EUR – Choppy still in this 1.30/1.3150 zone currently, Friday a prime example of that as we jumped around on headlines between 1.3080-1.3130 only to end the day back at 1.3055, where we open up today. Still of the opinion that Draghi was dovish at the last meeting suggesting something to come in May if the data continues to be weak so we look to the European PMI’s for that focus which is tomorrow. I think 1.3090/1.3130/1.3160 lvls topside to play against – support is 1.3030/1.3000/1.2980 on downside – no surprise that orderbooks wiped clean in near term with bids now 1.2990/15 downside before stops below 1.2980-55 – topside 1.3100/30 mainly selling but light before stops 1.3160-1.32.
GBP – No UK data today. The downgrade by Fitch of the UK to AA+ on Friday wasn’t a massive shock and cable sold off 30 pips on the news. It does leave a bad taste however and I notice that UBS have cut their gilt asset allocation. I think the pound will be back-footed this week and will look for rallies 1.5250-1.5300 to add to core shorts. Support now at 1.5180, 1.5144 and 1.5074. I expect cable to revisit the 1.50’s in the coming days. EUR/GBP a little more fickle as the EUR/USD leg trades in a choppy 1.30-1.3150 range. I expect demand to increase in the cross 0.8530-75. Resistance 0.8590, 0.8640 and 0.8680. GDP on Thursday will have the hyenas’ circling and could be the catalyst for a more constructive GBP sell off, should we get further weak data.
JPY – After last weeks recovery from the sell off to 95.80 at start off week we open up in Asia at the highs of the entire rally just short of 100. G-20 didn’t censure Japan for its monetary easing and risk stabilised so here we are – 100.00/100.20 focus topside – a break of 100.20 should open up a move towards 101.45 (2009 April high) Don’t expect much from Fridays meeting of BOJ, other than some tinkering and adjustment to what was done at the start of the month. So focus will be on risk and general usd uptrend. Support on downside will be 99.20 then 98.70 – topside 100.20 then 100.65 short term resistance. Remain long usdjpy with a target of 102 this week.
AUD & NZD – Trading at the lower end of last weeks ranges but I can’t get excited about a big sell off, as gold and equities pull back from the lows. This 1.0280 area has proved sticky for AUD/USD and some short term stops are appearing just below. 1.0250 and trend line support at 1.0215 should hold should the market try that way. NZD/USD saw better sellers last week but demand seems to pop up from somewhere on dips still. 0.8380-00 zone is support with resistance 0.8480-0.8510. Oz CPI at 2:30 a.m 24th and Kiwi trade balance 23:45 25th are the data highlights of the week.
CAD – Commodity weakness took a firm grip on things last week, Canada inflation data was middle of the road but there does seem to be some interest to still buy funds on any pullback. Therefore state of play remains the same 1.0220/10 the initially buy zone but expect lots of wood to chop between 1.0300/50, no specific CAD data this week so will be looking elsewhere for guidance, overall think there will be more action elsewhere but CAD short dynamic still in favour and think its one for the back book if you entry point is right. Orderbook starting to build stops below 1.0180/90, wouldn’t like seeing it below there for intra-day longs. Support: 1.0200 1.0150 1.0080. Resistance: 1.0290 1.0300 1.0350.
Scandies – SEK the big underperformer last week thanks to the lowering of the forward guidance by the Riksbank and the probability of a rate cut very much back on the agenda. Position squaring was the name of the game with good RM demand for EURSEK and USDSEK the back end of last week. EURSEK remains very much supported above 8.50 for now having a brief dip there on Friday before some buying into the New York close took us higher. 8.55 really the last bastion of resistance before 8.62 and then 8.70 which should be very important on the way up as it was on the way down last summer. Sitting with a stubborn short as long as we are below 8.55 but will be taking those back and flipping long around 8.47/48. EURNOK closed above the weekly cloud first time since 2009 and so definitely think there is more upside here but surprisingly it’s a grind for now, few stops building around 7.62 then some offers around 7.65. Have been advocating playing this from the long side for a while and still think that feels right, will be adding back to 7.55. EURSEK support: 8.47 8.41 8.35 resistance: 8.55 8.60 8.65. EURNOK support: 7.55 7.52 7.47 resistance: 7.62 7.65 7.70.
Barclays