EUR – Another quiet session for eur in a 42-71 range in Asia as mkt awaits Draghi tomorrow. Expecting 1.3080/00 to again provide resistance topside, as it did yesterday, and this is backed up by the orderbook. Downside support is 1.3000/10 then 1.2965/80. ADP the key focus today for the mkts – bias into tomorrow is to fade a move towards 1.31 with a stop at 1.3150.
GBPUSD – A weak performance in the last 24hrs, given the topside surprise in the Services PMI release. 1.5200 was the high traded yesterday, and on the approach to that level, we noted interest from our Leveraged franchise to reinstate GBPUSD short positions. To my mind, that datapoint has served to create some more-rangebound conditions for now – 1.5200 should contain strength ahead of tomorrow’s MPC meeting, but equally, the downside should not be threatened too much until new information is forthcoming. I am holding a small short position at current levels and will look to add to that position above 1.5160. Expect support at 1.5073 (previous 2013 low), followed by the 1.4985 – 1.5000 band (2013 low).
EURGBP – Is unchanged versus the level going into the UK Services PMI, via a low of .8589. I expect more rangy conditions for the time being. But with both the MPC and the ECB meetings on the calendar tomorrow, I am hopeful for a break from recent ranges. Until then, expect very good support between .8589 and .8610, with equally good selling interest likely between .8665 and .8685 (highs on Monday and Friday respectively). In the last 24hrs we have been persistent sellers of EURGBP below current levels, and would underline the strength of support in the .8589 – .8600 band.
JPY – sold off aggressively overnight into the TOK fix, the support zone round 92.90 again held firm. Topside some offers starting to appear round 93.50, for one reason or another this is shaping up as the most immediate level above with some stealth offers capping the rally again yesterday afternoon. Has been a quiet week to date in USDJPY, that should change from today though with ADP to be released at at 1.15 LDN time. Seems there is universal consensus we will get a strong payrolls print on Friday and take out this big 95 level – worries me that everyone is positioned looking for a similar outcome. EURJPY to be in focus as well with ECB tomorrow, this 122.00 level seems to be sticky over the past few days so I think you can be short against 122.10/15 for now. Offers immediately above in USDJPY, stops kick in below the figure.
CAD – USDCAD a little subdued yesterday, some good bids around 1.0250 keeping things supported before ISM surprised to the upside and the USD caught a bid in line with some powerful emerald equities. As such USDCAD squeezed to 1.0290 on the back of some RM demand but seems to be some offers around 1.03 which capped us. BoC rate decision this afternoon the focus and despite the popularity of CAD shorts I think there is still good reason to be on this trade but will certainly be interesting to get Carneys thoughts. Should reiterate less imminent higher rates however market will be closely watching other rhetoric, 1.0217 was the low on Feb month end, for now happy to be buying around 1.0230/20 pre BoC and potentially post depending on what is said! On the whole I feel the USD should be bid into NFP on Friday so will be looking to fade any Carney positivity as long as we stay above 1.0190. Support: 1.0240 1.0215 1.0180. Resistance: 1.0300 1.0350 1.0400.
AUD & NZD – With OZ GDP printing slightly better than consensus, we’ve traded up about 50 pips from the London close yesterday to 1.0303. We had small offers though and it feels for now that a lot of the shorts out there are now on the bench. So, today positions are lighter and I don’t expect us to trade outside of 1.0220-1.0335. What happens in between there will probably be similar to yesterday-more chop. NZD/USD got a boost from yesterday’s milk powder auction and traded firmly through the Asian session, disappointing recent tech longs in AUD/NZD. The overall complexion will change going into the end of the week with the USD gaining attention (ADP and NFP’S).
Scandies – SEK still the darling of G10 for now, the services PMI number yesterday a strong 54.6 set the tone for the session with fresh RM selling sub 8.35 and also some model supply of NOKSEK around 1.12. I think we take a breather for now and we have covered our short completely in EURSEK, 8.30 should be ok support initially and even though I am still SEK bullish I think we might see better levels to sell ideally around 8.35/38. EURNOK approaching some pretty good support around 7.41 and think this definitely a buy on dips which should ultimately filter through to lower NOKSEK eventually, more stops await below 1.1170 and its hard to encourage people to be selling NOKSEK on a 1.11 handle however the stars do seem to be aligning. No significant domestic data today. EURSEK support: 8.31 8.20 8.10 resistance: 8.35 8.42 8.48. EURNOK support: 7.42 7.38 7.34 resistance: 7.54 7.60 7.65.
Barclays