EUR – Well what a difference a day makes – Eur x demand turned into eurusd demand post a dovish Bernanke speech but we capped well against range highs at 1.30 as RM/lev names came to market selling 1.2980-50 area which completely flipped mkt positioning/sentiment – so far we remain heavy due to eur x unwind o/n, with the Nikkei off 7% and eurjpy off 300 pips but we remain supported for now against 1.2800/20 area – euro pmis today will dictate further eur movement with weak data likely to see the mkt price in further refi cut and chances of depo cut as well later in the year. Support 1.2790 then key 1.2740 – Topside 1.2890 then 1.2930 resistance – will remain flexible until eur pmi’s for now.
GBPUSD – Consolidating losses from recent sessions, and is being helped by the rejection of .8590 in EURGBP. I remain short GBPUSD, and I am positioned for a continued grind lower via options. I am not inclined to add at current levels however, and do expect those long of gamma, to slow any immediate downside progress. 1.5158 was the spike high after the initial statement from Chairman Bernanke yesterday, so that region will offer very good resistance now. To the downside, the next material support is 1.4912 (14.3 low), though some congestion is likely around the 1.50 mark.
EURGBP – Failed at .8590 yesterday, a previous high from 22.4. In my view, that now marks the near-term range at .8500 – .8590, though risks around that range are to the topside. I have a long position, though I am proactively trading around that within the range. From here, I suggest buying weakness below .8520, and I would use any topside surprise in the Prelim Q1 GDP to do this. A close back below .8500 would see a relapse into the previous range from late April to the middle of this week. Meanwhile, those of a bullish mindset can look at .8637 as a further topside target.
JPY – Yesterdays highs at 103.74 seem already a long way off as a global profit take on the recent 50% rally in the Nikkei sees usdjpy aggressively sold off from a high of 103.57 in tk to 101.43 early ldn – a combination of stops below 102.10/101.80 lvl combined with lev and spec selling helping see us move down. Right now we have seen a quick 80 pip bounce – i expect 102.10/30 to be toppy again wrong above 102.55 and below 101.45 think room for a further flush towards 100.30/50.
CHF – Eurchf did everything right yesterday as SNB’s Jordan just reaffirmed that all options to weaken the chf remain open. It traded up through the old highs at 1.2570 and continued all the way upto 1.2650, however since then its suffered from the weaker eur x’s and has flushed out to 1.2607. Right now further stops 1.2490-50 on books before we settle – in usdchf we did everything right yesterday on the break above 0.9760 but have failed to sustain the rally o/n – support is here at 0.9720/00 region then 0.9650 – there are stops on the books and with the flush on usdjpy i think danger for usdchf to clear short term stops towards 0.9670 region before we settle again. topside need a move back above 0.9810 again to reduce downside pressure and resume the uptrend
AUD & NZD – AUD hit hard o/n as ‘risk off’ now takes over following the big drop in the Nikkei. AUD/JPY the biggest casualty, dropping 2.5 big figs to 97.50. AUD/USD itself was already under pressure as initial comments from Bernanke seemed USD negative, getting short term traders long before further comments reversed sentiment. Weaker China data compounded the issue. So what now? Well seems that everything is against the AUD now, the next biggest driver could be an exit by Japanese retail of AUD/JPY. Keep an eye on this. Levels in AUD/USD below are 0.9582, 2012 low, 0.9537, Q4 2010 low and then the huge 0.9400, the 2009/2010 double top break out. Order wise I only have AUD/XXX system type stops below. NZD/USD following the general move but lags slightly as AUD/NZD slowly rolls below the 1.20 handle. 0.7975 is a big level to watch for further loses. Liquidity is noted to be poor already and the market is jumpy. Long tailed cat in a room full of rocking chairs.
CAD – Cleared stops through 1.0350 in style to make a new high on the year of 1.0393, despite continued supply from corp. and range names. Continuing on the volume theme, CAD posted its 2nd highest volume day of the year on VolT, reconfirming interest to sustain the trend. Despite USD profit taking across G10, USDCAD holds up well and we have picked up RM demand 1.0320-40. Beyond 1.0393, next resistance will be 1.04 and 1.0437/43 which were 2012 highs. Downside 1.0350 should be good support, but there are some short term stops through that level, though ultimately 1.0320 where we run into RM demand should be good level. Have now cleared most stops in EUR/CAD through 1.33 and will keep eye on German PMI coming up at 08:28LDN following pretty much on consensus French numbers earlier on.
Scandies – A little out of focus in G10 space but some USD/scandie buying lifts eur/sek and eur/nok from the lows. 8.55 supports in EUR/SEK whilst EUR/NOK is looking like a false break below 7.4800 recent range lows. USD/SEK looks a buy into 6.60 now, with targets up at 6.75-6.80. The NOK itself is probably a buy on dips with the Norges bank on hold and fundamentals looking solid compared to a lot of G10 currencies. 7.5300-7.5500 looks like a level to fade should that pair get a tow up from USD/NOK buying.
Barclays