G10
EUR – Consolidation continues as the market awaits the next clues from FED and news from the German court ruling on the Euro rescue fund tomorrow. 1.2800 ish is setting up short term trend resistance from the recent high. Techs pick up price action as over bought but I wouldn’t be surprised if we have another probe higher. 1.2870-00 sees supply waiting though. 1.2750 supports but ultimately, we need to get back through 1.2630 to get Euro bears back out of the woods.
GBP – Trade balance data at 9.30. Momentum stalls in cable above 1.6000 and without a fresh driver, it feels like retail supply will pick up. 1.6020 and 1.6035 should resist today but any further lunge higher will have to deal with tech resistance at 1.6070-1.6100. I’m starting to go short, all be it a relatively small core position for now. Support now at 1.5940-50 and hourly trend at 1.5875. EUR/GBP at the mercy of the next EUR/USD move but I am seeing some interest to initiate fresh shorts ahead of 0.8000. Overall, the market feels very undecided and liquidity is a little thin…still.
JPY – A quiet day in JPY yesterday, consolidation ahead of support around 77.90/78.00, but ultimately only trading in a 20 pip range. Strategy remains the same, still own downside in USDJPY to encompass FOMC despite a few people looking towards gold/stocks as a guide as to how much is already priced in. Given the importance of 77.90 and the stops people have below (our orderbook also reflects this) I think this will be tested if they do announce more stimulus. Also sitting short some crossJPY which has traded soft overnight in line with Asian bourses, should be some weak stops below 99.60. Best of luck.
Commodity CCYs – AUDUSD was steadily sold off yesterday from the early morning highs around 1.0380, stocks slipping on the New York close also weighed on the pair which has struggled to bounce at all overnight despite better than expected China loans data, seen some RM selling of AUDUSD already this morning but well absorbed sub 1.0330, looks to be some local demand back down to 1.0300 and think leading into Thursday USD rallies will be sold so happy to buy around 1.0320/30 with a chop below 1.0300. In the more medium term think AUD weakness best expressed in crosses AUDCAD back to parity and AUDNZD to 1.2650 look more favourable. We saw some CTA selling of USDCAD yesterday in a similar fashion to Fridays USD bail out, orderbook wise now we have very good demand from the corp community sub 0.9750 and few spec guys looking to re sell 0.9800. 0.9725 should be good support and given skew in orderbook wouldn’t be looking to get short funds at this level, think the demand for AUD that’s also out there maybe points towards some wood to chop in AUDCAD ahead of parity. Good luck.
CAD – A quiet day in JPY yesterday, consolidation ahead of support around 77.90/78.00, but ultimately only trading in a 20 pip range. Strategy remains the same, still own downside in USDJPY to encompass FOMC despite a few people looking towards gold/stocks as a guide as to how much is already priced in. Given the importance of 77.90 and the stops people have below (our orderbook also reflects this) I think this will be tested if they do announce more stimulus. Also sitting short some crossJPY which has traded soft overnight in line with Asian bourses, should be some weak stops below 99.60. Best of luck.
Scandies – A perfect storm in scandies yesterday which led to a sell off in the cross, Norway CPI disappointing and Swedish IP surprisingly good conspiring to send NOKSEK from 1.1530 to 1.1450 which is where we open this morning. EURNOK consequently had a quiet 8 big figure move from 7.32 up to 7.40 which is where we topped Friday, should still be some local interest to sell around 7.42/43 and will look to get short here if we see it. EURSEK not doing a lot we saw some buying out of Europe yesterday which took us shy of 8.49/50 resistance but was sold leading into the WMR. Happy to sell a rally back to Riskbank highs around 8.54/55 but equally expect 8.43/42 to be good support for now. Good luck.
EURSEK support: 8.45 8.36 8.28 resistance: 8.5520 8.60 8.70
EURNOK support: 7.35 7.28 7.20 resistance: 7.40 7.45 750
EM
ZAR – Yesterday saw us better sellers of USDZAR with local and offshore names on the offer in a relatively quiet JHB session. The local unit spent the day trading 8.1300 – 8.2175, extending Fridays gains as global risk sentiment remained well supported ahead of Thursday FOMC. This morning sees G10 range bound and USDZAR opens in line with yesterdays close at 8.1900. Of concern this AM is the renewed labour unrest in the mining sector with Goldfield workers joining Lonmin on strike and Implats threatening to down tools. On the day we look to buy dips back to the 8.1200 level, keeping a close eye on developments in the mining sector. Data wise we have Current Account and Manufacturing Production numbers locally with US Trade balance this afternoon.
Barclays Capital