EUR – Heavy buying continued yesterday from RM/Corp a/cs but we stalled at this 1.3180 lvl and again o/n in Asia. This 1.3180/90 looks like lvl we need to break now topside – a clear break and I think we can look at a run towards 1.3280. Downside support is 1.3130/40 area then 1.3090. Bias is still for a move higher into the end of the year.
GBP – ONS house price and inflation data today at 9:30. Both GBP and EUR continue to be in demand and, like it or not, I think the theme will continue going into year end. Inflation data this morning may get a slightly different reaction on a higher print, with recent comments from Carney suggesting inflation targets may take a backseat to growth. Whatever the data shows, it feels like cable will be a buy on dips. 1.6175 is the first level to consider and deeper setbacks should be held by 1.6150. Topside, 1.6270 and 1.6300 represent significant resistance on the techs and have held well on two occasions this year. EUR/GBP will probably be a factor of the USD legs today. 0.8150 and 0.8165 resist. Support 0.8120 and 0.8090.
JPY – Long the rumour sell the fact yesterday on the election results – After failure to make a new high after the official open we retraced back to 83.60. We saw gd selling 83.60-90 area but we held well and with Abe continue his aggressive retoric regarding a weaker jpy and more stimulus the mkt grinding back topside. Mkt wants to be long into the BOJ and so i like buying dips 83.50/60 then 83.20 with a stop below 82.50 looking for 84.50/85 zone.
AUD – RBA mins signalled the last major piece of economic data for 2012, on the the horizon it’s very quiet until Jan 17 where we get employment data (ofc with no RBA meeting in Jan). Nothing major from the minutes in my opinion, I still think the RBA will cut a minimum of 50bps next year as the non-mining component of the domestic economy struggles to pick up the slack from the increasingly subdued mining sector. Not that this will have any effect on the currency, it will likely continue to remain low vol and trade north of parity so long as global rates remain near zero. On the day I favour a dip back toward 1.05 figure, it should be a buy down here though with bids already lining up 1.0510 – 1.0480. Topside offers kick in above the o/n highs at 1.0560, though for the most part I struggle to see a catalyst that will move this more than 40pips in either direction.
CAD – USDCAD held where it should yesterday with good offers between 0.9880 and 0.9900 which still occupy our orderbook holding firm. A quick 40 point move lower in USDCAD partially explained by WTI rallying yesterday afternoon and EURCAD failing again ahead of 1.30 which dragged in some more leverage sellers of funds. Happy to still play this pair from the short side for now even though the corp demand around 0.9800/20 should offer fairly good support on the day. The political stumbling towards a resolution over the fiscal cliff also supporting risk at the moment, market expectations heightened slightly after yesterday and if confirmation of a resolution comes before the end of the week expect CAD to be one of the beneficiaries. Resistance 0.9890 0.9950 1.0000. Support 0.9800 0.9750 0.9700.
Scandies – Riksbank day finally upon us and expectation is clearly for a full cut. Anything but would be a big surprise and send EURSEK through 8.70 very quickly. I think they do deliver a cut but of more importance is the rhetoric about the rate path, already 14 bps priced in for a cut first meet of 2013 but change in repo rate path could alter this. Overall positioning a lot cleaner in EURSEK after this latest squeeze up to 8.80, on balance still favour playing this from the short with the cut today already accounted for. Lots of USDSEK was sold yesterday by RM and corps which weighed on EURSEK initially before rebounding somewhat in Asia back to 8.76, good support comes in around the 200 dma at 8.6750 and we have stops above 8.82. Square for the time being but looking to sell today unless we see a drastic revision lower in the repo path. EURNOK subject to the whim of NOKSEK today which still trades bid, expect people to buy NOKSEK dips to 1.1820/10 or break of 1.1920, should be good offers around 1.20. I like playing EURNOK from the short side at the moment with offers building around 7.40/42 thinking we might take a look at 7.32/30 again, Norges bank tomorrow the catalyst. EURSEK support: 8.72 8.6750 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