EUR – Finally ECB day is upon us and after some big volatility on the week for eur and eur x’s we sit comfortable for now on a 1.35 handle. Expect mkts to focus on any commentary regarding the recent eur strength, talk about the LTRO and any paring back on his recent bullishness regarding mkts and eurozone outlook. I think the mkt sits nervous about a sell off and has reduced somewhat – the trend, for now, is still for higher, however any sell off back below 1.3450 and 1.34 would negate that. Topside 1.3590 then 1.3650 then 1.3710 focus lvls. Orderbook pretty light until stops below 1.3445 or above 1.3650.
GBP – Production and trade data at 9:30, Carney on the tapes at 9.45, BOE rates and asset purchase announcements at 12:00. A big day, potentially for the pound today. Expectations are for some clues from Carney about future policy mechanisms for a more accommodative stance. I don’t think it’s the right forum for such announcement and he will be keeping things vague in terms of policy details and indeed his views regarding the growth/inflation play off. The market position of short pounds is out there but more medium term and I don’t see today’s events derailing that position. There maybe some short term punters looking for something that causes a sterling sell off as a risk reward play but I don’t see that net position as very large any more. So short term I look for a squeeze in sterling. Cable levels on the topside: 1.5680, 1.5726, 1.5746, 1.5773 and 1.5806. Support: 1.5625, 1.5603 and 1.5578. EUR/GBP support: 0.8615, 0.8606, 0.8586 and 0.8554. Resistance: 0.8663, 0.8687 and 0.8717 and 0.8733.
JPY – Stable o/n although selling has dominated it has all been absorbed well. Feels like its 93.20 focus lvl on the downside – below there probabaly room to unwind back to 92.70 – while we hold focus is still for a move towards the recent highs above 94.00 and ultimately 95.00. Eurjpy a big focus for the day as it holds its own for now above 125.50. Looking at 125.50/124.80 support then 126.90 (asia highs o/n) then 127.70 (high of move).
AUD/NZD – another weak data print out of NZ, how much longer Wheeler can remain hawkish and premise the entire economy’s growth hopes on the Christchurch rebuild is beyond me. That said, they have stepped up their selling of NZD so a touch of irony with the whole situation. AUDNZD 100 ticks higher, 1.2360 remains the first level of resistance with some offers already building. AU employment data was strong, problem is there is so much gamma washing about with ranges contracting as we approach the MPS at the end of the week. 1.0270 remains big level of support, there is a decent trendline that comes in here off the 2008 lows. Above here 1.0295/90 (yesterday’s lows) is the other level. Topside stops through 1.0360, offers don’t kick in until 1.0380/90. AUD will be bullied by EURAUD today with ECB the focus, watch 1.3200 above and 1.3050 below.
CAD – Tight range in USD/CAD prevails despite a very strong Ivey PMI print yesterday (58.9 vs. 53.6). Orderbook much the same with strong demand 0.9930-0.9890 but not much topside, continue to see good corp supply on rallies which has kept us below parity this week. EUR/CAD should be the focus today with ECB at 12:45GMT followed by press conference. Would expect to see some demand 1.3450-1.34 with stops back through 1.3375-50 which was the breakout level on Jan. 23 after the BoC rate decision and accompanying dovish comments. CAD employment data tomorrow, where consensus forecasts are projecting an increase in the unemployment rate to 7.2%. Feels like the market is positioned for a bad number after the big sell off in CAD post Jan. 23 and given this will look to sell any rallies between now and tomorrow 0.9985-1.0000 with a tight stop above 1.0020. CA housing data out at 13:30GMT.
Barclays