EUR – ECB day has arrived and eur still sitting on a 1.30 handle as mkt awaits the decision and press conf from draghi. Cant help thinking the mkt sitting a little short and its starting to look cheap, as is gbp, in relation to other things against the usd. So it will depend on what is said – i think doviness will be seized upon and below 1.30 room to extend a move lower quickly with stops building below that lvl. If mkt is disappointed i think room for eur to trade 1.3140 (tuesday highs) then towards 1.32 again as eur unwinds the recent selling from start of the year. Still sitting long from last couple of days and will exit if we start to go below 1.3030 or add with momentum post ecb above 1.3100
GBP – So we’re all aware of the trendline support below, it still holds as we hover ominously above awaiting the BOE at midday today. They should remain on the sidelines to kickstart 2013, market consensus is for rates and QE to remain unch. I personally think the real risk is topside, there has been a lot of GBP sold down here and it holds remarkably well ahead of very decent support. Any rally presents an opportunity to be sold into admittedly, but my bias remains to see a flush-out of ST mkt participants with this 1.6040 level key in the interim. EURGBP stuck between a rock and a hard place, today should be a game changer though so hopefully this cross can finally start to realise some volatility. We still see fairly consistent supply above, not a lot below to get excited about.
JPY – No real dip yesterday as mkt chased to buy usdjpy again post that shallow and short lived sell off to 86.825 on tuesday. Demand has been consistent with RM and Japanese investors buying straight usdjpy and x jpy yesterday in ldn and o/n in asia. Today expect 87.75/80 to act as decent support and then 87.40 below – topside 88.50 remains key resistance and order book has selling upto that lvl with stops above from 50-75. Long still although reduced at these lvls, looking to add again on any 30-40 pip dip.
AUD/NZD – All about EURAUD, we are now well and truly through this 1.2400 level so any rallies back to the figure should be met with supply. Caveat today is obviously ECB, until then I cannot see this going above the figure with some decent pain still lurking on the downside. AUD book has thinned out, we still have a few offers above though nothing major. Bids starting to creep in round 1.0520/10, unsurprising with those who missed the opportunity to buy yesterday hoping to scoop dips today. NZD still quite topical, this 0.8410 level is key (fib resistance) though a clean break through here targets range highs up round 0.8480. I can see us whipping about no where until ECB today, until then I like to keep positions light and am looking to job 10-20 pip ranges.
CAD – Still nothing particularly new to report from the world of CAD, slightly better housing starts data from Dec (198k) helped USDCAD a bit lower yesterday afternoon but granted I am clutching at straws because it does remain 0.9850/80 for now. Could be a chance this gets kicked into life today though with EURCAD the potential catalyst, ultimately market has been happy selling EURCAD rallies for now (me included) if the ECB do deliver a cut today then expect us to see 1.2750 pretty quickly, if not will be some short covering but hopefully this will allow better levels to sell straight funds which I will be looking to do around 0.9900/9920. CA New housing price index and US Initial jobless claims this afternoon. Resistance 0.9900 0.9970 1.0000. Support 0.9830 0.9800 0.9730.
Scandies – The CPI and IP data takes on a new level of importance after the Riksbank minutes on Tuesday and the rates market starting to slowly price in more of a cut for February. Spot has stayed firm since Tuesday and has consolidated between 8.56/59 with some continued RM short covering and a little bit of leverage selling. We haven’t managed to break above 8.60 though but expect that to happen in double quick time today if the data disappoints. On balance I think you play the data either way, I have a bias to sell rallies but the kicker of the ECB this afternoon clouds things again, 8.65 the 200 dma may come into play and then 8.72 which has held several times. EURNOK found a few offers yesterday along with good demand still for NOKSEK above 1.17, Swedish focus today of course so expect NOKSEK to continue to dictate things. EURNOK still has good support around 7.28/27 though and still maintain should be a grind through these levels. EURSEK support: 8.55 8.50 8.45 resistance 8.60 8.65 8.70. EURNOK support: 7.28 7.25 7.23 resistance: 7.34 7.38 7.40.
Barclays Capital