EUR – After the break below this 1.2840/50 area on Friday to that new low at 1.2796 we have settled down in Asia. Busy week this week with Bullard and Dudley speaking tomorrow then Bernanke Wednesday which should provide further colour on the feds tapering expectations. Then we have PMIs Thursday. On the day expect us to play 1.2790-1.2880. Downside focus will again be on the April lows at 1.2740 lvl while topside 1.2880 1.2930 short term resistance. Happy to sell rallies towards 1.29 with a stop above 1.2960 but reluctant to sell dips for now until we get that break below 1.2740.
GBPUSD – Achieved a weekly close sub 1.52, and I do expect the downdrift to continue into a new lower 1.4832 – 1.5227 range. That said, there are a lot of events this week on both the UK and US sides of the equation, and so flexibility will be key. I am holding a short position, having added on the basis that a close below the 1.5197 – 1.5227 pivot was achieved, and another close sub 1.52 today would increase conviction further. Expect some supply on the approach to the 1.5230 region, with buying interest now likely towards last week’s 1.5158 lows, with the next downside target formed at 1.5034 (4.4 low). In the recent past we have been better sellers of GBPUSD on behalf of Faster Money clients, though volumes were light into the end of last week.
EURGBP – Still sidelined. With a slew of UK data events this week, perhaps there is a chance that EURGBP can finally break from recent ranges? I have a slight bias for the topside developing, though the risk reward for being heavily involved right now is not very attractive. In the interim, I would buy weakness below .8420 if seen, attempting to operate within the recent .8398 – .8516 range, and flows from our client base suggest appetite to do similar.
JPY – Amari comments overnight cleared out stops down to 102.00 but we saw strong retail demand on the dip, as becomes clear that they were perhaps a little sensationalist and out of context. 1.0150 remains the key level on the downside, where we have a lot stops gathering but above here, it is confirmation the trend remains to the topside first off looking to target resistance 103.30-50. On a tech level a close above Friday’s low at 102.05 helps support the case for further upside.
CHF – With USD/JPY clouded by comments from Amari overnight, USD/CHF going to be the pair of choice to express the USD story, with Bullard and Dudley speaking tomorrow then Bernanke on Wednesday. Seeing some early USD demand on this dip below 0.97 and whilst we hold above 0.9578, confirmation that for now the trend is still to the topside. We remain long through options and ultimately while we stay above 0.9480, target a break of 0.9750 and a move towards the old highs on a 0.99 handle. EUR/CHF remains well supported above 1.24 and with European PMIs to come later in the week, this could be the cross of choice as we still house strong demand in EUR/USD 1.2770-90 (Friday low 1.2796), looking first off to target 1.2525/30 which were the highs last week.
AUD & NZD – I’m still surprised at the sudden scale of the moves, especially in the AUD. Correlated markets have moved but it feels like the AUD has overstepped short term. 0.9711 low set Friday and expect that to be enough barring fresh news. 0.9800 and then strong 0.9850 topside resistance. I’m not getting involved until we get close to those levels. My order book is slightly skewed for a re-trace higher. NZD/USD following its big brother lower and AUD/NZD still trades on a 1.20 handle. 0.8050 support now with 0.8156 resistance.
CAD – USD/CAD remains well supported above 1.0260 after a slightly softer April Core CPI print (1.1% vs. 1.2% cons) on Friday. A high of 1.0313 is all we could manage after clearing stops through 1.03, capped ultimately (as expected) by a host of corp. offers and profit taking. Data focus for the week will be on Canadian March Retail sales, released on Wednesday, which comes with fairly low consensus estimates at +0.2%. Next resistance in USD/CAD comes in at 1.0343 (Q1 13 high), 1.04 and the 2012 high at 1.0446. We now have consistent supply building between 1.0320-1.04 and feels like USD/CAD will become chief laggard again on the USD move, with a slow grind higher on the cards if Bernanke makes the right noises in his speech later in the week.
Scandies – Pretty dull in terms of flow and ranges, with the focus on the USD. EUR/SEK unconvincing in its new, slightly higher trading range. 8.55-8.62 seems to cover it, with supply above 8.6500. EUR/NOK feels like it wants to trade lower but runs out of steam and into demand sub 7.50. The bigger position out there in NOK/SEK and although I see the reasoning behind that trade, I think we could see a flush out back through 1.1350 unless we push higher soon. No data from the region today and both Norway and Denmark are out on holiday today. This could make liquidity a little scarce. Tomorrow we get unemployment data from Sweden.
Barclays