G10
EUR – So after Friday afternoons squeeze as people took further shorts off the table into the w/e, the break has allowed people to digest the news further and we have moved back into the range as people view the summit news as positive however realise there is still a long way to go and much to be decided. For now 1.2610 is where the big buying started Friday afternoon and the orderbook suggests that we are slow going 1.2610-80 as we have bids in the main on the downside – topside offers start 1.2670/1.2720 – we have European PMI’s today so i think it will be interesting to see how the mkt reacts to these prints – but for now – rangey 1.2580/1.2670 only interesting if we start to take out 1.2550/40 zone again.
GBP – Manufacturing PMI today will give us the lead for direction. GBP found itself caught between month end flows on Friday as cable strength was offset a little by the usual eurgbp demand. For now cable stuck in no-mans land, and we will try to fade around 1.5720 ahead of the resistance zone 1.5750-80. EURGBP continues to remain a sell on rallies broadly, but we are stuck middle of the range here, and I expect corporate demand sub 0.8000 to continue to frustrate the bears for now. I look to sell into 0.8080/0.8100 on the day.
JPY – some heavy buying late Friday at the fix and early in Asia but we cant break 80.00 and as exporters hit it we grind back to 79.50 , this short term support below here will open up that 79.20 that held so well – for now 79.20-80.05 range – prefer to play from long side.
AUD (1.0230) – despite the aggressive rally on Friday, coupled with the stronger-than-exp China PMI print, we have failed to take out the key technical levels above in AUD and that does remain a concern for the interim. 200dma comes in at 1.0252 and the weekly cloud right above spot round 1.0237, though the big one for me is the 100dma which comes in at 1.0270. We see a host of stops on the break of this, but I will certainly be short ahead of it as there are a lot of indicators suggesting this rally is looking stretched and that we may well be forming a top (both momentum/volume based). I remain short now, will sell more round 1.0250 and stop for the lot through 1.0275. Orderbook reflects a similar strategy, with the only bids of note kicking in round 1.0050.
CAD – coming into a confluence of support here with the 50dma at 1.0150, the 50% retracement of the 0.98 to 1.0450 rally at 1.0125 and then the 200dma at 1.0120. Oil had a rebound on Friday but remains well off its highs and I expect CAD to continue to underperform other commodity currencies. Bids on the orderbook 1.0150 area and I favour buying on dips. 1.0220 should cap rallies for the day.
Scandies – Norway PMI just released, a horrible miss by anyone’s standards (46.3 vs 54.6 exp) with EURNOK rallying aggressively post. Flows over the past few sessions have certainly had a RHS skew to them, and given that print I would expect to see a similar theme early doors today. Resistance comes in round 7.5700/50, having topped out round here a # of times over the past mth. Expect support down round the 100dma at 7.5506 – we did stops up through this level there on the back of that print. NOKSEK remains topical, this 1.1600 level very important having based here in late March/early April. We see decent stops through 1.1565/70 on the break. EURSEK continues to trade heavy, expect support near YTD lows round 8.7450/00. Good luck!!
EM
ZAR – Positive headlines from the EU summit saw risk rally on Friday as global risk sentiment got a boost. USDZAR traded to an 8.1580 low after opening at 8.4100 and on the day we were much better sellers of USD as local and offshore names sold out of USDZAR in decent clips. Risk trading marginally softer as we take over from a quiet Asia session this AM. Both EUR and AUD are off Friday’s highs and it would be interesting to see if there is a decent follow through to the risk rally that caused havoc in world markets on Friday. As it is, USDZAR has come a long way from last week’s 8.5300 high and we need continued good news out of EZ to sustain this move lover. The next level is 8.1400 and a break there opens 8.0000. On the data front we have ZA Kagiso PMI, EZ PMI and US ISM numbers today with ECB, BoE and US nonfarm data intra week. For now we’ll trade this from a small short USDZAR position but with no real conviction we’ll keep positions manageable.
Barclays Capital