From Goldman’s Spot Desk via our FXWW chatroom:
EUR: I continue to hold a core short, will look to add if we get a rally back to 1.3400/20 with a stop above 1.3450. First support is at the YTD low (1.3333) followed by 1.3295 (Nov ’13 low) and see scope towards 1.3250 into Jackson hole.
JPY: We have re-established USDJPY long cash positions overnight, leaving room to fade a dip below 102.00, with a stop now below 101.40, looking for a move back above 103.00 over the coming days.
GBP: We remain tactically long into tomorrow’s events with the bar seemingly lower on both a positioning and expectations basis for the QIR. Levels: below 1.6750 next support with a gap below that to 1.6680 (38.2% of Years highs to lows) followed by 200dma 1.6652, resistance at 1.6820.
AUD: On the session we will look to sell a rally towards 0.9300 in order to play the 0.9250/0.9300 range – a short term stop through 0.9330/35 now preferred.
NZD: On the topside, stops can be rolled down through 0.8500 should 0.8540 feel too far away and we have lightened our position once again with the idea of either selling a break of 0.8390/0.8400 below, or offering out back towards 0.8450/60 in an attempt to improve our average.
NOK/SEK: An upside surprise (anything positive!) brings the long SEK trade back to life and would likely see EURSEK back through pre Riksbank support of 9.1400 with 9.2500 the resistance point above.
EUR
Last week’s risk sell off seems to have been consigned to history and from an FX perspective the main impact has been to squeeze out a decent amount of the long dollar positioning that had built up. Short EURUSD will still be a significant market position but I think rather lighter than before the wobble. Overall EURUSD has been very well behaved (from a shorts perspective) with rallies well contained and key levels respected. I tend to think the slow dribble lower will continue into Jackson hole and probably September when the market will be more engaged and keen to ramp up its pursuit of the downside. I continue to hold a core short, will look to add if we get a rally back to 1.3400/20 with a stop above 1.3450. First support is at the YTD low (1.3333) followed by 1.3295 (Nov ’13 low) and see scope towards 1.3250 into Jackson hole.
JPY
With a lack of further developments on the political stage over the past 24 hrs, the financial markets have taken no news as good news and with the front end of the US curve settling down, the Dollar once again has rallied within the G10 space, helped by some idiosyncratic data releases overnight. We have received a number of enquiries regarding the GPIF story over the weekend and the removal of the % cap on the purchase of domestic equities – it would appear from this article in the Nikkei that the GPIF are close to or have reached their upper band for their domestic equity allocation and do not wish to wait until Sept, when the new allocation is introduced – and hence have given themselves flexibility over the interim period to continue purchases. This is worth noting and the first time since April 2013 we have seen a pro-active approach by the GPIF. We get 2Q GDP released this evening from Japan and given the slew of poor activity data over the past month, the market is looking for -7.0%, with the downside possibilities. Once again this figure will add further political pressure on Abe and in turn the BOJ. We have re-established USDJPY long cash positions overnight, leaving room to fade a dip below 102.00, with a stop now below 101.40, looking for a move back above 103.00 over the coming days.
GBP
Price action remains heavy as positioning continues to unwind in the Pound into QIR/Jobs data tomorrow. GBP makes new lows on the month this morning at 1.6757 at the USD is better bid and BRC sales fall – food sales fell by most in 5 ½ years. Assumption now being that the heavy discounting unlikely to put much upward pressure on inflation in the near term. Flows to start the week relatively light but evident further reduction into the main events, any remaining GBP demand seems to be exclusively against the EUR. We remain tactically long into tomorrow’s events with the bar seemingly lower on both a positioning and expectations basis for the QIR. Levels: below 1.6750 next support with a gap below that to 1.6680 (38.2% of Years highs to lows) followed by 200dma 1.6652, resistance at 1.6820. EURGBP 55dma above continues to hold at 0.7988 with 0.7920 below first support.
AUD
NAB Business Survey comes in stronger than expected (11 vs. 8 last) insulating AUDUSD from the US$ advances seen across the rest of the G10 space. An autopsy of the figure suggests strong underlying components too with all measures registering rises vs. the previous month – business confidence, business conditions, trading conditions, profitability, employment, forward orders. Whilst AUDUSD stalls ahead of the 0.9239 lows seen last Thursday/Friday, we remain flat cash with 0.9210 still the key level that needs to break below. On the session we will look to sell a rally towards 0.9300 in order to play the 0.9250/0.9300 range – a short term stop through 0.9330/35 now preferred. AUDNZD looks an attractive long around current levels and we will look to average in down towards 1.0980 with a 1.0910 stop.
NZD
REINZ house price index falls 0.7% MoM with the YoY figure registering +5.9% vs. the cycle peak at 9.9%. These latest figures certainly take the pressure off the RBNZ to hike over the September/October meets and NZDUSD looks to test the key 0.8393/0.8400 February highs/June lows. On the topside, stops can be rolled down through 0.8500 should 0.8540 feel too far away and we have lightened our position once again with the idea of either selling a break of 0.8390/0.8400 below, or offering out back towards 0.8450/60 in an attempt to improve our average. It feels as though Kiwi still has further to fall, but given the lacklustre price action in US FI, we await a catalyst on the US side of the equation. The cross looks interesting at current levels and we will look to buy a dip back towards 1.0980 with a 1.0910 stop – series of highs in April, lows in August.
NOK/SEK
Norwegian inflation data yesterday surprised meaningfully to the upside taking EURNOK through 8.3000 support. Into the data there was around 20bps of cuts priced into the curve for next year which has now moved down to 12bps but participation in the currency remained relatively muted. In fact corporate supply of NOK was the underlying theme as the broader market remains unwilling to engage in NOK until we see some consistency form the Norge – our strategy currently also to stay away. Next up today Sweden with the bar ever so slightly higher given the surprise yesterday, but the reaction function a little more straight forward given how direct the Riksbank reaction function has with respect to the inflation data. An upside surprise (anything positive!) brings the long SEK trade back to life and would likely see EURSEK back through pre Riksbank support of 9.1400 with 9.2500 the resistance point above.
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