EUR – Surprisingly one way traffic since that Friday high above 1.37 – Mkt that’s long and political issues in Spain/Italy leading to an unwind of positioning to an Asia low of 1.3462. Right now we are in that support area 1.3460/1.3410 key on downside – and I would expect this to hold in Draghi – topside 1.3520 then 1.3560 lvls to watch. Services PMI today adding some data to the mix but Draghi on Thursday the main event.
GBP – UK PMI Services/official reserves at 9:30. A deeper pullback than I expected yesterday, with EUR/USD and EUR/GBP back below pre month end levels. EUR/GBP has stopped bang on its 31st Jan low at 0.8555 this morning and it will be interesting to see if we continue to unwind EUR/XXX longs. I think at this stage the market is split and I expect choppy price action as a consequence. EUR/GBP stops were triggered back through 0.8580 and takes some longs out of the game. Fresh longs here will be risking 0.8555, 0.8530, 0.8506 (2012 high) and 0.8485. Topside now has 0.8570, 0.8610 and 0.8635 resistance levels. Cable still harbours demand into 1.5700 with further tech support at 1.5690 and 1.5675. Resistance 1.5750, 1.5775 and 1.5800.
JPY – Breaking that 93.00 topside yesterday had limited follow through as lev/RM selling capped us. and profit taking in eurjpy also weighed us down. Right now 91.96 the Asia low o/n and stops 91.85-50 downside as we come back to that 91.25/50 area which contains old highs. Topside offers on book 92.50/80 – feels like pressure still on downside as mkt looks to bank profits. Eurjpy coming to key support 123.30/50 zone and that will be a key focus on this 300 pip pullback from yesterday’s highs.
AUD/NZD – this week is chock block full of AUD data, problem is the mkt has been anticipating this for some time with spot trading like the world is long gamma and frustrated by these contracting ranges. We still see decent interest to buy below, 1.0350 looks to be the short-term pivot with a good mix of 2-way starting to emerge at these levels. EURAUD approaching some support round 1.29 figure, I think it is worth buying on dips below there with a chop through 1.2840 (Oct ’12 highs). NZD whipping about no where, we see offers up to 0.85 figure with stops building on the break above. AUDNZD should remain topical this week, 1.2315 (2011 lows) will see decent short-term support. A break of this opens the 2010 lows round 1.21 figure.
CAD – Capitulation in EURxxx the name of the game yesterday and EURCAD no exception, we saw leverage and European RM supply on the break of 1.3540 and then US names join the party through 1.3500. This early flow helped weigh on funds sending us from 0.9980 to 0.9950 support which is just ahead of the break out level from the BoC, we filled some leverage demand we had in our orderbook around 0.9950/60 but we still have corp interest down to 0.9920/00. Proximity of the ECB means I think topside in EURxxx for now a little capped but the decks are a lot cleaner, buying EURCAD back to 1.34 pre Thursday could be worth doing, and equally buying USDCAD around 0.9940/30. Support: 0.9950 0.9920 0.9900. Resistance: 1.0020 1.0080 1.0100.
Scandies – Fresh RM selling of EURSEK yesterday through 8.58 and also some corp selling of USDSEK has kept things heavy in EURskandies for now. Felt like most of the selling in EURSEK was stop loss related especially as we broke through 8.55, all eyes on 8.50 now where more stops lurk and it might be worth selling a break. 8.55/57 should be good resistance for now and certainly people will look to sell against here if we see it. EURNOK played general catch up yesterday and now looks to attack 7.38 support which would then open up 7.32, NOKSEK finding some short term support around 1.1500/20 aiding the EURNOK move but still fancy NOKSEK to be lower next few weeks. EURSEK support: 8.52 8.50 8.40 resistance: 8.55 8.58 8.65. EURNOK support: 7.40 7.38 7.32 resistance: 7.46 7.48 7.50.
Barclays Capital