the figure, but this really is indicative of the pain being inflicted via this cross recently with topside stops not far from spot either. Better offered up to the 100dma in cable. Good luck!!
JPY – Nice spike Friday post GDP to clear the decks but exporters top us out 78.50/60 and as eurjpy backs off so does usdjpy – Today still 77.90/78.10 first good support – topside need to break 78.70 to start to gain some upside momentum – with the FED likely to be the first interesting data point for usdjpy this week i still in buy dips mode.
AUD (1.0470) – continues to trade with an underlying bid tone though did hold resistance round 1.0500-20 perfectly overnight. I will be a seller at these extremes, but am really struggling to find any levels of note above spot. I am long gamma ahead of this week, there is a lot of event risk on the horizon and I still think vols are low enough to capture these moves. Big sell-off in Aussie fixed income over the past week, we have been advocating being paid such and finally the mkt has responded. We have a decent lhs skew to the book at current levels – stops below 1.0445/40, offers kicking in from 1.0490-1.0530. Nothing in the way of bids until 1.0365/75 levels. Continue to look to sell AUDNZD on rallies, 1.2975/85 the first level I will be selling. Good luck!!
CAD – USDCAD pivoting around this 1.0050 level but ultimately flow, orderbook skew and sentiment all point lower in funds, the FED Wednesday is clearly key and I think the market is desperate to see some action from Ben and co. Quite simply if they deliver Wednesday then sell USDCAD if not then buy it, then its Draghis turn Thursday and if he also delivers on his rhetoric last week short EURCAD may also work, still a popular position out there and when it feels a little too good to be true it usually is so wary of beating short EURxxx drum too hard but 1.24/2450 looks nice resistance for now in EURCAD, if we see it here pre ECB then will look to get short. Good luck
Resistance 1.0150 1.0230 1.0260
Support 1.0000 0.9950 0.9800
Scandies – Some nasty moves in EURSEK and EURNOK on Friday exaggerated by the arrival of summer liquidity, most of the market had stops in EURNOK above 7.42 which on thin air then traded 7.48 and EURSEK followed suit with most EURxxx bid trading up from 8.42 to 8.50 where some local offers started to appear. Levels and strategy on the whole remain the same in both EURNOK and EURSEK. I still like selling rallies in both and if we see risk on and weak EURxxx after more stimulus from both FED and ECB this week then EURskandies and particularly USDskandies should be lower. GDP today from Sweden and this could be very important, a much weaker print would definitely signal greater probability of a rate cut from the Riksbank in September and as such will happily trade round the data this morning, 8.40 should be good support and 8.50 good resistance. Anything between 8.55/60 on a shocking outlier should still be sold pre ECB on Thursday in my opinion. EURNOK equally still bouncing around between 7.50/40 and Fridays price action worryingly reflective of how poor liquidity is at the moment, will look to initiate short back towards 7.50 today if we see it, NOKSEK looking heavy at the moment targeting 1.1300 support may give us this opportunity. Good luck.
EURSEK support: 8.40 8.35 8.30 resistance: 8.53 8.55 8.60
EURNOK support: 7.40 7.30 7.25 resistance: 7.50 7.55 7.60
EM
ZAR – USDZAR continued its move lower on Friday and closed a volatile, headline driven week sub 8.2000. On the day we saw good USD demand from predominantly local accounts and ended small better buyers. Taking over from Asia sees markets consolidating and USD clawing back some lost ground. If the carnage of last week teaches us anything, it is that markets will continue to trade in a volatile and erratic manner for the foreseeable future and unfortunately USDZAR remains dependant of EZ developments. We are closing in on some key levels on the downside and 8.1500 becomes the next target, if that breaks a deeper correction to 8.10 and 8.06 looks likely. Intra week we have a lot of data and events to look forward to including ECB and Fed.
Barclays Capital