BARCAP GFX SINGAPORE TRADER COMMENTS:

GBP

With the dollar trading stronger cable took out downside stops to 1.5955 as some post FOMC longs were taken out. EURGBP traded back up to 0.8449 on this move but has since pulled back to 0.8420. Yesterday the BoE’s Miles and Tucker spoke, with Miles arguing his view that the MPC should keep interest rates low until the recovery is confirmed to increase confidence. Tucker mentioned forward guidance is not a loosening of the inflation target but instead a means to take a ‘probing approach’ to policy during the economic turnaround. The pound should continue to be a relatively strong performer and after cable pulling back 200 pips off the highs we suspect the market has lightened some of its longs. With the dollar bouncing back after its post FOMC selloff, we prefer being short EURGBP to express this view and will look for a better position in the 0.8350/0.8520 range to sell. There is no major UK data today, and our order book has EURGBP stops on both sides of spot. Levels: cable support 1.5950, 1.5893, 1.5850 and resistance 1.6043, 1.6100, 1.6164. EURGBP support 0.8400, 0.8384, 0.8352 and resistance 0.8475, 0.8504, 0.8520.

EUR

EURUSD was actually looking quite perky as London walked in yesterday up towards 1.3520 in line with EURJPY/EURGBP demand but worse than expected IFO business climate/current assessment sparked a turnaround with EURUSD moving back below 1.35. Over the course of the overnight session we have sold a decent clip of EURUSD for spec, model and RM names with talk of an Italy downgrade circulating. However all of it has been very well absorbed ahead of 1.3450/60 band of support encompassing the break out level from post FOMC. Our orderbook has some demand here and we think it is perhaps prudent to be buying it here first off with a 1.3440 stop but purely on a range play basis. Later today we get US New Home Sales and Durable Goods Orders.

JPY

Usdyen fluctuated in nearly 50 points range with mixed flows. Weak U.S data pushed it down along with heavy stocks and there’s talks of short term players being aggressive sellers on the expectation of supplies from Japanese names related half fiscal year end. USDJPY then printed a low of 98.47 before market found euryen demands. For today USDJPY will likely trade range bound with focus on flow driven. We expect heavy supplies from exporters coming into rallies around 98 highs ahead of hourly ichimoku cloud 98.90-99.15. On downside, demands from investors seem to be waiting around 98 lows. We would like to range trades while keeping core longs for midterm.

AUD/NZD/CAD

The antipodeans have traded poorly with NZDUSD being the notable mover as it has gone from 0.8370 to 0.8240 amidst leveraged/CTA selling, cross yen supply weighing on NZDJPY ahead of month end, and trade balance data coming in worse than expected this morning. AUDNZD traded from 1.1260 to 1.1387 and at the moment the double bottom on the charts at 1.1200 confirms the downside holding in the cross. We have taken out of our AUDNZD shorts but think this relative value trade will be worth reinstating only at higher levels (trend line resistance 1.1560 and September high 1.1660). The USD appears to be holding strong at the moment so the risks will continue to remain to the downside for both AUD and NZD, and therefore any rallies should be sold. There is no more data today and looking at the order books we have some AUD demand scattered on the downside. Levels: AUD support 0.9314 (100dma) and 0.9285 and resistance 0.9458, 0.9558. NZD support 0.8165, 0.8100 and resistance 0.8300, 0.8370. USDCAD sold off to 1.0270 on the slightly stronger Canada retail sales print but has since resurfaced above 1.0300 as the USD trades strong. The range in the near term will continue to be 1.0137/1.0366 with a bias for the long side.

CHF

An anticlimax to say the least in EURCHF which has bounced back towards 1.2300 over the past 24 hours aided by corporate USDCHF buying between 0.9120/30 as EURUSD slips away. There will be stops in USDCHF above 0.9150/60 and the pair could look seriously out of sync if EURUSD starts to break 1.3450/40 but for now happy to be ignoring it. It has tried several times to crack 0.9080 support which has held firm so this is the first level on the downside before 0.9000. EURCHF is a buy back towards 1.2250 if we get there but looking unlikely given the significant lack of catalyst. A USDCHF stop hunt up towards 0.9180 looks like the path of least resistance where it’s a fade first off if EURUSD can hold in.

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