EUR – A quiet Asia session post Friday’s moves as mkt settles, despite the late attempt at lower as Fitch caught up in downgrading Italy. Fading moves towards 1.3150 has worked but 1.2950 remains stubbornly supported and unlikely we take this out today. Currently reduced shorts after that failure at 1.2950 and will sell the break there or back at 1.3060/80 topside.
GBPUSD – Remains vulnerable, following the first weekly close below 1.50, since mid 2010. 1.4965 marks the previous low on the year, and so very good selling interest should now be expected between there and 1.5000. I remain a committed bear, and will add to the position if that area is probed in the days ahead. Meanwhile downside targets are now formed at 1.4885 (2013 low), 1.4803 (23.6 low) and then 1.4687 (27.6.10 low). Client flows remain skewed towards selling interest, and that pace quickened post the US Employment report.
EURGBP – Somewhat sidelined for now, but overall a grinding move higher should continue. I am square here for the time being, favouring both EUR and GBP shorts against the USD, though for choice, I would happily buy EURGBP should weakness towards .8675 emerge. To the topside, expect resistance at .8743 (Fri high) .8765 (previous 2013 low) and .8815 (high2013). Real Money demand remains the most interesting feature in EURGBP activity right now.
JPY – buy on dips strategy remains, the first such level comes in round 95.45 (Friday Asia highs) which held very well following the Italian downgrade on Friday afternoon. I would not advocate getting long here at 96.05, I think risk is we do a whole lot of nothing into the upper house votes for BOJ nominees which should be confirmed by the end of the week. Book is quite thin at the moment, some decent supply kicks in above 97 figure but it really is thin air between. Some small stops accumulating above the post payrolls high at 96.60, I imagine these will increase should we gravitate toward this level at any stage today. 21dma in EURJPY comes in at 123.40, this remains the first level to buy against below.
AUD & NZD – Despite weak China data, (retail sales and IP) AUD/USD is still stuck in its 1.02-1.03 range, with gamma washing around the market. AUD/NZD stops through 1.2450 were taken out post payrolls on Friday but I expect some supply into 1.2490-1.2500. NZD/USD itself has suffered as a result of the cross stops, a stronger sentiment with the USD and some recent positioning. The 200 dma at 0.8179 should be enough to stop further losses for now but 0.8225 is the first level of resistance. G10 focus still on GBP, JPY and EUR.
CAD – Barn storming employment stats for the whole of North America we were informed of on Friday, payrolls did deliver a plus 200k number and the Canada data was the surprise package with 50.7k net change in unemployment. Overall this meant that USDCAD didn’t really do a hell of a lot apart from people squared up longs between 1.0280 and 1.0230 but funds held where it should and grinded back towards 1.03 over the course of the afternoon in line with insatiable demand for USDs. Ultimately I think USDCAD remains a buy on dips despite the heavy positioning (IMM data suggesting record CAD shorts from leverage community) but clearly defined resistance around 1.0350 for now. I think in wake of Fridays data people will still look to reload USD longs on pullbacks and no reason why USDCAD shouldn’t be apart of this game plan, 1.0240/50 first level to buy on the day. Support: 1.0230 1.0215 1.0200. Resistance: 1.0340 1.0350 1.0400.
Scandies – A very disappointing IP number on Friday saw a squeeze in EURSEK between 8.28 and 8.32 as clearly market makers have been long SEK for past week or so. In a world of uncertainty I think SEK still has benefits but given technically we are approaching some big levels here 2012 lows around 8.18/20 and also NOKSEK at some quite overstretched levels I think consolidation is the name of the game in EURSEK for now however in medium term as long as we remain below 8.42 then its worth reselling 8.35/36 if we see it. Norway focus this week with Norges bank on Thursday but CPI data today, I think worth buying EURNOK around 7.41/40 at first go baring any real positive deviation today, equally though the desire of locals to sell above 7.50 should keep things capped I think unless we see a rate cut this Thursday. EURSEK support: 8.25 8.20 8.10 resistance: 8.35 8.42 8.48. EURNOK support: 7.42 7.38 7.34 resistance: 7.54 7.60 7.65.
Barclays