EUR – So after the painful squeeze yesterday in Asia, eurusd is resold into the month end and we open today back around the Asia lows. Once we broke below 1.31 in the afternoon we never got back above that lvl and so we look at 1.3090/1.31 as the short term sell zone with a stop back above 1.3150. Downside we have Asia lows at 1.3053 before the Tuesday lows at 1.3018. If we do start to move lower then 1.2990/1.30 for me is the key pivot a break there opens up a move into a lower range 1.28/1.31. Pmi’s this morning provide the next focus then ISM later in NY.
GBPUSD – Consolidation of recent losses is ongoing, but this is happening within quietly higher ranges this week. Trading is very ‘order-driven’ right now, and I have noted the pattern of our flows has been much more neutral in recent sessions versus the first half of February. Some short-covering was triggered above the 1.52 mark yesterday, but the well-advertised buying to be done in the 1.5250 – 1.5300 band has not been threatened thus far. I am relatively square for the time being, though will willingly reinstate shorts if that area is probed. Expect support at 1.5149 (Thurs low) and then between 1.5073 and 1.5080 (years lows). Selling interest should be apparent ahead of 1.5222 and 1.5321 (high 22.2).
EURGBP – Has been in an .86/.87 holding pattern since Wednesday, with option related activity reaffirming the short-term range. My feeling is the risks have now shifted to the downside, and should EURUSD break the well-flagged support at 1.2990-1.3000, EURGBP should begin to develop down towards .8450. Selling right here does not seem too attractive, but on the day any min-correction above .8640 should be sold, risking above the highs from both Wednesday and Thursday (.8677/79). .8450 marks the 50pcnt retracement of the years gains, so seems a reasonable target for the bear camp. Flows have been very neutral in recent days, with Real Money and Leveraged accounts active on both sides of .8650. *UK Manufacturing PMI due at 09.30 Ldn, consensus expectation 51.0.
JPY – still some very good demand below, we sold a large amount for the fix yesterday which was well absorbed with 92 figure the key level below. If we trade back down below 92.40 I will be a bit worried, we failed to break this a number of times yesterday but when we did we saw a quick run up to a high of 92.85 in late NY. Topside 93.10 level is key (21dma), we break through this and I think there is further momentum toward the highs of last week. Book is quite thin, little interest either side of spot though we are picking up a few stops above the o/n highs round 92.90. I am long USDJPY from yesterday; confidence will wane though should xxx-JPY remain under pressure. ISM data at 3PM London time.
AUD/CAD/NZD – AUDUSD couldn’t sustain the rally it made post capex, which was predominantly a short squeeze it must be said, but some month end USD buying and fresh leverage supply sent us back to just shy of 1.0200. AUDUSD is in a range and as such looking to respect extremities of this range for now, people still have good bids around 1.0150/60 and equally offers around 1.0300/10, day trade for me is fading either of these extremities, a breach and close of 1.0150 would certainly galvanise the bears but not sure we will have the impetus. Unfortunately USDCAD just didn’t quite dip far enough in line with the corporate month end supply, we got down as far as 1.0217 before rebounding quite aggressively with the USD bid cross the board, it was a bit of a mess quite frankly at the WMR, having poked above 1.03 we then went straight back to 1.0280. For now CAD weakness make sense, GDP today is the focus given the recent domestic deterioration on the data front people will be expecting a weak number, I think any dip inspired by a positive outlier should be bought, ideally around 1.0270/60. If the number is bad expect further RM cutting of CAD longs and a test of 1.0350.
Scandies – The data yesterday suggested NOKSEK should be higher, Norway retail sales better and Swedish PPI worse, however RM cutting of NOKSEK longs and a slow breach of this already aforementioned long term trendline around 1.1250/60 saw EURSEK take a look below 8.43 and EURNOK remain well supported around 7.48. The afternoon fix did see some local buying of EURSEK but we had RM selling of USDSEK, took the opportunity to take back half of our short at the fix. We await GDP this morning which if positive should see at least 8.41 and maybe 8.40 tested. If we do break 8.40 then I think we reset in a lower range and will test 8.30. We remain short NOKSEK on the desk with clean break of 1.1250 partly inspired this morning by weaker Norway PMI, no interest to fade EURNOK at the moment. 7.55/56 next level of resistance and the weekly close in NOKSEK will be important. EURSEK support: 8.40 8.30 8.20 resistance: 8.48 8.50 8.53. EURNOK support: 7.48 7.38 7.30 resistance: 7.54 7.60 7.63.
Barclays