EUR – extended through that cluster of moving avg at 1.3070/90 (50/100/200) yest but couldn’t sustain the break lower as we walked into a bout of profit taking across the board – Support remains that 1.3060/80 area a close below there opens up a run towards the daily cloud top at 1.2990/1.300. Topside feel like room for a further squeeze today back to 1.3160/1.32 area before look to initiate shorts again. Draghi speaking at midday will be watched closely for signs of any dovishness, while saw first signs of corp demand in eur and eur x’s yest which should support us on dips initially.
GBPUSD – A very impressive recovery, having traded to as low as 1.5343 on Monday. Surprisingly, we noted a wave of Macro supply below the 1.5370 region yesterday, yet Corporate buying seems to have proven too strong. I have cautiously sold this rally, around current levels, and will add further into the 1.5470 – 1.5500 band, risking above Fridays 1.5531 highs. My conviction is rather low for the time being, though I do have a general preference to sell GBPUSD rallies. Expect short-term support between 1.5390 and 1.5400, where a lot of two way interest was noted yesterday, and below there at 1.5343.
EURGBP – Remains rather sidelined, but does trade well supported overall. I am square here for the time being, though would prefer to buy weakness into the .8450 – .8480 band. To the topside, expect very good supply on any approach towards the upper end of the range around .8591. Client volumes remain incredibly low, that could be generally defined by Real Money selling in rallies, versus Corporate demand on dips.
JPY – Extremely whippy pulled around by general usd and stock mkt weakness – topside we seem to have had the squeeze for now in the short term after 98.30/70 contained us yesterday – demand on dips remains for now while we stay above 97.20 but expect stops below – if we do slip below then look at 96.80 and 96.30 as decent support zones US data out later will be interesting to see if that impacts usdjpy, more on positive prints – For still in buy mode but waiting for dip rather than dealing mid range.
CHF – 200 day held well at 1.2215 in eurchf yesterday in face of some heavy selling, which is a good sign – While we remain above there happy to be long with the 1.2190 stop – target 1.2330 and then 1.2370 topside – Usdchf failed yest at 0.9380 area so that’s the focus today then 0.9430 – downside 0.9280 and 0.9230 – Still long with a stop below that ny low from back end of last week at 0.9240 – The fact that eurchf bounces for first time since Thursday and off crucial lvls adds to my view that we go higher eventually.
AUD & NZD – Strange price action yesterday as G10 fx felt like it led the move in U.S FI and equities. Over eager USD buyers on the open put AUD/USD to new 2013 lows before snapping higher and squeezing out fresh shorts. Similar patterns were noted elsewhere, especially cable. Caught in the squeezes myself, I look to get involved only at the extremes, if I can. I still look to play from USD long but not until 0.9325 or 0.9400. Between those levels and 0.9143 below is no mans land. NZD/USD is similar, although it trades naturally heavier with the cross bouncing hard from the lows set last week. I look to fade into 0.7810. 0.7635 is the downside level to break. Patience is the key today with liquidity really poor and continuing to deteriorate.
CAD – another constructive day in USD/CAD clearing resistance at 1.0525 which now opens up further upside, looking ultimately to test the 2011 high at 1.0658. Small flush out late last night to 1.0470, but 1.0450 should act as good support to the downside, which held well on the small pullback on Friday. Wouldn’t rule out another a look at this level first as we’ve done a lot of work post-Friday afternoon data but would take any opportunity 1.0430-1.0470 to add to longs, still risking 1.0380. A bit of XXX/CAD supply emerging yesterday afternoon from leveraged names, particularly in AUD/CAD, but there is good AUD/USD demand about 0.92-0.9250 from a range of accounts and feels for now like we might settle into a 0.9660-0.9750 range in AUD/CAD.
Scandies – now looking for some consolidation in Scandinavian FX, with first signs of profit taking starting to emerge yesterday in EUR/NOK 8.02-8.04 from leveraged and local RM names. EUR/SEK in particular looks overbought after strong unemployment data last week and now looking to fade this 8.87-8.90 with a tight stop above 8.92. Busy data calendar for the rest of the week, starting with Swedish PPI today, then retail sales from Sweden and Norway on Friday, in addition to Norwegian employment data. NOK/SEK has found some support around 1.10 and continue to see RM interest to buy 1.0940-1.0970 but with a dovish Norges Bank likely to remain, any further strong data from Sweden could put more pressure on the cross, looking to test longer term stops 1.0850-1.09.
Barclays