EUR – Good month-end supply of EUR/USD was the catalyst to clear stops through 1.32 but so far we have seen better buying of EUR/USD in Asia and on the London open 1.3210-30 from RM names, with bids lined up 1.3140-80 below for mixture of corp and lev names. 1.3290-1.33 remains the level to clear topside which we failed to do towards the end of last week. Positioning now a lot clearer and think we can have a re-test of 1.3280 but with the US don’t see any momentum beyond there. Will look to sell any rally 1.3250-70 risking 1.33.
GBPUSD – Remains underpinned by the notion of very significant Corporate demand ahead, with the improvement in risk appetite having added a further tailwind. I am square here for the time being, but prefer to buy weakness into the 1.5500-28 band. Attempting to position for forecasted FX flows is always a challenge, however what is clear to me, is that it is increasingly hard to make a compelling case for GBP shorts. To the topside, last Tuesdays high at 1.5592 offers the next point of resistance, with 1.5612 and then 1.5638 notable resistance thereafter. Client flows have been light since the back-end of last week, though some Leveraged demand has been noted.
EURGBP – Attempting to break the lower end of recent ranges. My gut feeling is that an upward correction may be the initial move this week, but a lot of willing sellers should be waiting in the wings, .8530-50. I am square, but intend to enter into shorts if that sell-zone is met, expecting a challenge of the series of June lows between .8465-75. We have been better buyers of EURGBP in the recent past on behalf of Corporate clients, and I expect further losses to come in a grinding fashion on that basis.
JPY – Breaching the August highs at 99.15, no doubt there has been significant short-covering on the break of this area. We have only seen sellers here however, with Leveraged and Corporate clients having layered offers between 98.70 and 99.25. The improvement in risk appetite, together with the brighter technical picture seem to have been the drivers this morning, and should price action be sustained above 99.15, a challenge of 99.95 would then be the next target. Expect intraday support now on any weakness into the 98.70 – 99.00.
CHF – Month-end USD demand did materialise on Friday all be it within a pretty tight 0.9290-0.9350 range which has encapsulated trading in the last 72 hours. Stops are in place through that topside level and for now I can’t see too much extension beyond the August highs at 0.9397 while we still wait to here on US actions over Syria. SNB’s Jordan re-iterated his commitment to the floor this morning which will continue to help support EUR/CHF along with the 200dma now at 1.2280. There are some lev. stops building sub 0.9250 and think this would be a good dip to buy into 0.9250-0.92 with a stop below 0.9160.
AUD & NZD – Good session for AUD/USD overnight with strong building approvals data and Chinese data to match with sustained spec demand since the higher open at 0.8953. As London walked in there was some more profit-taking in NZD/USD sub-0.78 (following that seen Thurs/Fri 0.7750-90), as NZD/xxx stops also went through market. 0.90 and 0.7840 now remain the levels of resistance and in particular there are stops building in AUD/USD through that level for RM names. AUD/NZD remains well supported against the 1.1430-60 band of support, and with a busy data week in Australia I think we should test weak stops above 1.1560/70 in the first half of the week.
CAD – Not much to report as USD/CAD remains well behaved in its 1.0470-1.0560 range. BoC rate decision coming up later in the week but there seems little scope for surprise or change. At most there is some expectation for the downward revision of growth forecasts but this is likely to come in the form of a warning shot on Wednesday with actual revision more likely next month. Stops remain in place below 1.0470 while targets to the topside remain July’s high at 1.0608.
Scandies – Strong Norwegian PMI to start the week off at 53.0 vs. cf. 49.5 and reaction in EUR/NOK typically volatile but the pair continues to find support ahead of 8.00 (low 8.0148). Quite a few lev stops building below that level but think we should sit in a 8.01-8.07 range for today. Swedish PMI not as exciting 52.2 vs. cf. 52.4 but EUR/SEK remains stuck against the top of the recent 8.65-8.75 range. Early week I will continue to buy EUR/NOK on dips with a stop through 8.00 looking to re-test 8.07 first-off.
Barclays