EUR – Disappointment on Friday at the failure to break those offers at 1.3400/05 led to a nasty flush out in the LDN afternoon all the way back to the 1.3280 lvl but even then no follow through on downside. I cut longs Friday on the move back below 1.3320 but my view remains that eurusd eventually breaks higher. So still happy to buy dips 1.3250/1.3280 and eventually proved wrong on a move below 1.3170. Topside 1.3370/00 still offers dominate so still need to respect that topside resistance. Eurogroup meetings today and tomorrow so be interesting to see if anything comes from this.
GBP – Public finances at 9:30. I’m banging the same drum but GBP is set to remain under pressure. The exploding pass the parcel has moved on from the EUR and USD and the music has stopped with sterling. A perception of an exodus of safe haven money, (although not really highlighted in then gilt market) and deteriorating domestic data prints continue to keep the pound on the ropes. Cable has resistance as close as 1.5883, with 1.5909 200 dma and 1.5924, 1.5955 and 1.5962 price action levels to lean on. Support at 1.5829 (November low) and then 1.5780. EUR/GBP should get support from the daily channel break out level, now at around 0.8352 and then 0.8325. Resistance 0.8407-10 but then not a lot stands in the way until the 0.8506 2012 high. Looking ahead this week and unemployment data tomorrow shouldn’t be a huge market mover but Fridays GDP will be the focus.
JPY – All about BOJ tomorrow now and feels like positioning dominates in the short term/next 15 hrs – seen some decent profit taking/selling from Lev and spec o/n as well as some stops go through between 89.65-12 low – Still some stops below the asia low down towards 88.90 before decks again clear. Topside focus lvl 90.25 (asia high o/n) and while i dont think we break there today if we go post BOJ meeting i think room towards 91.50/80 zone. I think mkt looking for a clear statement from BOJ that they are in sync with the gvmt on stimulus and weaker JPY so mkt will seize on this. Sq currently but think 88.50/88.70 will contain any flush moves downside into the meeting tomorrow.
AUD/NZD – not a great deal to add here, 1.0480 – 1.0600 remains the range in AUD. Trade it accordingly. Very little flow, and even less inspiration on my own part to trade this with the px action this lacklustre. Rest of G10 is showing signs of life, but at the moment the antipodean space is certainly off the markets radar. CPI released this week, it really is the only domestic catalyst on the calendar. GBPAUD looking horrible now we have convincingly closed below 1.5200 – still has further legs, though I would advocate selling rallies from here with 1.5140/50 the first such level to lob some out. AUDNZD nudging agst range resistance round 1.2600 – I am biased to fade this here in keeping with recent ranges (1.2600 – 1.2520) with a chop above 1.2610.
CAD – Perplexing day in USDCAD on Friday, the USD was bid across the board really in the London afternoon with stocks not particularly following suit and no real stand out reason for this price action. I think primarily it was position related with people short against 0.9900, a level we haven’t been above since the early part of the month and once we got above there it was a very quick move to 0.9947 with a mix of both model and RM guys buying via both voice and ecom. Said I would resell here if we saw it and I have but still not looking fantastic I must say, initially now 0.9900 will be short term support expect more stops above 0.9950 and certainly above parity. Orderbook a little lighter now after Friday but few offers building ahead of 0.9950, EURCAD stubbornly bid and feels like positioning a lot lighter in this pair now, faders coming in around 1.3240/50. BoC on Wednesday the highlight of the week but shouldn’t be any surprises. Resistance 0.9950 1.0000 1.0030. Support 0.9900 0.9880 0.9830.
Scandies – Still good demand for both EURSEK and EURNOK which in part can be attributed to the unwinding of the safe haven type flows that have been occurring in CHF and GBP over the past week or so. I think this is more relevant in NOK which is why for now there is still good demand on any pullback in EURNOK, 7.43/42 first support on the day, and also some good selling of NOKSEK which is hovering around good support around 1.1620/00. Long NOKSEK at these levels expecting EURSEK to take another look above 8.70 and maybe even 8.74/75 before we start thinking abut reselling it. EURNOK resistance comes in around 7.48/50 and I think could be vulnerable given the nature of position unwinding but for now thinking/hoping EURSEK will be doing the work topside. EURSEK support: 8.65 8.59 8.55 resistance 8.70 8.73 8.80. EURNOK support: 7.43 7.38 7.32 resistance: 7.48 7.50 7.53.
Barclays Capital