EUR – Mkt seizing on the Monti news over the w/e to hit eur lower on the open – We currently holding this 1.2880/75 support zone that we held Friday on the post payroll sell off. Reluctant to sell eur at these lvls preferring to sell a rally towards 1.2940/50 like Friday and respect this 1.2875/80 support – there are stops below 1.2855-75 before bids in the main 1.2800/40 – topside orderbook clear before fresh selling 1.2980-1.3010. With a big data week with FOMC and a host of Euro meetings i think important to stay flexible.
GBP – NO UK data today. A quiet week on the data front from the UK this week, with ILO employment data the highlight on Wednesday. EUR pressure looks set to continue, as the market gets back-footed last week with sellers failing to get meaningfully short. European yield will be a focus but EUR/USD much below 1.2880 looks technically in trouble. EUR/GBP has taken the brunt of the move, breaking down through 0.8100 like a hot knife through butter. 0.8065 and 0.8082 resist now on the topside. Support at 0.8031 and then 0.8000. Cable could well play catch up with the EURO but 1.6000-1.5980 support needs to crack first. 1.5830 is the target for bears.
JPY – Disappointing price action friday for usdjpy bulls with a gd print followed by strong buying but ultimately also a fail at 82.80 lvl for the third time. Lvls to watch 82.20 then 81.90 before the all important 81.65 downside – Stops in short term building below this 82.20 lvl that has held the last 3 dips. topside some offers still lingering 82.60-82.90. With FOMC leading to the weekend of Japanese elections mkt will want to go in long its just about do we hold current lvls or get a further dip to buy. I looking at scaling into longs from 82.10-81.50 for higher later in the week.
AUD – AUDUSD continues to weather domestic and Asian headwinds rather well, overnight weaker Chinese trade balance saw some leverage selling of straight AUDUSD but we only traded 1.0463 and have recovered into the London open. Market has thrown the kitchen sink at AUDUSD this year and it has absorbed a lot of it, EURAUD back into peoples favour at the end of last week with lots sold though 1.2350, some leverage profit taking the books around 1.2260/50. Straight AUDUSD been sticky recently but with FOMC this week hopefully room for some action, range highs around 1.0520 should offer ok resistance for now but there will be stops above. NZDUSD still holding firm thanks to the RBNZ last week and EURNZD selling, 0.8350 stops will be around but difficult ot fight at the moment.
CAD – The perfect cocktail for CAD on Friday with employment looking rosy on the surface of both the US and Canadian numbers. The lower participation rate in non farms took the sting out of the headline number but a very good Cad number, with very strong service growth negating the manufacturing weakness helped USDCAD through 0.9900 and take out some stops below, 0.9880. CAD strength in the crosses notably EURCAD and CADJPY seems to be the more popular position which I also advocate, feels like positive CAD sentiment should continue if we can navigate the fiscal cliff headlines over the coming week and the orderbook composition reflects this, still better offers between 0.9950 and parity and a little bit of profit taking around 0.9830. Short USDCAD and will add back to 0.9950 and looking to buy CADJPY around 83.00 over the course of this week. CA Housing starts the afternoon. Resistance 0.9950 1.0000 1.0050. Support 0.9850 0.9800 0.9730.
Scandies – EURSEK holds in remarkable well given the dovish ECB rhetoric and EURxxx selling everywhere else in G10, one of the main reasons for this is the very much anticipated pension payment flow that is meant to be occurring today and tomorrow. I think it will be difficult for me to fight the majority but struggling to be long with conviction, IP this morning will set the initial tone but think people will be selling towards 8.68/70. There has been a few tops around these levels and as such 8.70/72 offers a nice band of resistance, if we stay below there in the next 24 hours I think its worth fading this pension flow eventually with the bearish EURxxx backdrop more important over next week or so. EURNOK not the focus for now, will be bids around 7.30/28 bit given the overt SEK focus NOKSEK should be the instigator and NOKSEK back above 1.1800 could be nice sell zone on the back of the one off EURSEK flow. IP this morning at 8:30. EURSEK support: 8.60 8.59 8.55, resistance 8.68 8.72 8.74. EURNOK support: 7.30 7.28 7.24, resistance: 7.38 7.40 7.44.
Barclays Capital