Goldman Sachs Spot Desk Strategies

From Goldman Sachs’ Spot Desk via our FXWW chatroom:

EUR: We have used the opportunity to fade the move higher, lowering our stop in our cash position above down to 1.3260 level.

JPY: This move back above 104.00 as London walked out the door yesterday evening was tapered by local supply during the Asian session, as the market took the opportunity to off load Dollars. We get the all-important CPI figure on Friday out of Japan and this will be closely watched to see whether we get the well published summer dip from the BOJ.

GBP: Cable is likely to remain a sell towards 1.6600 for now as structural positioning continues to unwind. We remain neutral in GBP awaiting the next round of data with clearer trades elsewhere at the moment.

AUD/NZD: Kiwi rallies off the lows and we have since triggered stops back up through 0.8350/60. We have added to shorts this morning with a stop through the 0.8430 high water mark from last week.


 

EUR

Yet again the Dollar appears to behave in both the NY and Asian session and it is on the London open that we see a squeeze off the lows in EURUSD – 1.31525 – with the market very quick to take profit off the table. The comments from the German FinMin Schaeuble suggesting that ECB’s Draghi’s comments on growth-austerity debate have been ‘’overinterpreted’’ – in an interview with a German newspaper – released this morning helped to compound the Euro squeeze – we fail to see the logic behind this squeeze and have used the opportunity to fade the move, lowering our stop in our cash position above down to 1.3260 level. French Business Climate came out in-line at 96 this morning and we now look ahead towards the EZ CPI’s tomorrow and Friday, for further supply pressure in the single currency.

JPY

USDJPY continues to frustrate bulls out there, running out of momentum to the topside following Sunday’s move towards 104.50. Both FI, which we have seen a large de-coupling from and Equity markets have failed to provide any support post Jackson Hole and what many were touting as month end corp Dollar demand yesterday afternoon was very short lived. This move back above 104.00 as London walked out the door yesterday evening was tapered by local supply during the Asian session, as the market took the opportunity to off load Dollars. We get the all-important CPI figure on Friday out of Japan and this will be closely watched to see whether we get the well published summer dip from the BOJ.

GBP

Can’t recover losses as USD better bid and uncertainty over Scottish referendum mounts. In the domestic data void GBP continues to be dragged by external events and the prospect of further European easing is weighing. Given the technical/political setup few want to fade the dip and franchise continues to see supply from a variety of accounts on rallies. Corporate month end today with assumed USD demand and Cable is likely to remain a sell towards 1.6600 for now as structural positioning continues to unwind. We remain neutral in GBP awaiting the next round of data with clearer trades elsewhere at the moment. Levels: Monday open lows of 1.6501 followed by 1.6474 76.4% YTD lows to highs, with 1.6680 200dma/Minutes highs the resistance. EURGBP 0.7920 support below with 0.80275/8037 above.

AUD/NZD

Fonterra announcement comes in relatively upbeat compared to expectations with the 2014/15 pay out stable at NZ$6/kg, citing an expected recovery in dairy prices on Chinese demand. Kiwi rallies off the lows and having failed to follow the lead of the Euro (0.8323 low vs. 0.8311 low Monday) we have since triggered stops back up through 0.8350/60. The same themes continue to resonate in the kiwi space despite the squeeze and we have added to shorts this morning with a stop through the 0.8430 high water mark from last week. AUDUSD shrugs off the construction activity data miss overnight, but remains capped by offers around 0.9335/45 for the time being. The building blocks for Aus GDP (Q2 release on 3rd Sept.) are coming in on the weaker side of consensus and a substantial miss is possible – a negative print QoQ on the cards?

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