EUR – Headline pair still trades very bid at the moment as a consequence of today’s FOMC but also of the Asian recycling of USDs which the market is wary of increasing in frequency and size leading into year end. Having said that doesn’t feel like the right thing to buy EURUSD above 1.30 which is where we open this morning, 1.3020/40 should be ok resistance initially with offers in orderbook here and then stops above 1.3050. I think respect this initial resistance and event risk this evening but ultimately we are still looking to buy dips around 1.2960/50.
GBP – Labour market data at 9:30. Our house call is pretty much with consensus. I have again been a little surprised with price action and it feels like some heavy, more medium term USD selling is going through the market. I’m a little sidelined right now, with light order books and flow. I still favour fading GBP strength but may wait until 1.6130 or even 1.6175 tech resistance in cable to initiate any meaningful short. Support now is at 1.6065, 1.6040 and 1.6000. EUR/GBP, still perky as it gets a tow from a bid EUR/USD. Trendline support rising to 0.8040 on the hourly’s, 0.8027 on the daily’s and 55 to 200 day moving averages converge just above 0.8050. Initial resistance at 0.8085 and 0.8100.
JPY – Finally played some catch-up late ny and Asia to the uptick in risk and yields – seen some gd demand in Asia o/n from lev and Japanese investors – Lvl at 82.85 first resistance topside before the 83 barriers and then 83.20 next lvl topside – Downside 82.45/50 first support then 82.00/10 – Going into FOMC mkt seems content to be long with the elections on the horizon in Japan. I remain long looking for higher into the w/e.
CHF – In the run up to the SNB meeting on Thursday EURCHF remains well supported as expected but resistance remains intact at 1.2135 for now, next level topside 1.2160 and then September highs around 1.2185. Orderbook suggests profit taking 1.2140-60, with good demand back around support 1.2060 which held well on Monday. We saw good demand in USDCHF ahead of support at 0.9310 then next level 0.9280, decent stops now building through 0.9260-30. We took profit on half our EURCHF position yesterday through 1.2120, now looking for the next leg higher.
AUD – Decent buying of both AUDUSD and NZDUSD through recent range highs at 1.0500 and 0.8370 respectively and feels like still may have legs in both, the USD looks to remain on the backfoot going into the FOMC this evening which is the main focus for today, I think any USD strength on the back of any disappointment should be faded, 1.0450/60 in AUDUSD is good support and first buy zone and NZDUSD should be initially supported against 0.8350. We are long AUDUSD via options for this evening, orderbook suggests that 1.0550 should be initially a bit tricky (1.0541 overnight high) but then pretty clear sailing above. Starting to see the model community come out and play in NZDUSD which our volume data is suggesting isnt quite as crowded a position as people think despite the thinning air above 0.8400. More about the greenback this afternoon but feels like commodity strength can continue in the short term.
CAD – Not a huge amount to report from USDCAD yesterday, stays well offered with the USD looking like its going to go into the FOMC on its lows and a backdrop of USD recycling all aiding USDCAD selling. Certainly market is short already with the confirmation of numerous positive CAD deals at the end of last week which kick started the leverage selling. Remain short for now and will take any USD strength over the FED to add to this position, will be other offers back to 0.9880/90 and the stops above 0.9920 and then for sure above 0.9950.
Scandies – So the very well publicised pension flow has come and gone and without much fanfare on the whole. EURSEK only traded above 8.66 very briefly on Monday and it certainly feels like the market trades long and was looking for better levels to sell. As such sitting short on the day thinking we may drift back to below 8.60 where there should be some buying ahead of unemployment and CPI tomorrow and then of course the Riksbank next week where a cut is almost all but assured apparently. Stay short for now but be happy to buy some ahead of 8.58/56 support. Offers building in NOKSEK ahead of 1.1800 and EURNOK subsequently a little quiet, few bids popping up around 7.32/30 and offers around 7.38 which I think should frame us for now.
Barclays Capital