EURUSD
Topside: 1.3832, 1.3862, 1.3937
Downside: 1.3790/95, 1.3742, 1.3711
We remain bid here, holding onto most of recent gains but price action remains constructive overall despite the stutter above 1.3820. A load of U.S data this week, plus the FOMC on Wednesday may give us something new to trade on but my feeling is that Wednesday could be a non-event. Short term reaction around data points will be the theme, with traders looking for a reason to sell USD and continue the mini trend whilst above the 1.3711 break. Support 1.3790/95, 1.3742 and 1.3711. Resistance, 1.3832, 1.3862 and 1.3937. I remain long but with room to add on dips. Month end on Thursday and early indications from early model runs are for a USD sell signal. More on that later. UK CBI Reported Sales due at 11.00, consensus is for a 32 reading.
GBPUSD
Topside: 1.6220, 1.6381
Downside: 1.6138, 1.6115
Caught between the generally soft tone in the USD and the significant EURGBP buying that seems to have gone through the street, since the beginning of last week. I remain committed to longs via cash and options and do expect an eventual test of the years highs at 1.6381. The position is requiring patience however, and I would like to see a close above 1.6260 soon to increase conviction. Client flows were very light all of last week, but what we did see, was very balanced – HF supply vs. Real Money demand. Expect support at 1.6138 and 1.6115 with resistance at 1.6247 – 1.6260.
EURGBP
Topside: 0.8542, 0.8555
Downside: 0.8484, 0.8505
It strikes me that a very significant flow has gone through in the last week – we have not been a part of it, and it has made trading the Pound in the last five sessions quite challenging. We have noted a little Corporate demand on dips, and perhaps this is the overall theme in favour of the EUR right now? In any event, we have seen faster money clients use this opportunity to sell EURGBP above .8540, and I would personally prefer to be short rather than long at current levels. Buying interest will likely be found between .8484 and .8505, with selling into the .8542 and .8555.
USDJPY
Remains rather rangy, with 96.90 – 98.20 the likely short-term parameters. To my mind, the most noteworthy recent theme was the mass liquidation of JPY shorts on Wednesday. Into this JPY demand from Spec and HF clients, we noted longer-term real money clients buying AUDJPY and NZDJPY. It is this longer term flow that should enable X-JPY to regain some topside traction soon enough, and I added some short-term AUDJPY calls at the backend of last week. Against the USD meanwhile, I am happy to operate flexibly within the range, though I do have a preference for buying USDs towards the 97.00 mark. Our order book is rather neutral, with Spec stops on both sides of the noted range.
AUD/NZD
AUD
Topside: 0.9647, 0.9679, 0.9758
Downside: 0.9570/0.9550, 0.9539
AUD/USD holds well above support levels at 0.9570/0.9550 and 0.9539. Good quality buying from a number of accounts on the dip last week lead me to believe that further demand will be prevalent should we try and dip again. I think if we regain 0.9625 we could see another push higher this week. As the market calms and with USD/JPY finding its feet, I expect AUD/JPY to have another topside move, with carry going on the pads again. I’m looking for a fresh test of 95.69 recent high. For straight AUD/USD resistance kicks in at 0.9647, 0.9679 and 0.9758. NZD/USD remains subdued as demand for AUD/NZD hots up. We should regain 1.1600 as AUD demand runs the show. NZD/USD support 0.8268/0.8213 with resistance 0.8342/57 and 0.8448.
CAD
Topside: 1.0461, 1.0472
Downside: 1.0426, 1.0400
USD/CAD remains bid despite a round of profit taking on Friday. 1.0426 and 1.0400 now support, looking for a test of Fridays 1.0461 high. Good daily trend tech resistance kicks in at 1.0472 though but crack that on a close and we target the years highs above 1.06. More USD neutral trades have been in demand such as EUR/CAD, GBP/CAD and AUD/CAD and I expect traders to flip into these leading into USD sensitive events. Still play CAD from the short side but take your pick of ccy’s to own.
Skandies
A patch of SEK strength has emerged after the non events of the twin cb’s last week. EUR/NOK remains within range, (all be it wide) but EUR/SEK pushing to the downside and trading sub 8.7335 support. Next support there around 8.7000. NOKSEK shorts back in the game now as we test 1.0720 support but it feels as though there is real demand at the level. Break it and that test of 1.0600 at the start of the month could be revisited. More as I see it.
Barclays