EUR – so month end doesn’t conform to expectations/or models by selling off into and rallying into the close to stand at 1.3020 as we open in ldn this morning. Definitely saw increased selling late Friday from lev, spec and momentum accounts but that support at 1.2940/50 held and we open a new month right at the top of recent ranges. Lvls to watch now 1.3060 and 1.3110 topside while 1.2980 then 1.2940 support to watch – with European manufacturing pmis this morning and US ism later this afternoon we kick off the week as we mean to go on – busy – With ADP wed, then Draghi and ending with the payroll report in states. On the week a squeeze above 1.3110 would be a concern for shorts while a fresh attempt below 1.2940 should confirm that the recent rally was just a cleaning of positions but the trend is still down. I think early bias for a squeeze but like to sell 1.3060/80 with a stop at 1.3130.
GBP – PMI’s this week and we kick off with the manufacturing number at 9:30. Cable has bounced with a general softer USD despite good quality selling at the end of last week as fresh shorts were reinstated. It just feels like the market is taking a breather to me and I continue to play from the short side, looking to add into the 1.5270-80 zone. Only above 1.5320 will I start to get concerned. Support at 1.5158 and 1.5110 but I’m looking for a move back below 1.5000 eventually. Accounts are still looking to sell cable in general and a stronger PMI later will be seen as an opportunity to fade any further bounce in cable. EUR/GBP struggles to crack 0.8530 and has room to progress up to 0.8600 where recent supply should continue. That’s the range to play in the cross today.
JPY – Rallies short lived for the time being, especially as the Nikkei continues to point lower. We are against key support now 100.00/100.30 – I would imagine we need to have a test lower first, but I think 99.85/90 should be a buy first off for a bounce – topside 100.80 then 101.30 need to be breached to unwind recent downside momentum – I think with ISM data today leading to ADP and Payrols later in the week we need a strong print on US data to calm the recent usdjpy wobbles, otherwise we may see a deeper cleaning of positions towards 98.70.
CHF – Hanging in there above this 0.9480/95 support without really gaining any traction topside. I still prefer being long usdchf with a stop at 0.9450 for a retest of higher later in the week on back of stronger data -I wouldn’t like to see a close below 0.9450 now while a move back above 0.9650 would suggest recent selling has seen many of the longs cleaned out and we can start to move back higher.
AUD & NZD – Stronger China PMI caused the gap open in AUD/USD from 0.9580 to 0.9630 but overall price reaction to the topside is muted and we struggle to hold on to gains. That said the USD does trade soft across the board as we walk in this morning. RBA tomorrow morning is the next focal point for AUD, with the market unconvinced of a further cut. Positioning is still running at high levels but AUD shorts are in at good levels and if anything will look to add on bounces. 0.9710 and 0.9750 are levels where I expect to see some supply. 0.9580-0.9600 is short term support. For the NZD, we finally got nudged sub 0.8000 with AUD/NZD stops triggered through 1.2000 and we currently sit just shy of the 2010 low at 1.2100. This is probably a good short term fade with a cheap cut above the previous years low at 1.2143. Those with deeper pockets can risk 1.2222, the 50% fibo of the entire 2008-2011 range. Overall, nothing has changed dramatically and the USD should continue to be in demand.
CAD – Stronger GDP print on Friday (2.5% vs cf.2.3%) felt like it should have been the catalyst to clear stops through 1.0280 but US data continues to dominate the pair, underpinned by strong Chicago PMIs and Michigan data. Some month-end USD selling did materialise but leverage were quick to jump on the dip but with USD weakness elsewhere in G10 in Asia (vs. GBP/JPY/EUR) feels like USD/CAD should retest last week’s lows at 1.0295/1.0301 and position now becoming very populated, but still expect to see continued RM and macro demand 1.03-1.0320. Topside targets continue to be previous high at 1.0421 then 1.0450, and through 1.0450 would expect to see stops but corp. names and range players will continue to sell any rallies. Continue to be long USD/CAD with a stop through 1.0250 but now looking for opportunity to square up on rallies and will try and combine that with a chance to get short EUR/CAD 1.3550-1.36 if EUR/USD can hold resistance 1.3080/1.3110. AUD/CAD cleared stops through 0.99 post-GDP data on Friday but comes back strongly and continues to reinforce the band of support 0.9880-99.30 despite clearing previous lows from 2011 around 0.9905.
Scandies – Swedish Manu PMI at 51.9 better than cf. with EUR/SEK quickly in firin#g distance of last week’s lows 8.5544, but for now still in the broader 8.50-8.65 range – Norway PMI to follow at 08:00LDN. NOK/SEK should hit good patch of support 1.1150-1.12, levels at which we saw decent RM interest earlier in March/April, but expect to see some stops run first through last week’s lows at 1.1240. IMF comments over the weekend supportive of SEK (“IMF Says Krona Strength Poses No Real Threat to Sweden’s Economy”), and with Norway manufacturing output later in week feels like NOK/SEK will dominate Scandinavian FX this week. EUR/NOK remains underpinned by virtue of pressure on NOK/SEK with support likely on dips 7.55/7.58 and resistance 7.67.
Barclays