EUR – Stays supported above 1.3070 in Asia although still struggling to gain much traction on spikes above 1.3110 for the time being – Month end today before European holiday and FOMC tomorrow – Orderbook wiped clean of stops again until above 1.3155 – while few stops appearing now 1.3065-40 downside – While we stay above 1.3070 think we still target a run at 1.3150 however a break below there and we move back into the middle of the recent range targeting a move back to 1.3030 and 1.2990.
GBPUSD – Consolidating the gains from the second half of last week. Close to the 1.55 mark, Real Money buying vs. Corporate supply has been the general theme, and I expect further consolidation ahead of the UK PMI releases (Wed, Thurs, Fri). Early flows this morning, have been to sell GBP, and any close below 1.5476 will encourage more of the same. 1.5424 will offer some very good support, with the high for the rally (1.5546) the next resistance of note.
EURGBP – Has drifted back into the previous range, having failed to break to the downside sub .8400 on Friday. I have squared my EURGBP short position, but for choice, would look to sell ahead of the .8490 breakdown level (from Thursday). Leveraged selling has been the early theme this morning, albeit in modest size. .8398 now forms the lower end of the range, with very good resistance likely between .8490 and .8510.
JPY – Couple of failed attempts at breaking resistance at 98.20/30 has led us back lower o/n in thin relatively quiet mkts. Support is again this 97.30 before 96.75 below – topside 98.30 then 98.70 the lvls to watch – Possibilities of some month end JPY supply – US data key this week for usdjpy so trying to remain flexible on spot, while still long through upside options – I think dips to 97.00 still offer value to be long in short term.
AUD & NZD – Both AUD and NZD trade with a bid tone as the tide of corp, AAA and yield hunter flows continue to underpin. For AUD/USD 1.0350 resistance has broken and we eye up further gains with 1.0395-00 the next target, (where both 100 and 200 dma’s converge). NZD/USD feels like its revving up for a look at the years highs at 0.8676 but has some short term work to do to break resistance at 0.8576 and 0.8600. Support now at 0.8534. Tonight we have Manufacturing PMI out of China, which seems to have more of an impact nowadays than most domestic data. No doubt, an away from consensus print will see a re-price, especially in the AUD. Risks are skewed slightly to the upside. For the cross 1.2140 and 1.2222 are both good levels to sell and we still look set for further losses.
CAD – CAD much a beneficiary of strong oil performance yesterday as the pair continues to chop through good corp. demand back down towards the April lows at 1.0084. For now I’m happy to sit long risking that level until CAD GDP this afternoon (+0.2% mm consensus). Unless the GDP print is very strong I think we struggle to make new lows beyond 1.0084 and instead will target a move back towards 1.0230 where we have a mixture of RM and corp. offers. EUR/CAD is testing support once again at 1.32/1.3230 but for now I think this level should hold firm with EUR/USD well supported against 1.3070 overnight in Asia and more support down to 1.3030.
Scandies – Norway unemployment and retail sales data at 9:00, zip from Sweden. The main theme from the wonderful world of Scandinavian currencies is poor liquidity and with Sweden going home early ahead of tomorrow’s holiday, things are set to get worse still. Yesterday Riksbank minutes were as expected by the market but the boards concern over household debt may have dampened expectations of an imminent rate cut. This overshadowed poor retail sales data. We tested 8.5450 support again but then Real money buyers and U.S names buying into the fix saw us trade a couple of figures higher very quickly. Range now 8.5450-8.6500 on the wide, with lots of chop in between. EUR/NOK remains on the soft side though despite the SEK selling. 7.5780 support, with 7.67-7.70 resistance.
Barclays