EUR – Shrugging off the 3rd dip to the 1.2980/1.30 area yesterday, eur opens up back above 1.3080 in ldn – Right now, drivers still seem to be positioning and mkt seems to be short still – While we await Bernanke tomorrow we have ZEW and US CPI today that could have an impact and pressure seems to be building for another run at 1.3130/50 area to clean the decks ahead of tomorrow – At least into data expect 1.3050 to provide decent support downside, while If we do spike 1.3150/80 offers decent resistance, Ultimately on eur shorts wrong if we get above 1.3210 (wed night high) remain so.
GBPUSD – Rangy conditions abound, with 1.5028 – 1.5222 likely to cover things for now. Having taken back shorts after yesterdays downside surprise in US Retail Sales, I am now square. I intend to take a modest short position into tomorrow’s BofE Minutes for July, so will look for a more attractive entry level between now and then. Client flows have been skewed towards Corporate demand in the last 24h, though flows have been on the light side since Thursday.
EURGBP – Remains underpinned overall, and I do expect dips into the .8575 – .8610 area to continue to be bought. To the topside, .86945 marks the upper end of the recent range and should continue to offer good resistance. Tomorrows BofE minutes potentially offers the chance for one of those parameters to be challenged, but my base case remains for steady gains in the weeks ahead, without anything too impulsive developing.
JPY – Strong rally yesterday as lev, rm and model buyers helped to push us above 99.70 and to a high at 100.49 – Rally stopped in its tracks by weaker retail sales and we continue to look to US data to give us further direction. O/n japanese investor demand 99.65/85 has been met with exporter selling 99.90-100.00 area – US cpi later before Bernanke tomorrow – looking to see from a price action basis if we can stay above 99.50/20 short term – while topside 100.50/70 area should be the initial target – I am expecting further range trading as we go into the Japanese election the w/e.
CHF – Another top yesterday around the 0.9530/40 area yesterday not a good sign for usdchf bulls, like myself and that remains the key focus topside in the short term – From here while we struggle to break there I think danger of a deeper correction back towards 0.9380/0.9400 – eurchf supported ahead of 1.2350/60(trendline support) which held yesterday and looking at 1.2430 then 1.2465 as resistance topside.
AUD & NZD – RBA minutes gave us a slightly different tone, with reference to the ‘drop in AUD’, rather than the ‘high levels of AUD’ and that policy was appropriate as a result of that and previous policy decisions. OIS scaled back expectations of further near term cuts and AUD/USD has bounced as a result. No doubt the medium term market runs short and expectations of further AUD weakness are largely unfazed. Fade this bounce? I think we probably do but price action/flow is key as LDN and NYK digest. Order book remains light with net small selling above. Short term levels above, 0.9194,0.9200.0.9215/22/34, take your pick if you want a cheap cut whilst trying a new short. If we can trade back through 0.9140 then squeeze over. NZD/USD, with benign inflation prints continues to tread water within broad 0.77-0.79. Buying pressure lifted on the data and as AUD/NZD bounces. Suggest 0.7860 tops us today for another look to 0.7760.
CAD – USD/CAD holds in well overnight to re-test resistance at 1.0442 despite the USD struggling o/n elsewhere in G10. Can’t help but think on a short term basis we should have a re-look at support 1.0350-70 where good demand is starting to build, but positioning less of a concern after Thursday’s clearout down to 1.0326. We saw good macro demand yesterday around 1.04 and seems the market starting to position for some sort of dovish undertone from Poloz in his first BoC rate decision tomorrow. Beyond 1.0460, 1.05 will be next resistance but only supply in orderbook now to topside 1.0460-1.0520. Canadian May manufacturing sales at 13:30LDN (cf. 0.7%).
Scandies – The Riksbank minutes from the July rate meeting are released at 08:30LDN. Focus likely to be on new board members Floden and Skingsley, the former supporting a 25bp cut, despite Skingsley being widely regarded as the more dovish of the two. EUR/SEK price action remains contained 8.65-8.75 but seems the market sat on its hands for now until we hear more from Bernanke tomorrow and with the USD under pressure overnight, it feels like the next stop will be the bottom of the range, failing any big surprise from the minutes. Some corp demand for USD/NOK emerged yesterday 6.08-6.09 but RM supply of EUR/NOK 7.92-7.94 still in place, whilst 7.95/7.9550 remains the top of recent range.
Barclays