EUR – Sustaining the downward move from the back end of last week with a sell off to a new low on the ldn open – seeing early selling from rm and spec names taking us to 1.3164 low. Support is here at 1.3130/50 area with 100 (1.3135) and 200 (1.3145) day m.a – since closing above the 200 day on 19 July we havent been back below that in last 7 weeks. That said i do favour a lower eur on back of stronger usd and weaker eur crosses (eurgbp /euraud) weighing it down – i Think eur will hold 1.3130/50 initially but favour selling bounces 1.3220/40 targetting a move to 1.3085 (daily cloud top) first off. US data starts today with ISM then ADP tomorrow before the all important payrol data.
GBPUSD – Holding a 1.5502 – 1.5592 range, caught between the forces of weakness in EURGBP and a generally better performance for the USD. I can see this pattern continuing for some time, and with the well-advertised potential Corporate demand for GBP in the background, GBPUSD is now a tough short. My preference from here, is to buy between 1.5500 and 1.5520, however short EURGBP should remain a cleaner play. On the topside, a breach of 1.5592 would open 1.5638 and then 1.5666. We have been better buyers of GBPUSD in the last 24h on behalf of Leveraged clients.
EURGBP – Hovering on the .8463-75 band of support, that contained weakness a number of times in June. Below here, some interim support should be found around .8440 and then the major test will be at the series of lows in April and May, .8400-25. I am holding a small short position and will be looking for an opportunity to add this week, close to .8500. To the topside, very good selling interest should now be found between .8490 and .8505. Client flows have been skewed towards selling of EURGBP thus far this week, with Real Money clients having been most active.
*UK Construction PMI will be released at 09.28 Ldn, consensus expectation is 56.9.
JPY – Surprisingly leading the USD charge – After last weeks capitulation move to 96.82 was met with Japanese demand, we have seen steady lev, RM and spec buying between 98.20-99.50. At important lvls now here at 99.70/100.10 area and we have seen exporter interest o/n capping the rally for now. As the US come back from the long w/e it feels like if data supports it we should see a push back above 100 – We have ISM and the ADP tomorrow before payrols Friday so enough out there to wet the appetite. 99.15 First key support before 98.70 below.
CHF – Usdchf has been another beneficiary of the general calm in mkts and risk sentiment of the last 3 trading days. We now moving into the middle of the 0.92/0.95 trading range and i still think room for us to push on towards the top at 0.9430 then 0.9490 this week. Right now a few corp sellers into the highs and with eur on support here at 1.3150 zone probabaly back up a little towards 0.9325/30 before renewed buying – Eurchf holding nicely again above its 200 day at 1.2280 is supportive as well and we target 1.2385 then 1.2415 on the topside there.
AUD & NZD – RBA unchanged as expected, with language similar in tone to the last meeting in my view. The market may have had some spec shorts playing risk/reward on an out of consensus move, which would explain the 60 pip spike reaction but once again, no confirmation of an easing bias by the RBA saw fresh buying. Overall, nothing much has changed but the market feels a little stale short term at these low levels. I prefer to buy into 0.9000-10 today for a move to 0.9100. AUD/JPY had a peak above 90.00 just now and holds above the 55 DMA at around 89.92. A solid move in USD/JPY over the last 24 hours has seen some quality accounts buying again and a continuation here may draw some AUD/JPY buyers into the mix. NZD/USD a little sidelined for now and moved in sympathy with AUD o/n. 0.7840 and 0.7875 topside resistance but for those in favour of fading Kiwi strength, AUD/NZD is probably a better bet. 1.1600 is the level to bust topside.
CAD – Some interest to buy USDs at yesterday’s 4pm benchmark was enough for USD/CAD to have a brief look above resistance 1.0560, which held perfectly as we saw profit taking from RM names 1.0530-60. 1.0570 will be the next level of resistance which marks the high for August and through there we should have some traction to July highs at 1.0608. Downside 1.0515/20 will be first level of support whilst 1.0470 remains the bigger level where a host of spec stops are gathering. EUR/CAD stops in place 1.3570-50 likely to keep USD/CAD under pressure as good EUR/USD supplies emerges on the London open. I still play USD/CAD from the long side but think we probably have a breather today and you should get the opportunity to add at better levels below 1.0520.
Scandies – Trading very tight ranges for now and with a quiet data day ahead, don’t think that changes until Services PMI tomorrow from Sweden. EUR/NOK remains well supported against 8.00 but there has been some interesting two way flow in EUR/NOK 8.01-8.0250 along with some macro supply of USD/NOK 6.06-6.0750. EUR/SEK failed again against 8.75 and seems comfortable to sit in the 8.65-75 range as we head into the Riksbank meeting on Thursday. Still some supply of NOK/SEK 1.0850-80 but for now a component of EUR/NOK support at 8.00 and EUR/SEK resistance at 8.75. I remain long EUR/NOK risking 7.98.
Barclays