EUR – So draghi much more upbeat than the last meeting and in no way signals rate cuts and eur and eur x’s snap back hard – Eurusd now feels like its caught up to aud, nzd and cad against the usd in the general risk senario. Going forward expect eur to be bid 1.3210/25 on dips and look to buy any dip there with a stop back below 1.3150 – topside key lvl is now 1.3300/10 (dec highs) above there look for further upside towards 1.3450/1.3470.
GBP – Production data at 9:30. Death by a thousand cuts yesterday. An as expected BOE and a slightly less dovish Draghi than anticipated, catch a very short market off-side. EUR/USD lead the squeeze rolling through topside resistance without a care, dragging Cable with it. 1.6130 now supports on the day with the 1.6182 o/n high blurring the topside resistance levels at 1.6172/78. 1.6260 and 1.6222 should be enough to top us out on the day. Cables’ fate though lies in the hands of further EUR/USD moves. If EUR/USD can breach 1.3300 resistance then we probably find EUR/GBP up against its own resistance at 0.8222/25 and cable could play catch up as the legs arb out. I think the market could still be sitting a little short of pounds and although I think it’s right on a medium term view, the dust needs to settle today. I sit square right now but look for a level or new driver to get short.
JPY – Powerful bounce off that 86.825 dip continues. RM, japanese investor/ lifer demand o/n takes us up through the 88.50 resistance hitting stop buy orders on the way helping us to 89.35 high. Seeing some profit taking here 95-10 on the ldn open but expect 88.50/60 to be decent support now and we should hold there looking for another run at the o/n highs.
AUD/NZD –It’s all about EURAUD, now this 1.25 figure level has broken any dips back toward here represent a buying opportunity. Waves of EURAUD buying going through yesterday, AUD really is stuck between a rock and a hard place. Overnight range in EURCHF is about the same. Not what you want to hear if you’re in the long AUD vol camp – problem is I struggle to identify a catalyst that will break this rut. Can AUD vol continue to grind lower? Sure, but it will be a slow painful grind. 1.0625 the level to watch above, worth fading it ahead of here I think. NZD saw a bit of respite from the incessant buying that has taken place over the past week, that said this 0.84 figure level is the first buy zone so I will be small long should we dip another 15 ticks. AUDNZD whipping about no where, no strong views on the cross at the moment.
CAD – Initially all about EURCAD yesterday afternoon with the ECB unanimously keeping rates on hold and seemingly optimistic rhetoric sent EURxxx higher across the board, EURCAD had a quick move from 1.2950 to 1.3050 but really there was only one leg at the races. This fresh wave of optimism meant that there was more than enough interest to sell USDCAD around 0.9860/70 including models and RM names via voice and on our ecom which has kept USDCAD fairly suppressed. A few Macklem comments also helping talking about the need for higher interest rates to bring inflation back to target as well as CANADIAN BUSINESSES SHOULD NOT COUNT ON A WEAKER CANADIAN DOLLAR. We walk in this morning with USDCAD trading below 0.9840 and I think once we get through this corp interest down to 0.9820 there should be a quick move to 0.9730/40 so sitting short and will certainly add if we get anywhere near back to 0.9860/70. Think there is also some value being short AUDCAD back towards 1.0440/50 with AUDUSD looking a bit toppy around 1.0610/20. US trade data this afternoon. Resistance 0.9900 0.9970 1.0000. Support 0.9830 0.9800 0.9730.
Scandies – The stars are aligning at the moment for higher EURSEK and EURNOK primarily aided by the actions of the ECB but the Swedish data yesterday wasn’t exactly encouraging CPI was slightly better but the IP and especially the industrial orders were shocking. We tested 8.55 support again briefly yesterday pre-ECB and then some crossSEK buying and stops above 8.60 in the afternoon have kept us supported above 8.60 since. I think there is room for EURSEK to test the 200 dma around 8.65 before people think about selling it with an 8.72 chop, which is something I will be looking to do. With the move in oil yesterday lots of people looking to buy NOK, including some RM names selling EURNOK and leverage guys selling USDNOK but the EUR squeeze trumped everything and EURNOK couldn’t sustain a break below 7.30 and has rebounded in New York and Asia, offers building around 7.35/36 but and think it could be worth selling here with a 7.40 stop, NOKSEK also looks to be supported around 1.1720/30. EURSEK support: 8.55 8.50 8.45 resistance 8.65 8.70 8.73. EURNOK support: 7.28 7.25 7.23 resistance: 7.34 7.38 7.40.
Barclays Capital