EUR – Big disappointment for eur bulls yesterday with a fail at the dec highs at 1.3300/10 and then some eur x selling (mainly euraud and cad) which initially was taken well but eventually fed through into some heavy spec and lev selling on the break of 1.3200/20. Break up lvls 1.3140/70 have been breached and now looking at 1.3100/20 as key support. Topside 1.3190/1.3210 fade lvls initially. For me this 1.3120 (asia low 1.3124) key now a break below here and feels like we have already negated the dec move higher.
GBP – Construction PMI at 9:30. A volatile start to the year, with cable extending well through 1.6270-1.6300 resistance, before falling back to earth with a thump. Good longer term and real money supply yesterday helped drive the move. I’ve taken back part of my short from yesterday though purely due to the pace of the move and uncertainty over the US fiscal implications. The market still feels confused. I still favour playing from the short side in cable with 1.6270 and 1.6300 the sell zones should we see a pop. 1.6200, 1.6170 and 1.6130 support levels. EUR/GBP still trades at the mercy of the USD components but tech support kicks in at 0.8070, 0.8080 and 0.8090. Resistance at 0.8165 and 0.8190.
JPY – Selling dominated our flows yesterday from longer term and lev names however we held in well with RM demand late in the day supporting us around 87.00. While still overbought on technicals i prefer looking for a dip to 86.30/50 to buy first off especially as eurjpy starts to tire, backing up from 115.50/60 area yesterday. ADP today and payrols/ISM tomorrow so some room for volatility. Stops located 86.90-60 below with bids dominating 86.50-86.00 – Topside stops 87.35 -87.60 before offers appear.
AUD/NZD – a crazy day in the bird yesterday, some big one-off flows in limited liquidity aggressively moving NZDUSD and AUDNZD in all directions. This was a theme into 2012 year-end, the flows seem to kick in an hour before the 4PM WMR fix so I will be cognisant of such again this afternoon. I sold AUDNZD yesterday at 1.2570, watched it trade as high as 1.2645 and stopped myself out on the subsequent dip at 1.2590. Lesson learned, don’t try and trade fundamentals in the first week of the calendar year – liquidity (or lack of) trumps everything. Book is thin today in both AUD and NZD, bids kick in 1.0480 and below in AUD with nothing topside until 1.0550 with a mix of stops and t/p. Sitting on the sidelines for now, with ADP and Payrolls coming up AUDJPY remains the cross to watch having seen a clean break of the important 90.00 level.
CAD – Favourable start to the new year for CAD for now, the hangover of sustained corp selling at the end of December has continued to weigh on funds but also starting to see some CAD strength in the crosses. EURCAD the notable move lower yesterday from 1.3100 to sub 1.30, and as attention slowly turns back to European woes and the possibility of a rate cut sooner rather than later from the ECB EURxxx weakness looks like it could prevail. Little bit of profit taking in EURCAD in our orderbook around 1.2900 but offers building around 1.30. Straight funds simply seems like a sell on rallies, should be weak stops above 0.9900 would ideally like to be selling around here though with a 0.9970 chop looking for move back to 0.9700. ADP and jobless claims this afternoon. Resistance 0.9900 0.9970 1.0000. Support 0.9830 0.9800 0.9730.
Scandies – NOK and SEK strength looking rosy at the start of the new year, US RM names selling EURSEK yesterday between 8.58 and 8.55 somewhat countered by local corp demand for USDSEK. Happy to sell rallies in EURSEK for now, and onshore consensus is for sustained SEK strength this year (yet to decide whether this is a good omen or not), will be more stops below 8.50 and offers back to 8.60/62. EURNOK found good offers yesterday in line with NOKSEK buying, I do understand the sentiment to own NOK which I agree with but not sure how much further we can aggress lower in EURNOK, 7.28/27 initially good support and then 5.50 in USDNOK is very important. Clean break of this level in USDNOK could be the catalyst needed in EURNOK, for now look to sell back to 7.35/36. EURSEK support: 8.53 8.50 8.45 resistance 8.60 8.68 8.72. EURNOK support: 7.30 7.28 7.24 resistance: 7.38 7.40 7.44.
Barclays Capital