EUR – Full reverse off the 1.32 resistance lvl yesterday. With many of the shorts all taken off the day before not much to stand in the way of it coming lower, led by risk move down and Weidmann’s dovish tones – This took us into stops through 1.3110 and 1.3080 where we never looked back. A brief Asia bounce off the 1.30 lvl has stabilised the mkt and today expect 1.3080 then 1.3110 lvls to fade topside for an ultimate look back at 1.2980/1.30 again.
GBP – Retail sales data at 9:30 and I expect the print to be eagerly awaited, with growth and economic activity data likely to be the key driver for the pound in the short term. Cable posted a close below the important 1.5270 level and we look set for further losses. The market in general has scaled back shorts as we squeezed into 1.54 territory but short cable is still a favoured play. I run short and look to add into 1.5300, risking 1.5350 short term and 1.5415 further out. EUR/GBP more of a fickle beast with general EUR shorts having been ground into submission as EUR/USD squeezed above 1.32. I think many are out of shorts but feeling that they want to sell again. Hourly trend kicks in at around 0.8525, resistance again at 0.8605 and 0.8643.
JPY – holds in remarkably well given the broader risk wobble, a series of higher lows in the wake of the flush-out down to 95.80 bodes well and I think the up-trend is still in tact. Certainly trading like there is gamma round this 98 level, we have bids down round 97.50 now with a few small offers now lining up round the recent range highs at 98.50. I don’t envisage any major fireworks today, jobless claims are out at 1.30PM BST with Philly Fed to follow at 3PM. Buy dips remains the name of the game, I think any dips down toward 97.50 represent a good opportunity to go long on the day.
AUD & NZD – Another day of weakness for commodity ccys’s yesterday, with European stocks having a bad session and setting the tone for AUD and to a lesser degree, NZD. AUD/USD slipped through the recent low of 1.0290, tripping system stops before settling back above 1.0300 as corp demand dampened the move. Good leverage and spec selling of NZD/USD was well absorbed-there still seems to be demand for NZD on every dip. Equities and commodities will again lead these but the tone feels bearish. I’m looking to sell on rallies, with AUD/USD sell zone 1.0330-50 and NZD/USD 0.8480-00. Selling dips doesn’t work. Downside targets in AUD/USD are 1.0250 and 1.0210, the later being the uptrend from the 2012 lows.
CAD – BoC as expected was a bit of a snoozefest with Carney playing things with a straight bat. The rhetoric remained fairly familiar ‘monetary stimulus will remain appropriate for a period of time’, the next move probably higher in rates but the economy isn’t meant to reach full capacity until mid 2015 so lots of uncertainties! Price action therefore was pretty erratic, we had a rogue 1.0245 given then 1.0280 bid but couldn’t overcome corp offers which await between 1.0300/50, certainly will be wood to chop at those levels with the yearly high around 1.0350 the clear line of resistance. I think there will still be more than enough interest to buy a dip, the market was awash with long recommendations yesterday pre BoC which always concerns me slightly but as a day trade will be buying USDCAD at 1.0220/00 risking 1.0180 but as already mentioned expect 1.0320/50 to offer fierce resistance first off. Support: 1.0200 1.0150 1.0080. Resistance: 1.0250 1.0300 1.0350.
Scandies – The Riksbank surprised slightly with the lowering of the repo path and inflation forecast which ultimately points towards a greater chance of a rate cut in July, however it did feel like the price action didn’t really justify this news which wasn’t exactly a surprise therefore it says to me the market was longer SEK than I first anticipated and some of the crossSEK and EURSEK buying we saw from RM and model names would back this up. A lot of EURSEK was bought between 8.45 and 8.50 where we peeped above last night. Not as clear as one would hope though, some Ingves comments highlighting the need to focus on private debt going forward means a cut from Riks isn’t a sure thing and then Weidmann putting his boot into things means its perhaps more likely for the ECB to cut. I would still expect SEK to benefit in an environment where Draghi has a much more dovish tilt so sitting short EURSEK today but expect good bids around 8.45/44. Lots of NOKSEK demand yesterday from variety of different clients above 1.1200, EURNOK holds in remarkably well considering the buying of NOKSEK, have taken back almost all of my EURNOK long here and will certainly look to reload back to 7.50, NOKSEK will continue to be the short term catalyst for EURNOK. EURSEK support: 8.45 8.41 8.35 resistance: 8.50 8.52 8.55. EURNOK support: 7.47 7.45 7.42 resistance: 7.56 7.58 7.60.
Barclays