EUR – The day we have all been waiting for has arrived ‘ECB’ – all our stops taken out or disappeared from book as they went to mkt after the extension above 1.32 to 1.3243 new high. With positioning reduced we have seen a post fomc flurry of selling again on way down in Asia from spec, lev and models in eur and eur x’s – on the announcement with a refi cut priced in I think we see a quick 50 pip dip towards 1.3080/1.3110 zone before we bounce, this is backed up by only bids on the orderbook – Then we await more dovish tones from draghi in the press conf as well as possibility of some sme program. No cut I expect a rally first of 100 pips before mkt decides whether this is even worse outcome for the eur. 1.3250 then 1.3310 lvls to watch topside 1.3110 then 1.3080 lvls downside.
GBPUSD – Peaked at 1.5606 on Wednesday (50pcnt Fib retrace of the Q1 downmove), my sense is the risks are now shifting to the downside. I have only a very modest short for the time being however, having been badly burnt during the recent strength between 1.5425 and 1.5606. Though we have been better buyers since the GDP report last week, in the last 24hrs we have seen sellers re-emerge, from both the Corporate and Real Money communities. Initially, any loss back towards 1.5467 is likely to be bought, though only a close above 1.5606 suggests another significant leg higher in my view.
EURGBP – Failed at the .8490-95 band that proved pivotal last Thursday. On that basis, the short-term .8398 – .8495 range has been reaffirmed, and those levels will be the reaction levels for the key events between now and the end of the week. I am square right now, though for choice, I feel the risks lie on the topside. Any close above .8495 would encourage a move back into the former .8495 – .8637 range. Flows neutral thus far this week, though Corporate supply has been the broader theme in the last week or so.
JPY – 97 figure carving itself out as the level to watch below, we see bids below but nothing which justifies it holding up this well. Given the stubbornness, it remains difficult to sell it here and instead I would prefer to be long against 96.80. That said, for the most part it is doing a whole lot of nothing as we whip about in a 60 pip range and seems to be doing a good job of chopping people about. Topside we see offers kick in at 97.60, stops on a break of 98 figure. Some stops appearing in EURJPY on a break of 129 figure, I imagine this won’t be in focus until ECB however. Jobless Claims and Trade data to watch out of the US at 1.30PM.
AUD & NZD – AUD/USD takes another leg lower overnight, suffering from a big miss on Oz building approvals data and then from a weaker HSBC PMI. I get daily trend support around 1.0230 (from 2012 lows) and we’ve already traded a low of 1.0224 and had a mini bounce. Below there though, 1.0200 and 1.0150 are both good levels of support. Topside sell zones are 1.0256 and 1.0290. Yesterdays move surprised me a little in scale, despite the weaker commodities complex and slightly weaker stocks. There felt like there was a slightly risk off tone in the air, possibly the result of Frank-Dodd shenanigans. I currently run small long of Aud but will look to chop sub 1.0200. Although I see the reasons for the weakness in Aud, we rarely continue in a straight line lower, such are the headwinds from corp/AAA flows. NZD/USD struggled at 0.8480 o/n and it appeared a bid was being worked there. We’ve had a brief look through it but bounced straight back. Clearly some demand around though and this keep AUD/NZD back-footed. I still like playing short cross and will fade into 1.2100 and 1.2140.
CAD – CAD is lagging the commodities sell-off we saw yesterday afternoon in AUD and NZD, supported by a very slightly expansive 50.1 manufacturing PMI print and a persistent level of resistance 1.0085-1.01, which marked the tech levels we broke down through into the month-end benchmark on Tuesday. Without the bounce in USD/CAD, AUD/CAD has traded in line with AUD/USD helped lower by a weak building approvals print out of Australia (-5.5% for March), and through 1.0275-1.03 I will be looking to get long this cross risking the Feb lows at 1.0241. Yesterday we saw the first signs of profit taking in EUR/CAD through 1.3325 but with the USD buy back o/n after the FOMC once again feels like we can test support at 1.32. Core position remains long USD/CAD, but where possible looking for some enrichment from xxx/CAD, looking to test resistance at 1.0150 (area of consolidation at first half of April) and 1.02-1.0230 where we have corp. offers. In terms of support; 1.0030, parity and then 0.9989 (200 dma).
Scandies – Norway Credit indicator growth at 9:00. Weak Swedish PMI just printed at 49.6 vs 51.2 cons and EUR/SEK quickly trades from 8.5375 to 8.5749, (I think the 8.5800 print was a credit issue or mis-hit). This puts us back above 8.5450 again, seemingly a short term pivot level and sets us into 8.5450-8.5800/8.6000 range. We’ll see how the market digests the number this morning but its tricky to make a call with liquidity issues over the last day and a half distorting price action. EUR/NOK had a brief test of 8.5770 yesterday but has since bounced out of that support zone. Range top should be confined to 7.63-7.65 zone.
Barclays