EUR – So an important week ahead of us for the USD – With the mkt likely to seize on any attempts by the fed to calm mkt uncertainty over tapering – Eur rallies were capped nicely towards 1.3360/90 zone and expect this to be the case again as we approach the fed meeting – Downside support now 1.3280/1.33 that held bids last week – below there I think room towards 1.3220/00 which I would expect holds initially.
GBPUSD – Continues to hover around the 200dma, with Real Money short covering remaining the pervasive theme. My feeling is GBPUSD will ultimately peak somewhere around current levels, though timing this is far from straightforward. I have cautiously reinstated a modest short position, and will await confirmation of some bearish developments before adding. 1.5737 marks the recent high, and some other resistance will be likely on any approach to 1.5845 (8.2 high). To the downside, short term support is marked at 1.5616 (Fri low), with 1.5521 then offering some other support (Tues low).
EURGBP – Totally sidelined for the time being, with large flows in the USD legs causing various gyrations. I have a general preference for buying dips into the .8450 – 70 band, but overall, expect conditions to remain rangy until further notice. Client flows remain balanced, with European Corporate tending to buy weakness and Real Money clients selling strength.
JPY – Last week cleaned further long positioning from the mkt with some RM cutting post the BOJ meeting which took us to a low at 93.75 – Since then with Nikkei/general stocks holding up and some lifer interest appearing below 94.50 I like to play long with a stop at 93.50 – looking to play against last Friday’s Asia highs at 95.80/96.00 in short term.
CHF – Like jpy, the last week+ has seen a big reduction in usd longs and to an extent eurchf as well – With the break below 0.9480/0.95 confirming a move into a lower range we have trading quickly to a 0.9130 low before stabilising – with FED then SNB wed/thurs I prefer to be a long with a stop below the recent lows looking for 93.50/94.30 area to sell first off.
AUD & NZD – After a bit of a rollercoaster last week and positions reduced across the board, I expect some capitulation ahead of RBA mins tomorrow morning and the FED on Wednesday. I don’t expect either to be ground moving but the market is still a little nervous and is in reaction mode. 0.9560-0.9670 does it for me today barring fresh news. NZD/USD should be supplied at 0.8120 with support at 0.8000. AUD/NZD sets up strong tech resistance into 1.2100 and should continue lower overall, 1.1960-1.1815 short term range.
CAD – Very tight ranges captured price action last week in USD/CAD, and I think we see more of the same until FOMC. Having now cleared 1.0150 there is a bit more room to the downside, but not much, with some short term trendline support 1.0125 and the bottom of the daily cloud at 1.0118. Corp. demand remains the dominant theme below 1.0170, but don’t see much upside beyond 1.0220 in the run up to Wednesday with RM supply still cropping up on rallies. We have Canadian CPI and retail sales on Friday, but expect this week to be dominated by the USD – all eyes on FOMC.
Scandies – Busy week ahead in Scandinavia with the Norway rate decision the focal point, and trade balance data up first today at 09:00LDN. NOK/SEK remains well supported ahead of stops through 1.1235/1.12 and for now that leaves EUR/NOK trading soft after we saw a bit of leverage supply on Friday 7.6450. After clearing stops back through 8.6550, EUR/SEK now back within the previous 8.50/8.65 range and think these levels should contain the pair until Wednesday when we have Swedish consumer confidence and unemployment data. Aware of good corp. demand around 8.55 in EUR/SEK and with RM interest to sell USD/NOK continuing this morning on a bounce towards 8.72, the flow at least continues to support a long NOK/SEK position with a stop through 1.12.
Barclays