EUR – Nasty squeeze back towards 1.3040 in late NY Friday cleaned the decks of a few short/stops topside however we have failed to make any further eur gains in Asia. With risk sentiment weighed on to a large degree by the SHcomp. Draghi on Thursday remains the focus and I continue to think mkt sentiment is for him to be dovish so further scope for a sell off on the downside towards 1.2930/1.2880 before we settle. Topside 1.3040 then 1.3070 lvls to watch – order book cleaned out in near term but 1.3060-90 contains selling while 1.2965-00 still mainly bids in the main. Short term like to sell moves to 1.3040 wrong if we go back above 1.3120 short term.
GBPUSD – Opening the week in a holding pattern, having triggered the psychologically important 1.50 mark on Friday. The major downside pressure points are gone for now, and interest to trim shorts should now be found between 1.4965 and 1.4985 (Fri’s low). To the topside, 1.5073 marks the previous 2013 low, and some short-term short covering above that area may well be apparent. I am relatively square at current levels, but will willingly sell in the 1.5073 – 1.5100 region if seen. Overall, I expect some consolidation today, before tomorrow’s important Services PMI release emerges, but the skew towards client selling of Sterling does remain in place.
EURGBP – Remains relatively sidelined in the .8575/.8700 range. Both the EUR and the Pound are equally unfavoured right now, and this has led to pretty directionless trading in EUIRGBP in recent sessions. For choice, I would be inclined to sell strength above .8675 on the day, though in truth, there are more interesting opportunities elsewhere. Levels of note will be. .8601 – .8609, followed by .8576 (last Tues low) to the downside, with resistance likely at .8685 (Fri high) and .8765 (previous 2013 high). Client flows have been relatively neutral in EURGBP in the recent past, with Real Money accounts active on both sides.
JPY – not positioned here at the moment, we closed our long on Friday ahead of the 21dma thinking it would stall but some decent demand into and post the fixing saw us close the week on the highs. Buy the dip remains the name of the game, any dip toward the figure I will be buying with 92.80 likely to hold on the day. Not a great deal in the orderbook today, offers don’t really kick in until 94 figure with some weak stops lurking below. EURJPY stuck between a rock and a hard place, it is slowly edging higher but I think we will need a close above 122.50 to see any material follow through here. Market will be looking to sell EURUSD on rallies into ECB on Thursday, gamma will be king for the last two days of the week though with payrolls also out on Friday.
AUD/NZD/CAD – AUDUSD slowly chopped through the various demand we spoke about last week between 1.0170 and 1.0150 overnight, this was first instigated by a weaker building approvals print (-2.4% MoM) but predominantly the SCHCOMP down -3.5% weighing on things. The breach of last October lows through 1.0140 saw a quick move to 1.0116 the low so far as leverage names came in buying EURAUD. There will be stops now back through 1.0150 and that sort of makes sense as a day trade however with the proximity of the RBA meeting and the previous failures of going with AUDUSD momentum I wouldn’t be surprised to see this squeeze and see better levels to sell, ideally back at 1.02. Corporate bids now at 1.0100 and all important parity key levels of support. NZDUSD suffering overnight inline with Asian stocks slumping, stops building below 0.8150. Immediate focus more on AUDNZD next 24 hours with RBA overnight, bias for this is probably higher as I don’t think the RBA cut. USDCAD had a small wobble on Friday having traded 1.0342 pre GDP an inline number saw some position squaring as the market was clearly gearing itself for a very bad number. Ultimately price action still constructive for this CAD weaker trend, dipped to 1.0260 Friday afternoon and walk in this morning above 1.0300 with BoC this week and CA employment data. Buying a dip still makes perfect sense.
Scandies – EURSEK kicked into action on Friday thanks to the GDP data surprisingly better, we took out weak stops below 8.41 and saw fresh RM selling on break of 8.40 and saw us trade down to around 8.3620. We took back most of our short on this move but still categorically believe in SEK strength especially with the back drop of political acceptance of a strong kroner a rare anomaly in the G10 currency war landscape and as such remain core short and will resell back towards 8.40 and for now wouldn’t like to see it back above 8.43. NOKSEK on Friday also a focus, lots of stops and RM selling sub 1.1200 with EURNOK popping above 7.51 on the back of PMI coming out a measly 48.3. We did break and close below a few important levels in NOKSEK but seen a little squeeze this morning back to 1.1230 on the back of some EURNOK selling. Initially on Friday said I wouldn’t like to be fading EURNOK which doesn’t look so accurate now however my main conviction remains in SEK and I think EURNOK is a buy back to 7.42/43. EURSEK support: 8.35 8.31 8.20 resistance: 8.42 8.48 8.50. EURNOK support: 7.45 7.42 7.38 resistance: 7.54 7.60 7.65.
Barclays