Nomura – EUR & JPY Views

JPY – Another quiet session in Asia due to Japanese holiday although USD/JPY had a little choppy session between 119.63 and 120.33. Hawkish Lockhart ( he said that he feels very close to timing for lift-off) lifted the pair up to a daily high before weaker Chinese PMI pushed it down to a daily low. The risk-sentiment is not good while $ is generally bid across the board, USD/JPY hardly moves and it is likely to trade around 120 at the moment. I am slightly worried about the downside on back of worsen risk-sentiment and like to play from the short side but mainly through the cross. 2 daily high of 120.60/66 is a resistance while the uptrend from August low is a support at 119.50
EUR – Euro ground out another day lower yesterday even as US yields sold off and global stock markets had another torrid day.  There were many reasons for EUR to rally yesterday, but the offers just kept coming in.  VW is stuck firmly in reverse as their own version of manipulating results threatens to put the global car market in a tailspin and equity markets are not having a good time and nor is the EUR.  As I said yesterday, the market is trying to get short of EUR but there has been no rally of any note to sell into so people have begun to chase this.  Big support now sits at 1.1090, below which the downside is far more open.  Positions, although increasing somewhat, remain light. 

The inverse correlation between EUR and the DAX seems completely broken now.  This is what Draghi was trying to achieve with his speech a few weeks back, and he has achieved it totally.  He is speaking today at 2pm, and the market will hang on his every word.  Any disappointment around future cuts/more QE will cause a sharp move higher, but still sell into that rally.  1.1220 first resistance.  1.1090 big support.


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