Citi: Spot GBP: European open – FTSE fever
FTSE closed at its highest level in 15 years as market got the news it expected regarding the benign inflation data as the cost of goods and services had barely increased from this time last year. Today’s minutes and average earnings data should give us a little more action as the minutes tend to always have a little more substance than merely the headline data might suggest.
EURGBP continues to struggle to make any further ground to the down side and the highlighted level of 0.7375-85 continues to frustrate GBP longs. There has been a fair amount of profit taking of late across most GBP pairs and now the focus begins to turn to the very messy General election picture, it’s hard to see how GBP can make any fresh ground with the deflationary cloud hanging over it too. We have exited the EURGBP short.
Wednesday Feb 18th
USD/JPY: 117.90-118.00 (1.9BLN), 118.50 (1.4BLN), 119.00 (828M), 119.50 (2.2BLN)
EUR/JPY: 135.25 (200M), 136.40 (412M). AUD/JPY: 91.15 (350M)
AUD/USD: 0.7715 (557M), 0.7815 (240M)
EUR/USD: 1.1300 (2BLN), 1.1350 (500M), 1.1400 (1.95BLN), 1.1430 (471M)
GBP/USD: 1.5350 (200M). EUR/GBP: 0.7500 (412M)
USD/CHF: 0.9385 (200M), 0.9500 (463M)
GS: Summary of our Traders’ Strategies:
EUR: Until this headline ping pong clears however, trading EURUSD will prove to be exceptionally difficult and we remained sidelined in cash. We retain downside exposure through a variety of options and will look to sell any squeeze on a Greek resolution believing it will be short lived.
JPY: References to the strength of the dollar may creep in, but ultimately 118.80/90 should offer short term support with 119.85/95 the target for those who are long again. We continue to favour a move higher into the US events, but acknowledge that the traditional correlations have broken down.
GBP: We maintain bearish medium term view in GBP whilst 1.5500 holds, weak data today should be enough to test 1.5300 but worth being mindful of risks associated with Greek headlines intraday.
AUD/NZD: Kiwi bounces towards the 0.7560/80 sell zone and tactically selling with a stop through 0.7620 or 0.7660 remains our favoured approach.