Good morning,
Quiet session in Asia last night save for movement in the antipodeans, with rather poor data hitting both the AUD and NZD. On the Kiwi we had unemployment hit 10yr highs, while the AUD was faced with rather disappointing building approvals data. Both currencies showed some serious downside and the AUDUSD in particular not only gave back yesterday’s gains, but now this morning continues to trade heavy with a move to test support at 0.8750 firmly on the cards.
On the other majors, we had a rumor of potential Spanish sovereign downgrading hitting the wires late in the European session adding further pressure to the EURUSD alongside the Portuguese drama’s unfolding. Needless to say this morning we had Spanish officials denying everything while Portuguese CDS spreads hit fresh record highs. On that note, we also had the 1.3850 barrier taken out this morning in the EURUSD with fresh stops below taking us to a low this morning of 1.3830. It’s going to be heavy going from here for the pair before the ECB announcement and Trichet’s press conference. Needless to say I like this thing lower and save for some argy bargy to the upside (capped at 1.3900/30) we should see this thing unravel to further downside into 1.3750.
The Cable trades equally heavily now pushing into support at the 1.5850 level and likely to take out the stops sitting below. 1.5830 if taken opens a vacuum into 1.5750. But all eyes today will be on the BOE and whether or not there is an official end to the QE program. All signs point to further Cable weakness.
Outside of the above CB meetings, today brings the weekly jobless claims data from the US which will work as a precursor to tomorrows NFP data. I don’t have a clean view on pairs today and would prefer to stay out of the market looking for the dust to settle around tomorrow’s data.
Best regards,
Ken Veksler.
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