EUR – Calm resumes in Asia today as we hold 1.3180/1.3230 range – Mkt squeezed everyone out on Thursday last week and while we saw a few lev/RM sellers again Friday we haven’t retraced to far on the downside. Today expect 1.3230/50 to be decent sell zone before that 1.3300/10 lvl from last week – downside support at 1.3160 then 1.3110 – On the day like to sell 1.3220 area with a stop at 1.3260 looking for 1.3150 then 1.3120.
GBP – Having squeezed shorts out on the blast above 1.5600, cable now looks set to settle in a lower range before the next driver gives us a new thread. Production data tomorrow and the ILO employment report on Wednesday could be the key to the next phase of sterling. It does feel though that a lot of short cash positions have been cut as a knock on effect of pain elsewhere in accounts portfolios. Maybe the path lower is now clearer and should we get more disappointing data, we could see lower levels quickly. Support 1.5470, 1.5410 and 1.5360 with resistance 1.5560 and 1.5600/20. EUR/GBP a little sidelined as the USD legs dictated price and the break of 0.8500/0.8485 fizzled out. Suggest 0.8475-85 now support for a move back into the old 0.8500/0.8600 trading range later this week.
JPY – After the high volatility at the end of last week we have settled in Asia to a somewhat stable 100 pip range 97..43-98.44. Positioning definitely cleaned out alot last week and while some have gone back in i think that capitulation phase seems to have happened and that we should settle back in the 97/100 range. We have BOJ meeting o/n and while mkt I think expects extension of financing from 1-2 yrs, there is maybe a hope that after recent volatility in JGB, Nikkei and currency mkts that Kuroda may well do something more aggressive. This 98.50/60 area is really where the sell off started Thursday last week so expect some offers here initially and we have seen selling from spec and bank names against this area – support is 97.90 97.50 and I think good chance to reload longs again on dips there.
CHF – Like in usdjpy, usdchf had capitulation on long positions last week leading to a decline to 0.9226 low. Since Payrolls we have seen fresh buying but we are still in the middle of this 0.92/0.95 range – I think we stabilise now going into the snb on the 20th. While we have had the flush of positions in usdchf , eurchf held in well with a low at 1.2272 and this remains a positive .
AUD & NZD – The USD squeeze yesterday post U.S data left a trail of devastation as accounts scrambled to cut positions. AUD/USD itself traded 2 big figs from low to high, with price gaps as fast money made the most of poor liquidity. The RBA overnight left rates unchanged as expected and commented that policy was appropriate for the time being. Further comments stating that the AUD remains high considering decline in export prices, despite recent depreciation put AUD/USD on a weak footing again. We currently trade back below 0.9710, the first break out level on the top side. I wouldn’t be surprised if we retrace a lot of yesterday’s moves and in my mind not much has changed, although the market isn’t so long of USD’s anymore. ADP and NFP data will be key, strong prints will see another rush to buy USD’s, with U.S 10 year still sitting above 2.10%. I’m going to try and play AUD and NZD from the short side again today, but with smaller postions to offset probably wasp in a jam jar price action. 0.9750-0.9800 should contain another run for cover but ultimately 0.9850 is key in AUD/USD. NZD/USD a little looser, with liquidity a real issue yesterday. 0.8120 resistance but 0.8060 should be enough to top us out. I currently run short AUD/NZD on a tech basis whilst below 1.2150.
CAD – Flush out Friday in USD/CAD as a very strong Canadian payrolls report helped clear stops through 1.0180 to trade a low of 1.0166, but good RM and macro demand remains prevalent with bids now lowered to the 1.0140/1.0180 region. I think a focus on domestic Canadian data now key, as the USD/G10 story continues to break up and market positioning remains long USD/CAD, to me indicating some room to the downside. Likely to be stops around through 1.0150 but until we have a catalyst I see USD/CAD contained 1.0160-1.03. EUR/CAD attracting some headlines and I think you can be short this cross with a stop through 1.3550, which coincides with the high after gap lower on Friday and what was good trendline support from mid-May. May House starts data at 13:15LDN.
Scandies – Busy data calendar this morning with Swedish IP at 08:30LDN (cf.0.3%) then Norwegian inflation data at 09:00LDN (cf.1.8%yy,-0.1%mm). Despite strong Norwegian IP on Friday, little actually priced into NOK as EUR/NOK and EUR/SEK pushed and pulled around by EUR/USD on a busy payrolls Friday. NOK/SEK well established above 1.1350 now but seen some real money names trimming there position last week prior to the IP numbers and likewise a bit of demand for EUR/NOK from lev accounts 7.61-7.62. I still favour being long NOK/SEK looking to retest 1.1450 first-off, where there should be more stops, and think the picture should be much clearer after this data and remains the best way to play possibility of Norway rate hike. EUR/SEK has firmed up through the 8.65 breakout level and this should act as good support now looking at 8.70/72 as area of resistance. EUR/NOK still looking like a sell on rallies ahead of resistance 7.6450/7.65 before more previous highs 7.6650.
Barclays