EURUSD – Choppy would be an understatement but the trend remains to the downside. Long term and corporate buying slows the move and i expect this to continue but bias is still for lower. Target 1.2720 initially, while we stay below 1.2915. Currently short through downside options and think, into draghi next week this remains the way for it as sentiment focuses on chances for a more dovish outlook. On the day expect 1.2860 to cap us initially and, for spot shorts, only above 1.2915 would i be concerned.
GBP – GDP (Q4 final revision) at 9:30 along with the FPC statement on bank capital. Sterling hasn’t had its recent share of the limelight as Euro issues continue to drive currencies. Cable should be comfortable trading within broad 1.5070-1.5300 until the next major event. I doubt whether today’s UK events will be enough to shake us out. With that in mind, I’ll look to play within the range today. EUR/GBP struggles to muster a bounce as weak euro sentiment continues. We are currently trading new lows on the week here, despite EUR/USD buyers emerging below 1.2820. If you believe in further safe haven flow into the U.K in the coming weeks and think the pound may be due some bounce in general, short EUR/GBP fits the game plan. Techs are setting up a bearish pattern. 0.8500-30 resistance, with initial support at 0.8444 and 0.8401, (2009 low).
JPY – unsurprised to see USDJPY trade higher in Asia, there was a lot of talk re: LHS fixing yesterday being the last value date prior to Easter holidays but it was certainly well supported in the fixing window with spot not trading a pip lower following the fix. Nikkei article re: new bond buying tgt being set by BOJ certainly helped proceedings, though here at 94.80 there will be good resistance up to the figure. I guess 95 will remain a decent level for quite some time, so long as Abe continues to refer to 95-100 as the comfortable range. 21dma right here at 94.72, we see some offers up to the figure but stops are building on the break. I think the real level above is 95.15, through here and we target 96 again. Downside quite thin, 94.50 remains the first level of support and I think one can buy into this with a stop through 94.15 (pre-fixing lows yesterday afternoon).
AUD/NZD/CAD – AUDUSD stubbornly bid at the moment but still feels like primarily a function of EURAUD selling going through, we actually saw some EURxxx demand yesterday but it was month end exporter stuff. AUDUSD took out a few stops above 1.0490 but couldn’t get above 1.0500 which seems like the general consensus sell zone. Happy to be fading AUDUSD up to 1.0500 on the day but more medium term I think you want a stop above 1.06 if you can so will need to raid the piggy bank to hold onto that short. Corporate offers building around 1.0500/20 for now but EURAUD should remain the focus in short term, if we get below 1.22 then I think we got traction to 1.20. USDCAD suffering a little at the moment, more positioning and month end corporate selling than anything, interestingly we get CPI today which I think is an important print. The storming CA employment last month was maybe shrouded by US payrolls somewhat, a better CPI print today and I think we see more position liquidation and USDCAD test below 1.0100. Without a better data print think its worth fading any dip below 1.0150/30 if the month end selling does come to fruition. However, if the data starts to pick up I think the patience of CAD shorts will be severely tested.
Scandies – European safe haven type sentiment the catalyst in both EURSEK and EURNOK at the moment which is keeping both pairs soft. Lots of Swedish data this morning consumer confidence and retail sales the stand out. The whip saw price action got people annoyed they didn’t sell it above 8.42 when it looked bid to high heaven, still favour selling rallies but may see the usual suspects over month end buying which could give us better opportunities to sell. However EURUSD trades soft so if this data is good then maybe we test 8.25 pretty quickly. 8.30 should be good support for now, would tentatively sell the break of this on better data this morning but if not then we await month end madness but with bias to selling rallies back to 8.38/40. Talk of large USDSEK options flow in market yesterday (6.25s in a yard), not privy to it so can’t comment too much, I think nature of client would be interesting the usual M&A rumours circulating, either way think this environment is conducive to SEK strength unless we get domestic data disappointments. EURNOK back below 7.50 on similar safe haven SEK flow, 7.45/43 should be good support and people happy to fade up to 7.53 which makes sense. EURSEK support: 8.30 8.28 8.10 resistance: 8.42 8.46 8.50. EURNOK support: 7.48 7.38 7.34 resistance: 7.56 7.60 7.65
Barclays