EUR – Friday was a day of big moves in eur and eur x’s and that move off the lows at 1.3585 to test above 1.37 was no exception. We have since settled back down and been relatively stable in Asia. With the ECB meeting Thursday I think mkt will trade within this 1.35-1.37 range and then watch in the meeting for any sign from draghi whether the recent eur strength is an issue or not. Took off spot longs Friday as we reached that 1.3675/80 target and now just have some upside on for the week ahead. Bias is that we still hold above 1.35 and test that 1.3800/1.3850 zone but feels like will need to be patient.
GBP – UK construction PMI at 9:30. Friday’s price action was dictated by large one off flows and a hang over from month end USD selling, the later especially against the Euro. We have subsequently retraced in EUR/USD but not so much in EUR/GBP just yet, as the market digests the volume. For just about the first time this year, I think EUR/GBP maybe a short term fade, despite my medium term bearish view on the pound. Levels above though are a little sketchy. 0.8717, Fridays high and 0.8733 are price action levels but it isn’t really until 0.8800-30 that more decent tech resistance kicks in. Support 0.8648, 0.8610 and 0.8585. Cable still under pressure but support levels at 1.5690 and 1.5675 are important short term and 1.5630 sees good daily trend line support from 2009. Overall, price action will be key today in getting a flavour for the rest of the week. Watch out for Mark Carney appearing before the Treasury committee on Thursday.
JPY – RM demand continues and o/n strong japanese buying Keeps us above this 92.50 lvl we broke out through friday. On the day looking at 92.30/50 as first decent support – topside 93.40 then 95.00 key lvls. My outside target as we go into Japanese year end would have been this 95 resistance and as we close in faster than i would have expected i still look at this as the line in the sand.
AUD/NZD/CAD – Should be an interesting week for AUD hopefully with the RBA overnight and Chinese export data, market has been galvanised over AUD weakness recently especially in the crosses and see no reason why this shouldn’t continue. I like buying EURAUD back down towards 1.30 and equally selling AUDNZD around 1.2360/70. Orderbook wise offers in AUDUSD around 1.0450/60 then stops above 1.05, some bids around 1.0360 but nothing substantial. Continue to see supply from models and RM names in AUDNZD but not too much in the bird itself, happy to sell around 0.8500 if we see it. The hangover of month end USDCAD supply continues with a mixed payrolls also weighing on funds, 0.9940/30 was the break out level from the BoC and think its still worth buying USDCAD ahead of here initially where there will be corporate demand. US factory orders this afternoon.
Scandies – Another set of good data out of Sweden on Friday putting a spanner in the works for next weeks Riksbank where after the previous minutes people a lot more comfortable thinking about a rate cut. I think for now at least this SEK strength is set to continue so happy selling back towards 8.63 or break of 8.50, little bit of profit taking in the orderbook around 8.55 and stops in NOKSEK below 1.1500 which I still like lower. EURNOK still at the whim of NOKSEK for now, ultimately happy to sell back towards 7.46/48 as 7.50 looks like good resistance and 7.38 is good support. EURSEK support: 8.58 8.55 8.50 resistance 8.65 8.72 8.75. EURNOK support: 7.40 7.38 7.32 resistance: 7.46 7.48 7.50.
Barclays Capital