EUR – Edging lower with general usd eventually – positive for eur bears now that we finally broke and held below the daily cloud top at 1.2990, although its a thin cloud and we holding nicely on its base at 1.2950/60 area – so for me below 1.2950 we should be free on downside to extend towards 1.2850. Topside resistance now 1.3040 and then 1.31 above that – reduced some of short this morning against 1.2950 leaving room to add at 1.3000/20 area or on a break of 1.2950.
GBPUSD – Continues its downward progress, through last week’s lows. Interestingly, I have been a better buyer of GBPUSD thus far this week, with almost all the interest having been above the 1.5210 mark. This would support my ongoing view, that the market is not significantly short of GBP at these levels. This weakness continues against a backdrop of datapoints that have positively surprised. Should a weak outcome emerge from UK Services PMI this morning at 9.30 Ldn, I expect a breach of the 1.51 mark. 1.5009 forms the lower end of the broader range, so support will be found on any loss towards that region. To the topside, expect some resistance towards Mondays high of 1.5249, followed by 1.5279.
EURGBP – Continues to be bought on minor pullbacks, with the upper end of the .8599 range being persistently challenged. After a long period of inactivity, the shape of my order book changed in the last 24hrs. Much interest to buy now resides in the .8600 – 50 region. My feeling is that if Services PMI surprises negatively, we will get a meaningful break from the range, that has contained EURGBP since mid March. Clients have shown a preference for buying dips in recent sessions, and I expect interest to pick up a great deal should the range break. *UK Services PMI will be released at 9.28 Ldn, Barclays Economics expect a 55.0 outcome, the consensus is for 54.5.
JPY – Tech wise did everything right yesterday with aggressive buying on states open taking us up through 100 and a nice close above 100.30 – we should be into the higher range now 100/103 and looking for US data today to be usdjpy supportive in form of a stronger ADP – We have seen lifer interest o/n to buy usdjpy off the 100.45/50 area while some lev profit taking against 100.90/101 resistance has capped us initially – While above 100.00/99.90 looking at 104.45 then 102 as targets topside.
CHF – Staying bid while not yet confirmed that break for me into the higher range – We capped at 0.9530 yest and fell back to support at 0.9480 and we have held that o/n in Asia – Data permitting looking at that 0.9530 as key topside and expect further buying on a break as we target 0.9650/80. Downside looking at 0.9480 then 0.9430 as support – Like usdchf higher and happy long until we start to take out 0.9430 again downside.
AUD & NZD – AUD/USD setting new lows as I type as weaker retail sales o/n and comments by Stevens suggesting that the RBA rate decision was a close call take their toll. Optionality at 0.9100 taken out and we stare into an abyss in terms of strong technical support. We pick up 0.9000 and 0.8880 as vague levels, as the maps get re-folded for the journey south. Looks like we pin the chequered flag on 0.8545, the 50% fibo of the range set since the RBA intervened near 0.6000. Resistance now kicks in at 0.9100/10, 0.9143 and 0.9222 on the daily’s. AUD/NZD gets thumped back through 1.1800, setting a new 2013 low also. 1.1850 resistance, with bears targeting 1.1600-50. The last time we were near here in the cross though, the reversal was brutal, so a word of warning for new shorts. NZD/USD has room to catch up and I run short. 0.7700 and 0.7635 need to yield for a significant run lower.
CAD – USD/CAD made new highs on the year at 1.0578 after stops were run on the break of 1.0555/60 with more interest from RM names to buy the pair on the break, as was the case when we broke out through 1.0450. The move has consolidated well above 1.0520 and I remain long now with a stop back through 1.0480, still looking to target 1.0658 (2011 high). June Mfg PMI fell to 52.4 compared to last month’s 53.2, but more focus will be on today’s ADP print from the US.
Scandies – Riksbank at 08:30LDN. EUR/SEK traded a very tight range for most of yesterday’s London session despite very good supply from corp and local RM 8.70-8.7150, and seems the market is positioning itself for a very dovish Riksbank, clearing stops through 8.74 early on in London then sustaining that on a poor services PMI print at 44.8 vs cf. 48.7. While most forecasts expect a 25%-50% chance of a rate cut, many expecting a downgrade of growth and inflation forecasts and given the price action seen yesterday I think it makes sense now to go into the meeting short SEK, ambitiously looking at vulnerable stop levels back up through 8.85 and 8.90 in EUR/SEK, but from those levels I think it would be a good opportunity to re-initiate shorts. NOK/SEK is back in focus, with some interest in topside ideas and stops are likely to be positioned back through 1.1150 which acted as good resistance towards the end of June. EUR/NOK flow has been very light since Monday with RM still the noted sellers, but the broader USD buying across the market also helping to support EUR/SEK and EUR/NOK.
Barclays