EUR – Slowly retracing the spike move from Thursday evening, though client interest is very much on the low side. Fridays high was 1.3380, so I expect selling interest on the approach to that area. The multiple previous highs between there and 1.3400 make that band a very significant area of resistance now. To the downside, some minor support should be evident close to current levels, with 1.3311 marking Fridays low. 1.3206 – 1.3250 should then bring some further buying interest, with Corporate clients having been active around there in the recent past. Client volumes have been very light most recently, though the order book is building a bullish tilt through the 1.3380-1.3400 resistance.
GBPUSD – Retracing from Fridays 1.5657 highs, but overall, has held onto recent gains very well. There is room for GBPUSD to correct below 1.5550, at which point I would expect new buyers to emerge, ahead of Thursdays lows at 1.5496. I am square right now, but would advocate buying in that region, and would not expect 1.5460 to be lost on a closing basis ahead of the Fed minutes on Wednesday. To the topside, 1.5677 marks a point of resistance, with 1.5752 then forming the upper end of the broader range. Client activity has been fairly light in recent sessions, though a preference for GBP demand on crosses does persist.
EURGBP – Remains under pressure overall, though consolidation is the theme in the very short-term. From here, I suggest selling any upward correction into the .8555 – .8568 band, with the downside target of .8482 likely to be met in due course. Real Money and Leveraged selling of EURGBP remains a prominent theme, and I expect this to be ongoing. The next major event for the UK will be Governor Carney’s first speech since the QIR, which will be on 28.8.
JPY – Suffering from market fatigue. Thursdays probe up to above 98.60, and subsequent relapse lower, has quashed any interest to reinstate meaningful long positions for the time being. That said, I still expect buying interest to emerge on weakness below the 97.50 mark, and prefer to operate from the long side. 98.66 marks the next material resistance, with 99.15 the upper end of what I would consider the new range. Client flows have been skewed towards JPY selling in the recent past, though volumes have been below average.
CHF – USD/CHF bounced of 0.9220 support emphatically on Friday as everyone sold into the breakdown through 0.9250, and the simultaneous failure of EUR/USD to make headway beyond 1.3380 didn’t help. I will be buying USD/CHF on dips today 0.9240-60 with tight stop through 0.9217 as we head into FOMC on Wednesday where we expect to get some more clarity on September tapering. EUR/CHF has struggled after rejecting the 1.2390 break-up level and notable profit-taking 1.2430-50 has all but disappeared as a lot of accounts started to cut back down through 1.2360, and with that positioning is much clearer leaving good opportunity to get long EUR/CHF on any dips sub 1.2330 with a stop through the August lows around 1.2280.
AUD & NZD – Good leverage demand for AUD/USD overnight on the break of Friday’s highs at 0.9215, but couldn’t make much progress beyond 0.9234 high as the USD holds a bid tone on the London open. Orderbook much clearer now with better profit taking 0.9250-0.93, whilst picking up some weak stops back through 0.9170. With a light data calendar on the cards don’t see much catalyst for a break up outside the broader 0.9080-0.9250 range early week, with the focus Wednesday’s FOMC. In a similar vein we have been much better buyers of NZD/USD over the last 3 sessions but as AUD/NZD finds some support 1.1280-1.13, it feels like an unwind in NZD/USD could be accelerated if we can test stops back through 0.8060.
CAD – Nothing too exciting going on in USD/CAD as we hold a tight 1.03-1.0360 range. On Friday once again there was good leverage and RM demand on the dip below 1.0310 but this was followed by profit taking above 1.0340 by similar names, as it seems the market is happy to trade a tight range with bias for the long USD side. The wider range remains 1.0240-1.0370 and given the base US10s seem to be finding 2.75/2.80, I still favour USD/CAD higher looking to retest resistance at 1.04/1.0420.
Scandies – Feel like we have finally started to find resistance in EUR/SEK and EUR/NOK after the unrelenting rally seen last week. Macro supply of NOK was the main driver, but good leveraged profit taking around the top of the previous range at 7.90 and 8.6950-7100 in EUR/SEK has helped us settle, all be it at elevated levels. Data out of Norway and Sweden has been strong and NOK/SEK has struggled because of this yo-yoing 1.1050-1.1120, and still we see good demand for NOK/SEK below 1.1050 having now cleared stops through this level back on Thursday. I am short EUR/NOK with a stop above 7.93 and still favour a re-test of post retail sales low around 7.7760, but happy to stay light on my feet while NOK supply still remains in place from the longer term accounts. Norway GDP tomorrow at 09:00LDN.
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