EUR – German IP at 11:00. After last week’s brutal 3 big-fig rally, the dust should start to settle. Cross yen moves, weak US data and market position have been the drivers but I would expect fresh EUR shorts, focusing on Europe, to start being put on this week. 1.3050 will be the immediate risk level on the topside and indeed some stops are starting to appear. Above there, the major level isn’t until 1.3140. Below, we need to get back sub 1.2950 to start the ball rolling and then 1.2900, (where we failed to slip lower on Friday). The 200 dma is at 1.2897 today. 1.2740-50 is now set up as big tech support. Overall, I’ll look for a reason/signal to get short again but expect a fairly quiet start to the week, with FED minutes a focus on Wednesday.
GBPUSD – Broke through the upper end of the recent range on Friday (1.5280), in large part due to significant GBPJPY demand. In my view, short-term risks will be on the topside, and a deeper retracement to 1.5425 seems very possible (1.5424 marks the 38.2pcnt fib retracement of the 2013 losses). I am holding a modest long position and will willingly add between 1.5280 and 1.5300. Any drift back below 1.5250 will encourage me to cut this short-term position. 1.5504 will form some other resistance, with buying interest likely on dips towards Fridays 1.5200 lows. Real Money clients have been active on both sides in recent sessions, with Spec accounts having been net buyers.
EURGBP – Remains very rangebound. Persistent Corporate demand sub .8450 remains a theme, but for now, selling interest is being found between .8515 and .8525. My general preference is to buy weakness sub .8450, and I do expect this series of lows sub .8500 to ultimately prove a medium term bottom. For now though, clearer opportunities remain elsewhere, I so I will look to trade recent ranges only.
JPY – no interest in fighting the momentum here, seasonals and fundamentals have combined powerfully and we are now sitting not too far off the psych 100 level. Japanese equities put in another strong performance; there was a noted divergence between sectors though with the reflation names unsurprisingly in high demand. We have seen only demand this AM from the moment London came in, good offers remain in the books all the way up to 99 figure. Above here though is dominated by barrier related interests. EURJPY has taken out resistance thru 127.60/70, we saw some good s/l buying on the break. I would not advocate initiating fresh longs here, instead I would prefer to wait for a dip back toward 97.80. My only concern is it appears everyone is waiting for this dip, so will see how it all pans out.
AUD/CAD/NZD – Holy smokes that was some poor employment data, the Canadian number was particularly bad (-54.5k) erasing all of the gains of last month and sending funds from 1.0150 (it was certainly leaked) to 1.0235. We saw fast moneys buying immediately after the number but then plentiful model supply above 1.02 which capped us. Should be more than enough interest to buy back towards 1.0140/30 which seems like an ok game plan for now, however given the severity of that print I am surprised USDCAD didn’t finish the week higher. The US continuation of QE versus continued Canada deterioration muddies the waters somewhat. Commodity ccys actually saw USD strength on Friday and this felt more of a consequence of EURxxx buying more than anything else. We had buyers of EURAUD between 1.2430 and 1.2490, this despite some decent corp demand for AUDUSD below 1.0400 kept straight AUDUSD below the 200 dma around 1.0390 which is where we remain this morning. Short AUDUSD isn’t a hard trade to sell but exact reasons for weakness on Friday beyond cross flow a little hard to pin down, probably means it rallies today and feel more comfortable fading extremities in AUDUSD which means buying it around 1.0350, more stops lurk in EURAUD above 1.2550 but with the Portugal news this weekend could see a small revision in some of the gains made by EURCAD and EURAUD on Friday.
Scandies – A little bit topsy turvey in Scandies at the moment, EURSEK went from 8.44 to 8.38 prior to payrolls, back up to 8.43 after the print in line with EURUSD higher but then RM selling of USDSEK from 6.48 to 6.44 was the main catalyst sending EURSEK back to 8.38 again. Overall price action I feel is constructive for those wanting to sell rallies and still bullish SEK, including myself. Stops will be placed above 8.46 which makes sense, hourly support around 8.36/35 should be ok initial support happy to sell back towards 8.40/41 on the day. EURNOK not really at the races but there is IP data this morning at 9:00, still good support around 7.41/40 which I think you can lean against first off. NOKSEK struggling to overcome 1.1300 for now and should be some break trading stops placed around 1.1200/1.1190. EURSEK support: 8.35 8.30 8.28 resistance: 8.46 8.50 8.55. EURNOK support: 7.42 7.40 7.34 resistance: 7.50 7.56 7.60.
Barclays