EUR – Well early LDN crack the 1.3400/05 resistance as we trade to a 1.3420 high. Seeing some early model and corp selling into this move as spec and ctas buy. This should be the eur move we have been looking for now as a sustained break targets 1.3475/1.35 – Orderbook cleaned of all corp selling now and stops await 1.3450-1.3525. Eur x’s remain bid and should be supportive. Currently long wouldn’t want to see it back below 1.3370 now and target 1.3475 first off.
GBP – GDP at 9:30 and eagerly awaited. Sterling just can’t get off the ropes and the market keeps landed body blows. I saw an increase in volume as cable broke through 1.58 yesterday with leverage names producing some good combinations, all be it with some shots landing below the belt. A poor GDP print will see the pound hit the canvas but in the red corner, the market is looking a little punched out and running extremely short. A strong print could see the pound stage a rocky balboa style turn around but alas, I see no fairytale ending. I think sterling gets hit so hard, it gets lifted off its feet before hitting the canvas. The domestic macro picture and global developments paint a bleak picture in the medium term. A strong GDP print will only see a short term market scramble but the size of that move based on market position could be big. So, short term positional risks to the upside in sterling but the medium term risks remain firmly for a continuation of weakness. Cable levels: Resistance, 1.5806, 1.5820, 1.5852, 1.5883, 1.5893 and 1.5909…take your pick. Support 1.5757, 1.5691 (38.2 fibo) and 1.5618 daily trend from 2009. EUR/GBP has the 0.8506, 2012 high in its sights, with 0.8530 and then daily trend resistance kicking in at 0.8624 resisting behind that. Support 0.8480, 0.8440, 0.8420 and 0.8380.
JPY – Aggressive move through the highs on stop buying yesterday in ny and sustained in Asia. Bids now on the books 90.25/40 against that previous high. Expecting that to support us in the short term looking for an attempt at 91.00/91.25 region on the day.
AUD/NZD – so we have finally realised some volatility, though I am at odds to explain the reason for the aggressive move lower. It was in-line with the moves in other ‘commod ccys’ such as CAD, ZAR and NZD though it really did catch me off-guard. Yesterday we saw persistent demand for AUD the whole way lower, and despite a brief respite at the 4PM fix it was consistently heavy throughout the day. I was stopped out of my cash longs on the move through 1.0470, and to be perfectly honest have little desire to get back in despite hovering above good support in the form of the 100dma @ 1.0418. EURAUD just shy of big range resistance at 1.2840 – we see stops building on the break. AUDNZD failed to continue the momentum lower, some stops starting to build through 1.2520 mostly for those who opportunistically sold the break.
CAD – We saw a continued unwind yesterday post BoC with some very good demand for USDCAD from RM and leverage names between 1.0010 to 1.0030, our orderbook still has resting demand around parity and then stops below 0.9980. Our strategy put out a note yesterday citing the decision as not being a game changer and looking for USDCAD lower in the medium term. As painful as it is now I do believe this makes sense on a 3 month time horizon but immediately I think there is more room to squeeze, 1.0050 is key there will be good stops above here and if you look at the technical break out in EURCAD I think there is room higher in funds. Above 1.0050 I think we see 1.0160/1.02 and then we reassess. Buy a dip to parity state of play for now. Resistance 1.0050 1.0100 1.0150. Support 1.0010 0.9980 0.9920.
Scandies – Good demand for NOKSEK yesterday from a number of different clients amidst a backdrop of corporate supply of both EURNOK and USDNOK, took the chance to take off our NOKSEK long and will look to re buy 1.1650/60 if we see it now. I think 7.38/40 should be good support in EURNOK first off so not getting to bearish at these levels. EURSEK needs to get through 8.72 soon as another fail there yesterday not looking too good even though pull back was pretty shallow. Swedish data this morning though with PPI and unemployment up at 8:30 which should hopefully be a catalyst, for choice still like being long but binary impetus with data this morning. Any improvement in the data I think you fade EURSEK back to 8.65 with a 8.60 stop or buy the break of 8.72. EURSEK support: 8.64 8.60 8.55 resistance 8.72 8.75 8.80. EURNOK support: 7.40 7.38 7.32 resistance: 7.46 7.48 7.50.
Barclays Capital