Mid-session Europe: GBPUSD unable to grasp the 1.30 handle
US Initial Jobless Claims for period Aug 6. Expected 265k vs Prior 269k (1230 GMT)
US Continuous claims for period Jul 30. Expected 2133k vs Prior 2138k (1230)
Canadian New House Prices. Expected 0.3% vs Prior 0.7% (1230)
USD is coming slightly back stronger against EUR, JPY and GBP (with Japan off for the day), but is weaker against commodity currencies. We are still awaiting the main news this week which is tomorrow's US retail sales.
EURUSD is lower on the day following mostly short covering moves yesterday. EURUSD is currently in the upper limits of range August 4-9, with the 55-day moving average that we have been looking at as resistance back then being at 1.1148 today. Tech resistance of note is yesterday's and today's highs around the 1.1190 area, and then the 100-day moving average at around 1.1227 area today. It is important that, if selling rallies, to take note of this resistance to avoid sharper moves higher if broken.
GBPUSD had a strong push back lower yesterday right below the 1.3100 tech resistance, which is the key tech resistance to watch to avoid GBPUSD going into the range of mid- to late-July. Ending the week below 1.3000 would be first since July 4 and closing the day below 1.29 would be a first since June 1985, and thus an important landmark for any further GBP weakness.
The Reserve Bank of New Zealand cut as expected but came with a very dovish statement. Our Asia desk likes to play the AUDNZD on this outcome targeting 1.0786 on 50% risk allocation adding another 50% if this level is broken. They prefer 1.0440 not to be broken on the downside for this view.
FX Options volatilities
Volatilities are trading a bit on the soft side today and there is very little volume in the interbank market. The market was yesterday bid for upside-EURUSD strikes in the one-week area, but that has not been the case today, where we have seen one-week risk seversal offered as well. GBPUSD vols are more bid with spot lower, three-month at the money up 0.25% vol.
European stocks were trading almost flat on Thursday. Germany’s DAX 30 rose by 0.2% to 10,664.62, remaining in bull-market territory but France’s CAC 40 traded flat at 4,452.72 and the Stoxx Europe 600 shed 0.1% to 343.57.
Oil and gas shares were under pressure after the International Energy Agency offered a downbeat outlook for oil prices. Tullow Oil PLC dropped 2.3%, Norway’s Statoil ASA moved 1.3% lower, and Italy’s Eni SpA was off 1.2%. In the energy equipment and services group, Petrofac Ltd. fell 1.5%, Amec Foster Wheeler PLC shed 1.4%, and France’s Technip SA slipped 0.2%.
In the UK, housing shares were down after the Royal Institution of Chartered Surveyors said Thursday that housing prices in the UK in July grew at their slowest pace in three years. Prices in London are expected to decline in the next year, the survey showed. Shares of home builders Berkeley Group Holdings PLC and Persimmon PLC fell 3%. Counterpart Taylor Wimpey PLC gave up 3.1%, while Barratt Developments PLC gave up 2.7%.
Financial and industrial groups also lost the most. But gains for the defensive utilities and consumer goods sectors helped limit the benchmark’s loss.