EUR – Another fail on the topside at 1.34 and comments by Junker regarding the strength of the eur ruined the uptrend in the short term yesterday as we broke 1.3300/10 support in the NY afternoon running some stops to a low at 1.3263. While I don’t think the trend for eur higher has changed these comments hurt positioning and so room for further downside before we bounce again. For now I remain long with a cut and reassess below 1.3250 – topside need a break above 1.3320 again to start to build topside momentum. Order books with bids 1.3220/00 and offers 1.3330/50 topside.
GBP – No UK data today. It appears we are set for a choppy day again as the fast move in NYK in reaction to Juncker’s comments caught the market offside yet again. Cable just slipping through recent lows and EUR/USD struggles to get a foothold above 1.3310. Nothing has changed sentiment in the pound though and it still runs cold. GBP/AUD eyes up critical 1.5150-80 support, cable struggles to rally and even GBP/JPY has backed off 3.5 figures from its high. I still look to play core short of pounds. In cable, 1.6063 and 1.6100 are the levels to short/add. Support at 1.6000 and 1.5976. EUR/GBP got hit in NYK as EUR/USD stops got triggered. Congestion at 0.8325/33/46 on the topside. Support 0.8265 and 0.8250 but we trade at the mercy of EUR/USD for now, despite recent flows suggesting further upside.
JPY – Further commentary o/n from junior ministers regarding recent JPY weakness being too much has showed extent of mkt long positioning as we go into the BOJ meeting next week. Now below 88.30 lvl in usdjpy and eurjpy below 117.60 it looks like signs of profit taking so need to be flexible on positioning. Key lvl is 86.70 downside so between 86.70/87.30 on a flush out I think provides value as we go into the w/e and the BOJ meeting.
AUD/NZD – every morning we sit down and look at AUD, surprise surprise, it’s still at 1.0550! Horribly boring price action, we have employment data tomorrow morning but at this rate I am not convinced a big number in either direction will move this. 1.0530 remains support on the day, resistance round 1.0580 and then the bigger level at 1.0625/30. Am square, better action elsewhere in G10. NZD we saw some decent two-way flow yesterday, I am running short against 0.8480 (clear s/l through here) but if selling spot here you have another s/l level through range highs of the past few days at 0.8440. AUDNZD hit resistance round 1.26 figure and has retraced quite sharply post. Support in the cross comes in down round 1.2520/25.
CAD – Desperate to find a story to tell but USDCAD is just not at the races at the moment, CAD crosses are reacting but nothing to do with the CAD leg it must be said. EURCAD sold off yesterday afternoon in line with EURUSD after the Junker comments from 1.3130 to 1.3080 which is where we open this morning. Not to be out done however Japanese officials joined the party talking down the rapid depreciation of the JPY which sent USDJPY tumbling and as such CADJPY down a quick big figure which ultimately left straight USDCAD unchanged. Little bit of selling at the WMR fix yesterday took funds down to 0.9835 again which held for the umpteenth time with the corp demand holding firm, there are stops building above 0.9880/90 which I think if breached could see a quick correction to 0.9930/40 which is where I would look to resell. Also would like to buy CADJPY around 88.75/60 if seen pre BoJ. US IP this afternoon. Resistance 0.9880 0.9900 0.9960. Support 0.9830 0.9800 0.9730.
Scandies – Big day for Scandies yesterday and it was NOK leading the way, initially EURNOK was looking to kick on below 7.36 before the deputy governor warned about the implications for continued strong NOK on rates which spooked the market somewhat as we bounced to 7.3950 in double quick time, we then bought a good amount for the ECB fix which aided by stops helped us push on above 7.40 but stall where it should have done just shy of the 200 dma at 7.43. I think yesterday’s price action more reflective of market positioning than anything, the comments and stance from Norges is by no means a surprise and just serves to reinforce that I believe that they have greater ability to deal with kroner strength than the Riksbank which may be NOKSEKs downfall in the long term. EURSEK was dragged by EURNOK somewhat yesterday once NOKSEK found some support around 1.1650/60 and also took out stops above 8.63 had a quick peep above 8.66 and the 200dma but failed to close above there but I still think there is room to squeeze up to 8.70 before people look to sell again. Long some EURSEK on the day looking for 8.70. EURSEK support: 8.59 8.55 8.50 resistance 8.6650 8.70 8.73. EURNOK support: 7.38 7.32 7.28 resistance: 7.43 7.45 7.50.
Barclays Capital