This is a brief extract from a Goldman Sachs spot trading note for Friday. The reference to CAD CPI has already passed (Canadian June CPI 2.4% y/y vs 2.3% expected and Temporary my arse as Canadian CPI rises “temporarily” for the 8th month in 9 … oh, and as an aside, tsk tsk Ryan, such language … anyone would think you were, well, umm … Australian
I digress, back to GS:
On EUR (bolding is mine):
- EUR The Euro still trades heavily, without as yet really going anywhere. The quandary remains as to whether the market is again getting short towards the low of the multi month range or whether we are set to break and trend lower. The first inflection point which the market is very focused on is the 1.3503 low touched on the day of the June ECB meeting, followed by the YTD low at 1.3476 (early Feb). I am hoping and positioned for a break lower which I feel is justified by fundamentals on both sides of the equation but conscious of the numerous past frustrations. Ideally a break lower occurs today and I plan to add should 1.3500 give way or alternatively sell more ahead of 1.3575 resistance. Technically a weekly close below either or both the 1.3503 and 1.3476 levels mentioned would be very encouraging and suggest a chance of a trend extension towards 1.3300. Spot reference: EURUSD – 1.3528 View from Jon Pierce
And, JPY, GBP, AUD and CAD in summary:
- EUR: I plan to add should 1.3500 give way or alternatively sell more ahead of 1.3575 resistance.
- JPY: We have closed our long USDJPY cash position given the recent events, leaving ourselves in a position to react to future developments. The key support below rest in the 101.00-100.70 band, which if broken opens up the psychological 100.00 level and a real threat for further capitulation lower.
- GBP: 1.7120/30 will house some short term rolled stops for those anticipating a break of the 1.7060 WTD lows and as a desk we are tactically small short cable here, with the tech set up suggesting a reversal is on the cards.
- AUD: We remain core short AUDUSD into next week’s events, and will continue to improve our averages playing 0.9335/95 range.
- CAD: CPI due out at lunchtime today; the market should keep an eye on a possible bounce in the core towards the middle of the 1-3% band. Support well defined at 1.0710/25 and then 1.0680 – resistance 1.0790/95 and then the 55/200 DMAs at 1.0812/19.
