EUR – Sept highs still in play, this 1.3170/90 level is key for now. 100dma crossing up through the 200dma at the moment – take the chart back 5 years and this has been fairly defining in terms of ensuing trends. Books are fairly thin following the moves on Friday, 1.32 figure we see a lot of noise though no real skew one way or the other. Am square cash here but have a bias to buying dips on the day, 1.3125/30 will be the first such level. Keep an eye on EURJPY, the March peak round 111.50/70 should be sticky ahead of Christmas.
GBP – No UK data today. JPY clearly the main focus of the market right now, GBP/JPY gapping over 100 points on open, eyes still firmly set on tech level at 140.00 which were the Q2 2011 highs. Expect to see stops in GBP/JPY below 134.50. In GBP/USD we have stops in the orderbook above the overnight highs at 1.6202 from 1.6205-1.6220 before we pick up good corp supply from 1.6230-80. In the cross we have stops lined up below 0.8120 but most action is topside with supply above the overnight highs at 0.8155 but have some decent real money stops above these through 0.8170. Inflation data is released tomorrow and on Wednesday we receive the December MPC minutes, no shocks expected.
JPY – The nature of the victory for the LDP has caught a few people off guard and certainly there seems to be very little in the way of political barriers for Abe to follow through on his campaign rhetoric so definitely a very positive outcome for USDJPY in the medium term. The initial Asian open compounded this feeling with a pre market high of 84.55 (NY close on Friday was 83.53) and an official high of 84.48. This initial move higher was all leverage demand before Japanese retail accounts and models came in selling taking us below 84.00 on the London open. The orderbook composition is quite clear with lots of bids popping up between 83.80-40 with a few weak stops in between. Buy the dip seems to be the play but given the CFTC stats (showing massive JPY shorts) and EURJPY at lofty levels above 110 it comes with a note of caution. As we approach year end and the desire for leverage names who have been on this move to take profit I think we can see a pullback to 83.40/30 where certainly it will be worth buying USDJPY. With the BoJ this week and expectations heightened and attention back on fiscal cliff dramas it is by no means plain sailing higher. JPY weakness still looks to be a very popular thought for 2013 but also a consensus thought, we are long and looking to buy the dip but at this time of the year the pockets not as deep as one would like.
CAD – USDCAD is stubbornly bid at the moment regardless of what seems to be happening elsewhere in a more rosy world for risk in G10, certainly this is position driven to some extent with short covering in EURCAD on Friday above 1.2920 the main catalyst but also lots of short USDCAD recs out there after all the confirmation of positive CAD deals from a week ago. Orderbook wise we have very good offers building between 0.9890/0.9900 but equally some crop interest to buy around 0.9820/10, I am short looking for a retest of these range lows around 0.9800. CADJPY exploding but only one leg at the races for now, cant really argue with that move and really don’t like fading it, could be one for the new year, 84.50 looks like good buy zone in CADJPY. Resistance 0.9890 0.9950 1.0000 / Support 0.9800 0.9750 0.9700.
Scandies – Both EURSEK and EURNOK very bid for the time being with stops in EURSEK above 8.75 on Friday triggered and now it looks like we have re set in a higher range 8.72/8.85 with the Riksbank tomorrow. A cut is assured we are informed by our rates colleague and the recent disappointing data, so clearly risks are if the don’t cut in which case EURSEK will be back at 8.68 in a heart beat but I think this is unlikely so more about the language going forward and what is priced in for next year. For now tentatively buying the dip back to 8.75 but honestly trying not to have a position ahead of tomorrow which should help set the tone into year end. NOKSEK has a few offers building ahead of 1.1900 but also bids around 1.1825, EURNOK attacking recent range highs above 7.40 at the start of this week should be stops above 7.42 and the offers around 7.45. Norges bank also this week so more about NOKSEK perhaps, small position flush out of NOK longs which have been quiet popular recently think you can resell ERUNOK back to 7.45 though. EURSEK support: 8.72 8.68 8.65 resistance 8.78 8.80 8.82. EURNOK support: 7.30 7.28 7.24 resistance: 7.40 7.45 7.50.
Barclays Capital