EUR – Still dancing around in the range – yesterdays fail at 1.2950 area topside, with supply from rm/spec accounts – pre-empted the sell off post US consumer confidence data, With the usd rallying hard not much to stop the slip lower mid range, especially once we broke 1.2880/1.2900 support area. Since then overnight the selling extended to a low of 1.2838 in asia. This 1.2840-00 area has contained resting corp demand and again this time around seems no different. In no hurry to be short again at these lvls rather looking to fade back to 1.2900. Ultimately until we crack 1.2790 and the key 1.2740 area downside we still in the range.
GBP – Made a marginal new recent low overnight, and is now consolidating a little. I retain a core short position, but I am not inclined to add around current levels, even with US yields having achieved a material break. I will now lower my preferred sell zone to 1.5100 – 30, from 1.5150 – 80, and I do not expect a close back above 1.5210 (pre CPI level) in the short-term. Leveraged supply was noted in both the NY afternoon and in Asia, and I expect this pattern to continue on rallies. Next support, 1.5008 (Asian low), and then 1.4912 (14.3 low).
EURGBP – Consolidating last week’s gains, but does maintain a firm tone overall. I remain long here, and will add on any retracement into the .8500—20 band, expecting the upper end of the previous range (.8500-16) to contain weakness. I have noted a little profit taking form Spec accounts in the last 24h, but in the main, focus lies in the USD crosses. Last week’s .8597 highs will form good resistance for now, with any breach of that area, likely to see a test of the April highs at .8637.
JPY – Asia led the usd move higher yesterday through usdjpy, opening in ldn at 101.90 and it was the first usd to top yesterday in ny as we ran into exporter selling in the 102.40-50 region and short term range highs at 102.60 (thursday highs in asia) – Right now downside looks a little vunerable still but i only expect 101.60/80 area to be seen on dips. I think you buy there as short term stops get taken out and look for a retest and eventual break of 102.60 to lead us back to new highs. BOJ meeting with JGB mkt participants from 8am ldn so we see if any press releases post that time.
CHF – Big move up in usdchf/eurchf yesterday after we cleaned longs out last week between 0.9840-0.9580. With us seemingly forming a base now around that 0.9600/0.9580 region i look for a fresh attempt and eventual break 0.9840 zone targetting parity – For now hoever 0.9780/0.9800 remains some decent resistance with lev profitaking so far on previous rallies. Eurchf trades firm with usdchf but again stalling at the old highs at 1.2570. For now until seems to be in this 1.2400/1.2650 range and until we are ready to make that next leg by closing above 1.2650 we need to respect these topside lvls.
AUD & NZD – The USD is again the focus, with more good data leading to a sell off in US F.I and 10 year yields spiking higher. AUD/USD has slipped through the previous year’s low triggering stop and break sellers. 0.9406 is the big level to watch should the move continue. Fresh shorts though will no doubt have stops above 0.9600. Flows overnight were heavily skewed to buying, with more medium term accounts fading the move but price action is still very weak in the pair. AUD/NZD also hit hard after closing below 1.1930 and now breaking down through 1.1850 as NZD/USD stubbornly holds onto a 0.8 handle. With price action so weak, 0.9580-0.9600 will have sellers waiting again, whilst supply in the cross will surface into 1.1900. WE have Oz building approvals data tomorrow morning after building permits data out of NZ tonight. Looks like we stick with the theme and hold onto USD’s.
CAD – USD/CAD keeping up with US FI developments overnight with continued demand for USDs from RM and macro accounts. As expected there was some light profit taking on the break of previous highs at 1.0393 and then 1.04 but we hold in well above that level ahead of Carney’s last BoC meeting at 13:30LDN (08:30NYK). Next resistance in USD/CAD will be the o/n highs at 1.0421 then 1.0437/43 (2012 highs) and see some stops building above 1.0450 for longer term CAD bulls who will now be questioning positioning. I don’t see much room for surprise actions from the meeting but continuing weak domestic data and soft inflation prints will doubtlessly be a point of concern for the Bank. The most obvious development seems to be a continuation of language from Carney that GDP growth will “rotate” to be driven by exports and business investment…perhaps apt considering incoming Governor Poloz was the former head of Export Development Canada. Q1 GDP on Friday likely to be the bigger data event following the US print tomorrow. AUD/CAD now back testing support 0.99/0.9950 , now long this cross with a stop below 0.99.
Scandies – Swedish GDP at 8:30 is a major focus for the Krona, with inflation data favouring a rate cut a weak print in this mornings data could see the market buy EUR/SEK hard as more is priced into the next meeting. USD/SEK buying also going through as players picked the SEK as another currency to exchange for USD’s. 8.6500 is the topside level in EUR/SEK with support 8.5800-8.6000. EUR/NOK testing topside resistance through 7.5800, with the market fading this move. Stops will no doubt be starting to build above 7.6200. NOK/SEK positioning a little cleaner as stops pinged sub 1.1360. Support now at 1.1340, resistance 1.1460.
Barclays