EUR – Quiet Asia session again as we head into the PMI no.s today in europe. We held the dip at 1.2980 yesterday in ldn and ny well with spec and corp buyers, while o/n we run into fresh selling at 1.3050 zone. Resistance now 1.3050/60 and then 1.3090/00 in the short term – downside support 1.2965/80 (friday and monday lows) before 1.2930 and then 1.2880. Still happy to sell into moves towards 1.3080/00 on spikes wrong above 1.3140.
GBP – UK Services PMI a huge market focus today, with the result potentially having implications for the markets view of this week’s MPC meeting result and UK growth forecasts. I am holding a small short position into the event. Given yesterdays recovery from 1.5000 to 1.5120, the risk reward is now sufficiently attractive going into the number, in my opinion. Should a positive surprise emerge however, I will quickly turn to neutral and look for intraday opportunities only until the dust settles. The short position the market currently has, has been well advertised, so a strong release will likely encourage some profit taking. Expect resistance on the approach to 1.5186 (Fri high), with minor support at 1.5073 (previous 2013 low), and then in the 1.4985 – 1.5000 band.
EURGBP – Remains relatively sidelined for the time being, in the well-trodden .8575 – .8700 range. Today’s PMI releases offer the chance for a break of this well-defined range however, with the downside appearing more vulnerable form a technical standpoint. I am square here for now, but will watch today’s close around the .8575 and .8700 reaction levels, for clues on trading in the days ahead. In the recent past we have seen two way interest from the client base in EURGBP, but note a slightly negative tilt in the shape of my order book.
JPY – Surprised it traded heavy overnight, I really thought following the LHS fix yesterday we would resume the uptrend with spot bouncing back above 93.50 in late NY. Never eventuated, though importantly we still hold above this 92.80 level which should serve as the first pocket of support on the day. Comments from an opposition official saying they would not support Iwata’s nomination certainly didn’t help proceedings, with the intraday price action in NKY a mirror image of yesterday (open strong and subsequently edge lower throughout the course of the session). 93.50 will be the first level of resistance topside, so for the most part things should remain rangey with little on the data front to get things moving one way or the other. Bids kick in below 92.90 in the books, above some small stops starting to accumulate through 93.50. EURJPY remains stuck between a rock and a hard place – it’s moment to shine will come later in the week.
AUD & NZD – No shocks overnight from the RBA and optimistic shorts were probably forced to take back positions after strong retail sales data. The move down through 1.0150 quickly reversed and now 1.0270 above is the level to watch. I wouldn’t be surprised if we drift back towards 1.0342 200 dma and then trade fluky ranges for a while. I think the market has too much priced in for the RBA this year and dips in AUD/USD should continue to offer good value overall. Kiwi gets a tow higher from the AUD/USD move and AUD/NZD stays relatively stable. Resistance in the bird 0.8326-50. Support 0.8260 and 0.8190.
CAD – Position consolidation the name of the game in USDCAD for now but some big risk events this week with the BoC tomorrow and US and CA payrolls on Friday. A fantastic note from James Neale overnight highlighting some of the shaky fundamentals that have recently been exposed by a deterioration in Canada’s data (apparently Toronto has 144 skyscrapers under construction at the moment and more in number than Tokyo or Hong Kong!?). All this has contributed to this recent bout of CAD weakness and is tarnishing Carneys reputation as central banker extraordinaire. Don’t think he is going to change tact tomorrow so ‘less imminent’ higher rates the name of the game and buying dips still the state of play. Still seeing demand from RM and model names to buy funds however the consensus trade at the moment is certainly being long USDCAD which concerns me a little but any pullback to 1.0240/30 should be bought for now. Support: 1.0240 1.0200 1.0180. Resistance: 1.0300 1.0350 1.0400.
Scandies – An aggressive buyer of NOKSEK yesterday morning caught the market very much off guard after Friday’s close below 1.1200 we saw a RM buyer around 1.1220 but I don’t believe this was the main culprit we found a few fresh sellers around 1.1250 but not before EURNOK had done a quick 4 big figures south. We saw good two way in USDNOK yesterday with leverage selling and RM buyers unfortunately both a bit tricky given price action and liquidity in EURNOK. Surprised EURNOK finds itself back down here so soon after taking a look above 7.50 on Friday, think this is a buy around 7.42/40 on the day. Services PMI from Sweden this morning a better 54.6 and SEK the stand out ccy in G10 at the moment it would seem. Remain core short EURSEK, everyone looking to sell a rally back to 8.38. Think as long as we remain below 8.42 we should be taking a look at 2012 summer support levels around 8.20 soon, expect 8.30 support initially to house a few bids. EURSEK support: 8.31 8.20 8.10 resistance: 8.42 8.48 8.50. EURNOK support: 7.42 7.38 7.34 resistance: 7.54 7.60 7.65.
Barclays