EUR – Range bound for much of yesterday and o/n in Asia – We managed to stay below that 1.3430 zone yesterday despite comments from Weidman suggesting that eur strength isn’t an issue. While we stay below 1.3450 we are in this mini downtrend and look for 1.3330 and 1.3250 target to go long again. As we walk in today a few stops going off on the break of the Asia lows at 1.3378 but follow through limited.
GBP – Inflation data and ONS house prices at 9:30. Yesterday just highlights what a mess Friday was and I’m still scratching my head as to why so many so called medium/longer term accounts sold out their EUR/GBP longs. Certainly it did some damage and the resulting price action took a lot of accounts out of good positions. Now everyone is scrambling to get short of pounds again. Positions are a lot cleaner now. My books are also starting to skew, with sellers of pounds above and below in cable. Inflation data will give us a new threat but with ‘more flexible targeting’ as part of Carneys future vision, maybe the numbers will have less impact. I still run short cable, favouring that over EUR/GBP as the market feels a little nervous again holding Euros. Levels: Res 1.5675, 1.5694, 1.5740 and 1.5775. Sup: 1.5636, (trend from 2009), 1.5603 and 1.5500. EUR/GBP res: 0.8555, 0.8603, 0.8617. Supp: 0.8533, 0.8516, 0.8493, 0.8448.
JPY – Just another casual 200 tick daily range, unsurprising to see JPY vols as elevated as they are. Book has been cleaned out following the overnight move, some supply lurking above the overnight highs with stops kicking in below 93.80 on the downside. Buy dips remains the name of the game, I suspect they will become more shallow though as we approach BOJ with the Nikkei again trading strong overnight. 95.00 remains key level above (2010 highs), I don’t expect us to test it today though. Resistance in EURJPY kicks in round the late Jan highs at 127 figure.
AUD/NZD – the cross is where the action in, AUDNZD continuing to get hammered which seems to be providing the underlying bid for NZDUSD. I cannot envisage a situation where AUD falls out of bed, and kiwi fails to follow suit – sure it may not be to the same extent but hard to see NZD remaining idle agst a broadly stronger USD backdrop. AUD remains a sell against 1.0310, as long as we remain below here I’ll be short. Like being short the bird too, a stop above 0.94 figure should be sufficient for now. 1.2220 remains first support level in the cross, some small bids to churn through below.
CAD – The overhang of Friday’s disappointing employment and housing data out of Canada carried on in London yesterday with RM and also longer term leverage names joining in and buying USDCAD around 1.0060/70, as New York walked in we saw some corp demand as well which overall was well absorbed as we dipped to 1.0040 into the close. Overall like playing funds from the long side still buying any dip around 1.0030/20 or perhaps even break of 1.01 which held end of Jan post BoC quite nicely. Orderbook does have a few offers lurking 1.0090/1.01 but should be stops above. EURCAD dips on the whole pretty shallow and see no reason why you shouldn’t be looking to buy 1.3410/20. Support: 1.0000 0.9950 0.9920. Resistance: 1.0075 1.0100 1.0150.
Scandies – A day of consolidation expected in SEK before main event that is the Riksbank tomorrow. I think for now happy to be playing it from the long side as long as we remain above 8.55 but topside should be fairly capped for next 24 hours. I think ultimately despite a bit of an uptick in recent data they probably do cut tomorrow, the fact that the previous minutes suggested two people even looked for a 50b.p cut still telling. EURNOK drifting lower again having broken through a few moving and averages and 7.38 support, orderbook suggests there is some wood to chop between 7.35/33 and really playing extremities of the 7.30/44 range makes sense as NOKSEK should take centre stage tomorrow where I think bias is for us to take a look at 1.1700. EURSEK support: 8.52 8.50 8.40 resistance: 8.60 8.65 8.72. EURNOK support: 7.36 7.32 7.30 resistance: 7.40 7.46 7.48.
ZAR – A very lethargic trading session for the local unit yesterday , with USDZAR sticking very much to the predefined range at 8.85-8.95. This am however sees stops being triggered through 8.9500 pushing us to 8.9750 highs so far. Flows still remain light with current levels finding mixed interest ( similar in the in the oda book )all the way up to 9.0200 which we think should trigger good size USD buying. We maintain our bias to trade off a long USD base, we will be lightening up against 9.0000 level, with a view to re-enter long USD through 9.0200 or on a dip to 8.8800.
CZK – More bad data failed to get EURCZK higher, with corps happy to sell rallies. RM bids still keeping the pair above 25.20 for now. 25.10-40 still expected to cover on week. 9.00 BST – Current Account due. Look to play range – fade 25.10 and 25.40.
PLN – The random walk continues. RM sellers against spec buyers. We prefer to be buyers of EURPLN and USDPLN on dips but refused to get caught up in the middle of this choppiness. 13.00 BST – Current Account due. Buy dips to 4.13 EURPLN and 3.08 USDPLN.
HUF – Simor speaks today, and whilst we don’t expect anything market moving, we will be on alert. We think we are getting to good levels to buy EURHUF around 290. Buy on dips to 290 with SL under 287.50.
TRY – Recent rhetoric by Erdogan backing Economy ministers attack against the CB governor on his monetary policies and mentioning a possible dismissal gave a bad taste , also coupled with the recent bombing activity in Syria border didn’t help TRY at all . Yesterday market close 1.7760 above the important resistance lvl 1.7750 but need another close today to confirm a push above 1.7800 for more stops to come eventually targeting 1.7900 . Only a move below 1.7700 will endanger this scenario and will stabilise TRY . Daily basket range to be 2.07-2.08 for today.
RON – We are patiently waiting for another leg higher on eurron to test 4.4150 where we will initiate fresh longs on RON. The positioning is still there and fast money inflows are still not sufficient for the pair to stabilise yet.
Barclays