EUR – Yesterday tough to be long with the orderbook so skewed to selling between 1.3080-1.3130 however we walk in today with the orders all filled or gone to mkt leaving the orderbook topside much lighter. The lvls remain the same 1.3140 (oct highs) 1.3170 (double top sept highs) downside 1.3050/80 first support lvls – European PMIs first up then ADP and ISM later. Be interesting today if we can push on ahead of ECB and payrolls but a break of these lvls topside I think will drag the mkt further into buying.
GBP – PMI services/official reserves at 9:30. Autumn statement at 12:30. Price action is more robust than I expected and I’ve trimmed back shorts in GBP/USD and cut EUR/USD completely. The corporate world still look to sell these rallies and order books have USD demand just above in both pairs. Cable trying to resist the tow of a creeping EUR/USD as EUR/GBP takes the heat, bouncing away from 0.8000 support. 0.8150 and 0.8165 resist on the techs. I expect more doom and gloom, especially on the debt front from Osborne later but I think the market is expecting that. Never the less, I still favour playing cable from the short side and look to sell up to 1.6165 risking 1.6180. 1.6300 though is still major tech resistance.
JPY – Mkt targetted the stops 81.70/81.40 yesterday and early ny afternoon it looked like getting there but the lvl holds again and with asia stocks all firm the short squeeze back into the middle of this 81.65-82.80 range begins. We saw alot of selling yesterday below 82.00 and many of the stops were cxled by the ldn close having gone to mkt already. So we remain in this defined range much will depend on the data out later european pmis, adp and ism. Expect increased short covering on a break of 82.50 topside before that well defined range highs at 82.80/85, while i think the mkt will try to buy a dip again pre the adp data later. With eurjpy now above that 107.65 fibo lvl bias is skewed to the topside – we look now to see if the break can be sustained targetting 109.50/110.
AUD – market offers 1.0490-1.0500 still cap us for now, I think it’s a matter of time before we break but would not advocate initiating a fresh long here. I prefer to buy dips down toward 1.0440, or alternatively buy the break of the figure. Domestic data remained poor overnight, this did little to deter AUD and it’s ascent higher with bids now being raised up to 1.0450/60. We continue to see good corp interest to buy on dips, I can’t see this dissipating any time soon. Am long AUDNZD here, this is mainly premised on the RBNZ this evening where I expect a dovish MPS. I will send a preview out later today.
CAD (0.9915) – we open towards the bottom of the recent 0.9910-0.9975 range after a decent sell-off in USD/CAD following the BoC rate decision yesterday. No material news to accompany the rate decision with the Bank holding its expectations of a higher future rate path. First off today range support at 0.9910 where we still have some demand but stops from a host of spec names starting to build now below 0.9890. Strong offers to the topside remain intact, first ones come in at 0.9960 through to 0.9990. Still prefer to play this from the short side and will look to sell into any rallies up to 0.9980 with a stop above parity.
Scandies – Swedish PMI services at 7:30/service production at 8:30. No change in view or levels from yesterday in Scandiland. I still favour a long NOK position should we get close to 7.4000 against the EUR. 8.59-7.7250 defines the playing field in EUR/SEK and we wallow on the centre line. NOK/SEK fails to get traction above 1.1770 but looks good value down towards 1.1680.
Barclays Capital