EUR – Another position cleanse yesterday taking us to 1.3155 in ldn and 1.3174 in ny. We saw gd demand from lev and rm a/cs 1.3050-80 which eventually fed through later in the day. Feel that this time unlike last week the mkt has cut positions into Bernanke leaving the decks much cleaner. Think while we stay below 1.3210 (last weeks high 1.3208) value in being short into Bernanke and looking for him to signal tapering in sept. If we get that i think room for eur to goto 1.3030 then 1.2980 before we find demand. Topside i will sq above 1.3210.
GBPUSD – Peaked at 1.5169 in NY, completing the series of lower highs since Thursday of last week. I am holding shorts into the BofE minutes for July, and whilst Governor Carneys decision to vote for/against further QE must have been finely balanced, I along with Barclays Economics, go for Carney to join Miles and Fisher in the ‘more QE’ camp. To the downside, some interim support will be found between 1.5028 and 1.5045, with firmer support at 1.4999. Selling interest will be likely ahead of the 1.52 mark, whilst any close above 1.5222 suggesting to me the downside is neutralized for the time being.
EURGBP – Briefly probed above the recent high on Tuesday, and remains well supported, close to the upper end of recent ranges. Some dovish content from the July minutes today, would cement EURGBP in a higher range, and I intend to cross some of my GBPUSD shorts into EURGBP, if the Pound does weaken post 9.30 Ldn. Given the grind higher, client volumes have remained low, with Real Money selling on rallies and Systematic buying the underlying themes, if anything.
JPY – Orderbooks cleaned on the downside o/n with yesterdays move in ny to 98.90 and since those lows we have seen strong demand from investors again o/n in Japan. I think long here with a stop at 98.65 looking for 100.30 again -Looking for Bernanke to add a firmer tone to the usd later and then i think we can push on into the w/e and japanese elections.
CHF – Hanging in on the dip for now 0.9380/0.9400 area (0.9379 ny low) This is the interim support in the lower 0.92-0.9530 range. Looking at long here stop at 0.9350 looking for 0.9530 again topside. Eurchf support 1.2350 then 1.2270 resistance 1.2425 and 1.2470 – Mkt has backed up with lack of news and data since last week – looking to hold current lvls and push on again.
AUD & NZD – Not a great deal to add this side of Bernanke. Spike high in AUD/USD to 0.9261 o/n was enough to take out some stops and now we settle to well trodden range of yesterday. 0.9190 should support and 0.9250/60 resists. It will be interesting to see if we continue to get accounts short covering ahead of tonight. If we do break initial resistance, then 0.9300 is the next level with stops bound to be lurking. NZD/USD a little sidelined with flows super light. 0.7900 tops us out with 0.7760 and 0.7700 support. My view on tonight is that Bernanke has already fired his warning shot in the light of over exuberant U.S FI markets and will be balanced in his view of further FED action. I’ll look for any spike moves to get long USD’s again
CAD – USD/CAD well supported overnight against 1.0350-60 where we continue to see good corp and RM demand gathering. BoC rate decision at 15:00LDN, the first with Poloz at the helm, with most watchers looking to a move away from the tightening bias synonymous with the Carney era. That said, I still think Bernanke is the feature event today at 13:30LDN and if all goes to plan, with some calm reassurance over tapering intentions, then think we should re-test light stops back through 1.05 which was the initial breakdown level post-Bernanke last week. Whilst I still hold a USD/CAD long, very cautious over positioning where longer-term names are still long and if Bernanke disappointed and Poloz maintained a bias for tightening, can’t help but think stops through 1.0320 then 1.0280 would come under pressure pretty quickly, with very large stops back through 1.0140 which was the base of the move lower in June.
Scandies – Strong sell-off yesterday afternoon in EUR/SEK after Riksbank minutes were SEK supportive after some change in language over forward guidance, drawing attention to a split between the board over what the next move in rates should be. The pair cleared stops through the bottom of the recent 8.75-8.65 range, where it was supported by some corp demand 8.6450-8.66 along with EUR/NOK demand 8.67-8.68. I’ve now squared up EUR/SEK shorts and happy to wait until we get more news from Bernanke this afternoon, as USD likely to take control of the Scandies now we enter a data-less period for the region over the next week or so. Still have some RM interest to buy NOK 7.92-7.94 along with USD/NOK 6.10-6.12. Still favour being short EUR/SEK and will look to re-sell on any rallies back up to 8.72 with a stop above 8.7650.
Barclays