EUR – focus now switches to ‘core Europe’ following the French downgrade by Moody’s. French yields slightly higher on the open, not a huge move though with this largely reflected in spot having squeezed higher post the initial headline dip. Book still skewed topside with stops through the overnight highs, I don’t like buying here and if anything would be biased to sell above the figure, again into stops above the overnight highs and put a chop round 1.2860. Bids kick in 1.2760/55, clean air in between. 200dma now at 1.2806, this is now slightly less important given the break yesterday and establishment of a double top round 1.2820. Sell rallies is the name of the game.
GBP – Flows light, EUR/USD the G10 focus and cable stuck in a tight range with more chatter of 1.590 strikes today. EUR/GBP took all the heat from a bid EUR/USD yesterday but 0.8065-0.8100 looks like the sell zone if we get there. Support 0.8000-10 and 0.7980. We are light on data today and attention will be on news of a possible Greek aid deal later. Wait and react. Order books are fairly neutral but we have a slight weak topside EUR/USD book, suggesting the market runs a little short.
JPY – A small dip (if it could be called such) yesterday to 81.085 in what was ultimately a quiet session pre BoJ overnight, we did see some leverage USDJPY selling in the New York afternoon but nothing overly substantial. As market expected BoJ left things on hold and now clearly expectation is for 16th Dec and then next BoJ on 20th Dec, sensitivities surrounding potential political changes now heightened with USDJPY trading above 81.40 on the back of JAPAN OPPOSITION CONSIDERS BOJ LAW CHANGES, NIKKEI REPORTS pre BoJ announcement and this morning a small wobble (81.24 to 81.14) on *SHIRAKAWA SAYS NEED CAREFUL CONSIDERATION ON CHANGING BOJ LAW. We saw a little bit of leverage EURJPY selling off the highs after the French downgrade overnight and composition of JPY orderbook remains the same, offers up to 81.60/70 and a few stops below 80.80 but we are still long and would like to buy a dip as I am sure most people would back towards the 80.70/60 type area.
AUD/NZD – price action paints a clear enough picture, the RBA mins were indeed a non-event. While they did allude to ‘further easing’, it wasn’t enough to sway market pricing with the Dec decision likely to be largely influenced by the prevailing global macro backdrop. Stevens is speaking at 8.15AM LDN time, no topic has been announced though we await the impending headlines. We still remain largely topside skewed – stops through 1.0420/25/30 with the next pocket kicking in through 1.0450/55. Not a great deal in the way of offers. Downside again stops through 1.0350, sporadic bidding interest round 1.0375/70. NZD capped by the 50dma last night at 0.8210, very little of note in the books. We see some AUDNZD supply round 1.2760/70, this is the sell zone and I will again be lobbing out a few out round similar levels.
CAD – Stocks galvanised things yesterday afternoon and commods led the way initially partially aided by the Market Watch story highlighting AUD and CAD being formally classified as official reserve assets by the IMF, USDCAD churned through some big bids around 0.9990/80 with plenty of RM and model selling out of our New York which helped us down to 0.9960. The 100dma at 0.9940 next level of support and orderbook has some profit taking from here down to 0.9920, will be interesting to see if we get a continuation of the RM supply we saw yesterday or any model participation in CADJPY which now is breaking above recent range highs at 81.50. Square funds for now but will buy a dip around 0.9940, US housing starts and Building permits this afternoon. Resistance 1.0050 1.0100 1.0130. Support 0.9940 0.9900 0.9880.
Scandies – Approaching levels where I think it might be worth buying some EURSEK, USDSEK trading below 6.76/75 yesterday the catalyst with some RM supply of EURSEK also around, should be bids ahead of 8.60 and I will be looking to buy some there if we see it looking for a small move back to top end of the range around 8.71/72 where there is still interest to sell. EURNOK is slap bang in the middle of 7.30/40 range with GDP today at 9:00am, still favour buying a dip in this pair with a stop below 7.28. NOKSEK longs still about and will get worried below 1.1680/70. EURSEK support: 8.60 8.58 8.55 resistance 8.68 8.72 8.74. EURNOK support: 7.30 7.28 7.24 resistance: 7.40 7.45 7.50.
Barclays Capital