EURUSD: Support 1.4345 1.4260 1.4150 1.4100 1.4055/20
EURUSD: Resistance 1.4450 1.4480 1.4540 1.4586 1.4700
We continue to see accounts getting chopped up in EURUSD as we range ahead of Jackson Hole on Friday. After everyone had piled in at the top last week – which at 1.4518 satisfies the lower highs technical pattern this a year – the market remembered what a poor state the Banks are in again on Thursday and we crashed lower only to recover 200 points on Friday! – a stark reminder that one should not chase price action.
Today should be quiet as I expect the market to be licking its wounds and awaiting JH, for choice I would prefer to get sell a rally high enough to leave a stop above 1.4540 as the noises out of Europe still look far from fiscal unity and the 2yr rate differential continues to point lower. Charlie
USDJPY: Support 76.00 (barrier) 75.50
USDJPY: Resistance 77.50 78.00 78.50 79.50 80.00 80.25 (high intervention)
EURJPY: Support 108.30 106.50
EURJPY: Resistance 111.00 112.00
Yen finally broke the support at 76.25-30 on Friday (bids for $400 mio), triggering barriers at 76.00. The move, however, was short lived and we closed where we opened – 76.50. Overnight, we once again witnessed ‘spoof intervention’ back up to 77.25 with japanese officials continuing to jawbone. Again, like the swiss, where can we really expect to trade ahead of what may potentially be a defining moment for the dollar at Jackson Hole. Exporters’ offers ahead of 77.50 and all the way to 80.00. Below 76 a mixture of barriers and importer demand. Remain a better seller towards 111.00 and 77.50
GBPUSD: Support 1.6460 1.6410 1.6350 Resistance 1.6550 1.6610-20 1.6750
EURGBP: Support 0.8645 0.8610 Resistance 0.8730 0.8830 0.8885
Last week saw a huge stock of reasoning to short the pound met with a large RHS M&A flow (almost certainly HP acquiring Autonomy). The ‘further from raising rates, no closer to doing QE’ message was nailed vehemently to the mast with Dale and Weale relenting on there call for a hike while activity data (the key to more QE) was poor. Employment showed worrying signs with the Claimant Count the highest in over 2 years while Retail Sales was also disappointing. The announcement of the M&A deal and the lack of aggressive buying by the touted UK clearer has led the market to believe that this flow is done and we saw sterling come under pressure late Friday. Despite a decent clear out of positioning the ‘levels of last resort’ for shorts remained intact in sterling – 1.6620 in cable and 0.8640 in the EURGBP – so I do not think it will be the case that sterling disappears this morning. We remain in the mode of selling rallies but happy to admit that sterling is once again a sideshow this week with the only data release to note being the first revision to Q2 GDP. Charlie
USDCHF: Support 0.7750 0.7690
USDCHF: Resistance 0.8000 0.8050 0.8150 0.8370 0.8550 (strong)
EURCHF: Support 1.1175-1.1220 1.1000
EURCHF: Resistance 1.1550 1.1965
Talk of a minimum 1.2000 / 1.2500 target for eurchf continues unabated over the weekend but currently no tangible evidence or action to support it. The SNB have certainly managed to halt the meteoric rise of the swiss but for now we remain in a 1.1175 – 1.1550 range. For now stick to trading the levels -1.1175 support and 1.1550 resistance. Despite the meltdown in risk and the financials, end user demand for Euros is causing the move back lower to be somewhat bumpy. Ahead of Jackson Hole, I would be surprised to see any major sustainable moves outside of recent ranges so will endeavour to fade extremes on the week unless new dynamics come to the fore.
AUDUSD: Support 1.0110 1.0060 0.9927 Resistance 1.0680 1.0785 1.0890 1.1080
NZDUSD: Support 0.8065 0.7969 Resistance 0.8430 0.8470 0.8540 0.8580
USDCAD: Support .9750, .9700. .9640 Resistance .9970, 1.0010
Activity likely to be muted ahead of Jackson Hole but still biased to sell AUD and NZD on rallies – comments also out overnight from the Australian treasury “AUSTRALIA TREASURER SAYS HIGH AUSTRALIAN DOLLAR PUTTING A LOT OF PRESSURE ON TRADE-EXPOSED INDUSTRIES” weighing on the AUD. Furthermore, as Ian Stannard notes, ‘Local steel companies have stopped exporting as the high AUD has priced Australia out of the international steel market’ and when viewed in conjunction with the bigger picture of global growth forecasts being downgraded I get the feeling that there is more weakness to come for the commodity currencies.
EURSEK: Support 9.1000 Resistance 9.3000
EURNOK: Support 7.6500 7.78500 Resistance 7.9200
Well given that I have been absent for two weeks, I am probably not qualified to write this piece given what the market has done. The week ahead brings the GDP report for Norway, while we have consumer confidence, household lending, PPI and unemployment data in Sweden. The GDP report is by far the most important and at first glance, given how asset prices have moved, any downside miss here and I think EURNOK is headed for 8.00. While real money demand for NOK will continue for sure, I don’t see that stopping a significant move lower should we get a downside surprise and that is the side I will look to play tomorrow. For today, look to buy dips in EURNOK toward 7.8300. SEK has traded remarkably well given what equities have done. Real money demand has insulated it somewhat and while similar to NOK in that I expect real money demand to continue, the general global outlook suggests to me that SEK is now a sell on rallies rather than a buy on dips (the camp I had always been in before). Lets see what the data brings this week, but for me anywhere toward 9.10 is the buy zone, unless of course we see a Lazarus like performance from the equity market.
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MORGAN STANLEY
SALES AND TRADING