EUR – focus this week will be the EC meeting on 18th/19th, until then I expect the downward pressure to remain on the single ccy with this grind lower to persist. I still view a Spanish bailout request as unlikely this week, and at some point bad news from Spain will have to be taken as just that – bad news and likely to weigh further on EUR. For the time being it seems to be the opposite, bad news from Spain means heightened expectations of a formal bailout request which is +ve for EUR in the interim. Need we mention it again, but the only real level of note below here in EUR remains the 200dma at 1.2826. 1.30 figure remains key topside, the books have thinned out following the overnight moves but we still have a decent pocket of interest to buy ahead of the 200dma. Topside offers have been lowered to the Asian opening levels round 1.2955/60. Am square here, will look to sell up round 1.2940 on the day. G’luck!
GBP – No data from the U.K today but an important week, with inflation, employment, retail sales and possibly the highlight, the BOE minutes, on Wednesday. I think those minutes have could well be more dovish than anticipated, given the bigger picture, global view that the bank holds. Cable still stutters ahead of important technical resistance at 1.6270-00 and I’ll be looking to fade should we drift back towards 1.6200. I favour a move back to 1.5910 on the week. EUR/GBP should stay underpinned at 0.7980-0.8000, baring any fresh EUR setbacks with 0.8115, previous high and 200DMA on top. Positioning still feels a little on the light side but my order book is skewed slightly with cable supply 1.6150 and above. Have a good week.
JPY (78.60) – USDJPY opens in London at the top of last week’s range ahead of good Japanese offers from 78.70-79.30. The strong China export number gave risk a pick up overnight in Asia where we saw good crossJPY supply (particularly AUDJPY 80.20-80.10) on the bounce, and picked up more offers above in USDJPY in addition to the existing ones still intact from last week. These offers should act as good resistance for now as rhetoric from the BOJ on Friday seemed to steer away from currency intervention, and instead to focus on monetary policy and structural reforms of the economy. In EURJPY we have started to pick up some stops on the downside 101.10-100.80 which could come into play with supply of USDJPY at these levels combined with mounting pressure on the single currency as we head into the EC meeting 18th/19th.
AUD (1.0227) – failure to rally following the positive China data over the weekend suggests to me the market had this position on ahead of the weekend. We saw buying of AUD (agst USD and on crosses) and good selling of USD-Asia on Wednesday and Thursday; buy the rumour, sell the fact? Certainly appears this way, with further stops building below 1.0150 in the books now. We have bids below 1.02 figure, nothing overly material though with offers kicking in round the Asia opening levels at 1.0265/70. I still remain short AUD, I am happy to remain positioned this way heading into the RBA mins which I expect to be quite dovish and into the China data later this week. Selling round the NY close round 1.0235/40 represents good value on the day. G’luck!
CAD (0.9797) – Still not much to report in USDCAD as flows remain light, but the move above 0.9810 overnight was met with good supply. On the topside we have some stops 0.9830-9850, which coincide with last week’s high of 0.9838, but very little in the orderbook on the downside. We saw good supply of AUDCAD ahead of 1.01 towards the end of last week with some short term trendline resistance coming in around 1.0040 off the highs at the end of September, and on a wider chart a break below 1.00 sees the completion of a 2 year head and shoulders topping pattern. Heading into the RBA minutes will look to sell any rallies in this pair with a stop above 1.01 looking first to target 0.9920 where we bottomed out earlier in the month.
Scandies – The focus remains on SEK and the big tech levels at 8.7000-8.7250 against the EUR. Momentum has stalled for now but pullbacks remain slight. It feels as though most have taken their money out of the move and are waiting on the sidelines. We are up here mainly on weak domestic economic data and it wouldn’t take an awful lot to change sentiment again. 8.6440 and 8.5500 are initial support levels for fresh shorts and I wouldn’t be surprised if this latest up move unwound in the near future. EUR/NOK remains range bound inside 7.35-7.45 and flows light.
Barclays Capital