EUR – Signs of life again for eurusd as we hold very well at base of the range at 1.3300/20 and eventually stop fighting the positivity of European and US stock mkts all rallying and break 1.3375 and rally back to 1.3430 resistance. Few offers on the books 1.3440/60 and key focus will be this 1.3480/1.3500 lvl again topside. PMIs tomorrow and ltro/IFO Friday, not expecting too much data wise so 1.3375/80 should be decent interim support on dips.
GBP – This morning brings the minutes for the February MPC minutes (9.30 Ldn), where in light of the recent inflation report, a similar pattern to the January vote is most likely (unanimous to hold rates, 8-1 in favour of no change in asset purchases). If there is a risk around this event, it would be for Miles to join the ‘no change’ camp with respect to further QE, given the recent upward revisions in the inflation profile. In any case, it is clear the market is very negative on the pound right now, and any uptick around this release will be heavily sold into. Having failed to retrace back into my preferred sell zone of 1.5550 – 1.5600, I am frustratingly square in GBPUSD, and will now lower my offers to 1.5500-20, all else being equal. To the downside, expect some interim support between 1.5390 and 1.5415, with 1.5269 (June 12 lows) forming a deeper target for the bears. Meanwhile EURGBP is threatening the recent highs at .8714, and should now be well-supported around the short-term pivot of .8648. Client flows have remained skewed towards GBP supply vs. both the EUR and USD in the last 24 hours, though the shape of my order book now suggests interest to reduce over the next .5pcnt.
JPY – headline-fest overnight proving it is difficult to trade this intra-day at the moment. Surprised that USDJPY could only muster a rally up to 93.80 on a newspaper report suggesting Muto was out of contention, suggests to me the mkt is a bit too short JPY at the moment or the newspaper itself has zero credibility. Especially with the Nikkei trading quite strong over the course of the session and US 10s remaining offered. Pressure is building to the downside in my view, stops lurk below the figure with the failure to ascend higher overnight quite telling. We saw some good EURJPY retail selling overnight, expect similar in USDJPY on any move through 93.10/00. That said, all it takes is a headline to change proceedings as we saw overnight so keep a close eye on the news wires. USDJPY has been fairly muted in London the past few sessions so not expecting anything major today, Fed minutes this evening at 7PM London will be watched closely.
AUD/NZD – It was Wheeler’s turn to engage in the currency sabre rattling overnight where in front of the Manufacturers and Exporters Association he commented that the NZD was significantly overvalued and the RBNZ was ready to intervene in FX markets when circumstances were right. Nothing particularly new from this rhetoric but it did catch the market lazy long bird and as such we saw some fast names selling NZDUSD between 0.8450 and 0.8400. AUDNZD also caught a bid trading up above 1.2320 but we got offers building around 1.24 which I think is the first sell zone. I think there is a danger we see continued position unwind in straight NZDUSD which could see us test 0.8340/30 support before I would look to rebuy. AUDUSD on the periphery past 24 hours in wake of RBA minutes, squeezing back towards 1.04 where there are stops but then good offers around 1.0430 think AUDUSD more medium term is still a sell, ideally on a 1.04 handle though.
CAD – Starting to see model and RM names join the party in funds with decent demand above 1.01 keeping us supported for now, had a brief look at 1.0140 yesterday in the wake of all this demand but seems to be a bit of wood to chop around 1.0150 and certainly 1.02. I think USDCAD should remain supported for now though especially as we grind towards the sequester related doom and gloom as long as we stay above 1.0050 it’s a buy on any pull back, I think above 1.02 people will start to reassess. US PPI this afternoon. Support: 1.0080 1.0050 1.0000. Resistance: 1.0140 1.0160 1.0200.
Scandies – Well a little bit of an anti climax in the end yesterday in SEK, all in all better than expected data saw EURSEK sell off from 8.48 where we opened yesterday and there did even seem to be some selling pre the data. A better ZEW print also aiding SEK which I think remains a sell on rallies ideally back to 8.47/48 on the day and a breach of 8.40 looks likely. We saw some RM demand for USDNOK and also NOKSEK but things pretty light in straight EURSEK. There will be stops above 8.50 but the lack of any domestic impetus on the data front means I still favour long SEK. EURNOK should be supported ahead of 7.40/38 and expect stops above 7.44, I think EURNOK can drift higher but ultimately driven by NOKSEK lower which I still like. EURSEK support: 8.40 8.30 8.20 resistance: 8.50 8.53 8.55. EURNOK support: 7.38 7.30 7.20 resistance: 7.42 7.46 7.48.
Barclays