EUR – After last weeks sell off post fed we walk in on the lows with key support here at 1.3080 in short term – Rallies have been limited since Wednesday evening as mkt plays catch-up to recent events and the break higher in 10 yr yields – I expect eur to slow on downside initially as we get closer to 1.30 but think that rallies to 1.3160 and 1.3200 will be sold into – IFO this morning adds some data risk but little else – I squared shorts initially Friday at 1.3130 but will look to sell rallies 1.3160/80.
GBP – Cable’s 4 big fig tumble since last week has caught a few with their guard down. The short squeeze after the trio of strong PMI’s saw some medium term short run for the exit but good levels attracted fresh USD longs back in to take advantage. The USD story stays intact with U.S yields staying firm and I expect cable supply between 1.5400 and 1.5470. U.K GDP on Wednesday will be important for the pound and I expect a weak print there to force the hand of sterling bears waiting in the wings. EUR/GBP sidelined inside 0.8400-0.8600 and we need an out of consensus print from GDP to bust out. For the week, I’m in fade rallies mode in cable whilst below 1.5530, looking for another peak at 1.5270 and ultimately 1.5000.
JPY – Took a long while Friday to catch up – with some benchmark selling weighing it down late London around 97.40/50 area – but it eventually caught up and has extended o/n in Asia (98.72 high) – Exporters have come to market offering supply 98.50/70 area capping us ahead of 98.75 resistance but still demand on dips for now from model and spec a/cs around 98.20 (Fridays highs) – I remain of opinion we will have a choppy range higher but for now while we stay above 97.90 I like to see us extend towards 99.00/30 area (pre last boj highs).
CHF – Slow burner for now, with eurchf under pressure from general risk off atmosphere, but pace of buying of straight usdchf from spec and lev picked up late Friday and continues this morning – 0.9380 providing some resistance at the moment but if we can clear there then 0.9430 and 0.9480 as next resistance as we move back to the top of this 0.9150/95 range – downside support is 0.9320 and 0.9230 on dips but usdchf is step for step with eur for now with eurchf trickling back to 1.2250 area (200 day is 1.2215) and I wouldn’t like to see eurchf back below 1.2190 but it still trades soft – at least 1.2330 needed to remove the recent downward pressure.
AUD & NZD – Antipodeans stay hit against the USD and look to set new lows this week. For the Oz 0.9164 and then 0.9143, the 38.2% fibo of the 2008-2011 range are the levels to break for a further spell of weakness. 0.9260 and 0.9330 should cap a run to the topside. NZD/USD feels like it can catch up with the Oz as the cross rejects a move below 1.1800. I’m looking for sub 0.7500 on a break of the 2009 highs at 0.7635. AUD/USD has already broken its 2009 high. Topside exuberance should get snuffed out into 0.7760/0.7780 but 0.7810 has set up as strong tech resistance should we get a squeeze. Kiwi trade balance data on Wednesday is the highlight from both centres on the domestic data front. Have a ball.
CAD – Weak Canadian April retail sales (0.1% vs cf 0.3%) and soft May inflation combined to take out the 2013 high at 1.0421 and the 2012 high at 1.0446 on Friday in USD/CAD. 1.0525 now remains the key level to clear to the topside, having traded a high of 1.0488 on Friday and cleared 1.05 first thing in LDN, with a good amount of corp and real money demand seen 1.0420-70 on the initial breakout. We have Canadian GDP data out on Friday which will be next focus point. US FI likely to be the catalyst today as yields continue their march higher, and on a break through 1.0525 in USD/CAD we are looking for a re-test of 2011 highs at 1.0658.
Scandies – USD/NOK and USD/SEK dominate proceedings for now in Scandinavian FX as US FI takes centre stage. Strong leverage demand for USD/NOK 5.98-6.00 was the stand out flow on Friday but this wasn’t enough for EUR/NOK to make a clear break of 8.00. If we can sustain a close above 8.01, we are looking for a move back to 8.2575. USD/NOK should hit a patch of tough resistance 6.15/17 and first-out if feels like we could test this later today. In NOK/SEK the board seems to have been wiped clean and now starting to see RM demand popping-up 1.0950-1.1020, and this SEK supply has helped EUR/SEK beyond Q4 2012 highs at 8.7950, but would like to see a close above that level to confirm the move.
Barclays