EUR – Quiet and rangey yesterday with it being a US holiday and o/n we have stuck to similar ranges 1.3330-70. Seeing early eur and eur x supply on London open but lvls remain the same with data focus ZEW at 10am LDN. 1.3300/10 support a break there targets 1.3250 which i think is a reasonable lvl to start to go long – topside 1.3380/1.3410 short term resistance lvls. Orderbook has stops below 1.3290 or above 1.3420.
GBP – Further consolidation likely today, ahead of the release of the Bank of England minutes for February tomorrow. The skew of client flows remain firmly on the sell side, but the 1.5438 – 1.5480 band is proving very resilient thus far. I, along with the consensus, hold a very negative view on the pound right now, though I am square at current levels, awaiting more attractive entry levels for a new short. I would flag 1.5550 – 1.5600 as the area to re-enter, whilst downside focuses will be 1.5438 (Mon low), 1.5394 (12.7 low) and 1.5269 (1.6 low) beyond.
EURGBP – Continues to find notable resistance between .8630 and .8660, and with European event risk on the horizon, this is likely to remain the case in the short-term. Some range-trading seems the most likely scenario for now, though for choice, I would suggest the risks are slightly on the downside. Expect support between Thursdays low of .8575 and yesterdays low of .8602, with only a close above .8648, likely to encourage a challenge of the recent highs at .8717. Modest selling interest, the very slight bias from the client base thus far this week.
JPY – fairly quiet start to the week with the US out on holiday yesterday, we found out o/night that the next BOJ Gov won’t be announced until after Abe’s visit to the US. Short-term mkt has been sitting long following the position squeeze we saw on Friday, this move lower is clearing the decks a tad though bids should kick in round the figure for now. The ‘buying foreign bonds’ conundrum remains, seems each headline is contradicting the previous. Irrespective, I don’t think it is an immediate concern with the upcoming Gov the next focal point of note. Topside clear sailing now, stops kick in thru 94.50 and again thru 95 figure. Below some bids round the figure. ZEW out at 10am London time will be the focus for EURJPY today.
AUD/NZD/CAD – A fairly balanced minutes from the RBA overnight, there is scope for further easing if things deteriorate but this was not enough to appease the market which is certainly short AUD and such we saw a bit of a squeeze overnight with leverage buyers through 1.0320. I still think AUD weakness especially in the crosses, buying EURAUD around 1.2850 and selling AUDNZD around 1.2320, makes sense in medium term but it’s a position people have had on. Orderbook skew in AUDUSD suggests its still worth selling around 1.0360/70 with a stop above 1.0420 and will be interesting to see if there is any further follow through to the topside today with the minutes disappointing overnight. CAD weakness across the board surprising a few, our volume data suggests an uptick to sell CAD against NZD and AUD as well as the greenback over the past 24 hours. Will be offers around 1.0150 and certainly 1.02 but equally fresh demand building around 1.0090. Still favour being long funds for now and it could be the squeeze in CADcrosses which kicks us on but expect 1.0150/1.0160 to offer good resistance first off.
Scandies – Nature of positioning in SEK since the Riksbank is such that the market is going to be sensitive to negative surprises to Swedish data of which we have CPI and Unemployment this morning. EURSEK traded with a bid tone yesterday but did find good offers around 8.48 and more lurk ahead of 8.50. Long SEK has been a popular position recently and see no reason why this cant continue to be the case, if your pockets are deep enough you sell some here and then more around 8.52 with a stop above 8.55 which was the level we were trading going into the Riksbank. A whole confluence of moving averages can be found above 8.60 but that seems a way away for now. All about the data this morning, I think because of positioning we get better levels to ultimately buy SEK but better data this morning could see that opportunity evaporate as we would trade 8.40 very quickly. Short here but will add above 8.52 on any negative surprise. NOKSEK remains a sell on rallies in the medium term, 1.1480/1500 first level of resistance with EURNOK struggling to sustain a break through 7.40 since Olsens comments on Friday, can happily buy EURNOK around 7.38 and equally expect 7.46/47 to offer good resistance, certainly a Swedish focus for today though. EURSEK support: 8.40 8.30 8.20 resistance: 8.50 8.53 8.55. EURNOK support: 7.38 7.30 7.20 resistance: 7.42 7.46 7.48.
Barclays