EUR – Extremely whippy in this 1.28/1.30 range – Yesterday saw us squeeze hard off the lows with eur x longs cut out and usd supply back in market as well as corp and lev demand – Today I think risk for further usd weakness into the long weekend so room towards 1.30 again which should be a fade with a stop above 1.3030. Downside support is 1.2900/1.2880 area before 1.2830 again.
GBPUSD – Sidelined in the second half of this week, as movements in global equities trigger some FX adjustment. Whilst a small topside correction did develop yesterday, the underperformance of GBP against the likes of AUD, NZD and CHF reaffirmed my belief that the market is not notably short of Pounds. I expect rangy conditions on the day, with 1.5010 – 1.5160 now marked as the short-term range. I remain short of GBPUSD, though have trimmed a little, awaiting an opportunity to establish something more meaningful at higher levels. Flows in the last 24hrs have been incredibly lean, though I expect a ‘sell on rally’ approach from our clients from here.
EURGBP – Topside pressure remains overall, though I do expect firm resistance to remain around the weeks high at .8590 for the time being. I am long, and will now add on weakness below .8530 should it be seen. Alternatively, a weekly close above .85290 will also increase confidence, and steady gains in the weeks ahead, remain my central scenario. Flows this week have been skewed towards buying, and my order book does have a bullish tilt on the day.
JPY – Crazy volatility continues for usdjpy with the capitulation into 100.80/90 providing lev and rm buying opportunities resulting in a nasty squeeze back in Asia above 102, wiping the orderbook clean of stops on its way to 102.59 high before cleaning all the downside out again with a 101.08 low. On the day I think still risks of further usd weakness and stops now appearing below 100.80 before bids against that 100.30 support. Topside despite some decent rm/lev demand o/n we haven’t sustained the move suggesting 102.60 now upside lvl to watch to unwind the recent downside pressure. 102.10 a pivot then 102.60. Bias for me is still to the downside but with big moves already in Asia it will be a patient wait to see how US react again to see if we have increased supply into the weekend.
CHF – Despite the stops going off yesterday 0.9740-0.9634 low usdchf remains remarkably well supported as does eurchf – with rm and Swiss names still decent buyers of the lows. Today offers eurchf 1.2540-70 area and bids 1.2460/40 while usdchf orderbook wiped clean by recent actions – support is 0.9630 then 0.9580 resistance 0.9730-50 area.
AUD & NZD – Volatile ranges yesterday as the initial sell off in risk gave way to position reduction, with accounts heavily invested in the Nikkei took profit in G10 FX. AUD/USD is a big short position on the street and the spike move late yesterday was mainly shorts capitulating. I think today we settle down ahead of the long weekend and I doubt we trade outside of ranges set yesterday. 0.9650 and 0.9600 support-0.9750 and 0.9788 resistance. AUD/NZD checking out this June 2009 low at 1.1934 but the level is still intact. A close below this level opens up further weakness. No real support until 1.1850, 61.8 fibo of the whole 2008-present range. Further weakness in AUD/USD could see us crack as NZD/USD lags and longer term buyers are probably happier buying into dips in NZD/USD than they are in AUD/USD.
CAD – USD/CAD played catch-up yesterday with the rest of USDG10, clearing stops back through the 1.0350 breakout level. Whilst USD/CAD is still somewhat victim to the broader USD moves, particularly in USD/CHF and USD/JPY, the broader CAD weakness story remains intact as domestic data continues to disappoint and CB watchers now speculating on what actions Poloz will have to take if the Canadian Government continue on their path to a balanced budget. Short term, first support in USD/CAD will be 1.03 then o/n lows at 1.0286. RM took the dip late yesterday as an opportunity to rebuy 1.0290-1.0320 and would expect to see good demand down to 1.0250, but beyond there stops are starting to build. Topside 1.0350 and 1.0393 should be good resistance and think we struggle to make new highs above 1.0393 as we still see good supply from corp. names and range players on rallies.
Barclays