G10
EUR (1.2869) – seemed to be no shortage of negatives emanating out of Europe yesterday, the surprise really was in the timing of the mkt response with EUR again trading in the direction of pain. Topside stops were triggered after the failure to materially break 1.2890, and despite buying a very decent chunk on the highs we could not push higher than Monday open. Following the protests in Madrid and calls by Catalonia for an early election, Spain will again be key today so I expect a whippy session with headlines likely to dominate proceedings. 200dma kicks in at 1.2827, I expect EUR to be very sticky ahead of this with some decent bids already lining up. Topside stops now start 1.2920, other than that the majority of our resting book interest has been cleared following the stab lower in Asia. No strong bias today, am sq cash here looking to be nimble and keep the powder dry for the impending headlines. G’luck!!
GBP – CBI reported sales at 11.00. Heavy EUR buying yesterday by quality names rubbed out as Plosser/IMF comments and equity sell off impacts the market. More cracks in Europe with unrest in Spain and confirmation that Monti will step aside from elections in Italy. EUR/GBP trades heavy once more, keeping cable artificially high and sets up resistance at 0.8000-10 zone. However, my order book is getting skewed with demand towards 0.7900 and stops above 0.8000. Cable support 1.6160-70, resistance 1.6235 and 1.6270. I expect another comment/equity driven day as the market becomes less and less convinced of medium term direction. The game plan is to keep the ship pointing into the swell and play the ranges. Newswires will have increasing impact as liquidity loosens up. Good luck.
JPY – EURJPY the main point of interest over yesterday’s session, had a round nice trip up to 101 from 100.20 and back again in line with the perplexing price action in EURUSD. Ultimately left USDJPY a little quiet in a 77.70/77.95 range, we have been better sellers of crossJPY and USDJPY overnight and orderbook wise clear bias to buy dips ahead of 77.50 and the post FED low around 77.10. Happy to still buy the dip in USDJPY and think we maybe given this opportunity given the way crossJPY trades. Good luck.
AUD (1.0352) – open right above the 200dma (1.0341), this is certainly the first level of support with some profit taking noted first thing. Below here there are no material levels until 1.0275 where we pick up a trend line off the early June lows. Trend is your friend here, I don’t have any real interest in trying to buy dips but more looking for opportune levels to sell rallies. Today the first such level will come in round 1.0400. I am still holding onto my + AUDNZD, will chop this through 1.2570 as I think the bird has a lot of room to retrace with positioning in this cross very short in my opinion. Book is quite thin, some interest to sell AUDUSD emerging 1.0380-95 with very little on the downside. G’luck!!
CAD – A dramatic turnaround in the USD since the London close where seemingly everything was rosy, USDCAD was left around 0.9765/70 yesterday afternoon where we did see some European RM buyers after the fix but open this morning at 0.9820 looking to test 0.9850 resistance. Still think its worth fading a rally around this level but your stop needs to be above 0.9900 and the way EURUSD trades my desire to hold onto a USD short diminishing slightly. Stops in EURCAD lurking below 1.26/1.2590 and then bids pop up near 1.2530/20. US home sales this afternoon. Good luck.
Resistance 0.9850 0.9900 0.9930
Support 0.9750 0.9680 0.9650
Scandies – Lots of SEK was bought yesterday with local names selling the break of 8.48 and stops being triggered, we saw some decent leverage selling through this level as well but the pair held where it should at 8.45 but will certainly be more stops below 8.44. Square in EURSEK for now but core long NOKSEK still looking for a move back above 1.1500. Swedish consumer confidence out this morning should set the tone. EURNOK looking to test bids/support around 7.35/36 and happy to play this pair form the short side, offers still building 7.44/45. Good luck.
EURSEK support: 8.45 8.42 8.38 resistance: 8.56 8.60 8.65
EURNOK support: 7.38 7.35 7.30 resistance: 7.48 7.50 7.55
EM
ZAR – USDZAR spent yesterday trading a relatively tight 8.1600 – 8.2600 JHB range as the local market got back from the long weekend. On the day we saw decent USDZAR offers by leverage names with offshore corporate on the bid in a chunky clip of EURZAR, on the day net better sellers of USDZAR. Taking over from the East sees risk under pressure. USDZAR opens at 8.2400, holding up well considering news this morning that the majority of AngloGold’s 35 000 workers have downed tools and the threat of labor unrest is spreading to other sectors of the SA economy. On the day we’ll sell into rallies towards 8.3000, keeping a close eye on local labor unrest. From a data side it’s a quiet one with no local releases and scattered data out of EZ.
Barclays Capital