EUR – Choppy best way to describe it – we squeezed yesterday enough to take people out of shorts but again failed at that 1.3090/1.31 region for the full reverse on eurgbp selling from RM and a raft of further calls for 25bps cut from ECB next week. Today support remains 1.2980/00 and again corp bids still sit at that lvl – only a break below 1.2950/40 region (200day m.a) will stir further stop selling – topside Asia highs at 1.3050 offer some resistance but 1.31 and 1.3130 remain key.
GBPUSD – I expect some consolidation today, between 1.54 and 1.55. The extent of the short covering yesterday took me by surprise and I am square at current levels, awaiting a clearer picture. My gut feel is EURGBP will hold these range lows around .8410 and GBPUSD will ultimately fail somewhere close to current levels. Timing this will be tricky though and I also believe there will be more short covering to be done on any initial dip into the 1.5400 – 20 band (material volume was changing hands in this area yesterday). The next major area of resistance will be 1.5550 (15.2 high), with 1.5606 then marking the 50pcnt retrace of the 2013 losses. The shape of my flows yesterday, were generally Real Money demand vs. Corporate supply, whilst I notice that the order book has a negative tilt today.
EURGBP – Held the range lows yesterday around .8410, against a backdrop of Corporate and Spec supply. My feeling is this area will continue to hold, though this is low conviction and I am not long. From here, I would expect offers to re-emerge on strength back towards .8470/90, with only a close above this band of resistance likely to shift broader risks back to the topside. Should a NY close below .8410 be achieved, a new lower range of .8230 – .8410 then seems likely.
JPY – More on liquidation front as BOJ offer nothing new and we fail to break 100 topside – Extremely thin and whippy price action twice printing to 98.30 region and bouncing back hard – As we go into golden week in Japan next week mkt starting to go defensive again on usdjpy and so we look at 99.00/99.30 topside as interim resistance and 98.20 then 97.70 lvls to watch downside – US gdp later with mkt expectations for 3%+ so weak side will be for disappointment – cut out of spot longs o/n through 98.90 still maintaining upside bias but need to be flexible after mkt has been hurt on many positions this week, from short stg liquidation, eurusd and to a certain extent usdjpy/xjpy. Usdjpy below 98.30 and eurjpy back below 128.00 could lead to further unwinding but i think that will be later post US data.
AUD & NZD – Feeling a little sidelined right now with focus on JPY and GBP. Both antipodeans sit in the middle of yesterdays ranges against the USD. Looks like we play ranges pre U.S GDP, 1.0280-1.0350 in AUD/USD and 0.8495-0.8560 NZD/USD. GBP/AUD struggles to get a foothold above 1.5000 for now and I’m hoping that most of the GBP short scaling back has been done. Back through 1.4960 and we should retrace some of the ground made yesterday. I run short with a tight stop. Order books are light.
CAD – Drifting lower with leverage and model supply on the break of 1.0220 and then stops taken out below 1.0190 but only trading down to 1.0186 yesterday afternoon. Few little bids popping up from a few range players around 1.0160 and offers now 1.0220/40 but nothing overly substantial in the orderbook. US GDP this afternoon should be interesting, not quite sure what the implications of an outlier print are, more QE sell funds or risk off buy USDs, on the whole given the recent sell off I still feel like there is value being long funds here with good support around 1.0150/40 for now. Support: 1.0180 1.0150 1.0100. Resistance: 1.0220 1.0250 1.0300.
Scandies – PPI disappointed yesterday aiding some short term demand for EURSEK from RM names but ran into a wall of supply of USDSEK from corporates which has kept things in check in EURSEK around 8.63/64. It has had a big move this week but the past few sessions has done a lot of work in the 8.60/64 range with no further traction on the topside. Consumer confidence and economic tendency survey today and clearly 8.65 is line on the sand topside where there will be stops and further interest to sell SEK but I think the danger today is these figures if better than expected cause an end of week position flush with market makers sitting long EURSEK. I would expect any dip to 8.54/53 to be bought though so barring any real deviation I think the downside is limited. Some profit taking in EURNOK has seen us drift off of 7.70 resistance and back to 7.64 which is where open this morning, no real conviction here aside from that I would look to buy it first off around 7.61/60 today. EURSEK support: 8.55 8.41 8.35 resistance: 8.65 8.70 8.74. EURNOK support: 7.62 7.55 7.52 resistance: 7.68 7.70 7.75.
Barclays