EUR – The price action yesterday was death by a thousand cuts, with low volume and a slow stuttering squeeze. We ran out of steam rather than ran into supply at around 1.3100 and I sense buyers were reluctantly cutting shorts. The main event once we get past the European production data this morning will be the FED minutes tonight and I expect a lot of the days flow to be positioning around that event. Topside levels 1.3107, 1.3134 and 1.3140. Support 1.3068, 1.3050 and 1.3000. Order wise, I’m starting to pick up some stops a little lower but have supply, all be it not huge, all the way up.
GBPUSD – Continues to gyrate around the 1.53 mark without any real direction. I am currently square awaiting a clearer picture, and note that client flows around this area are very much two-way. In the short-term, I would expect buying interest to be layered ahead of yesterdays 1.5249 low, followed by other support at 1.5200 (low last Fri). Meanwhile, selling interest will be found around Friday’s high of 1.5363, with 1.5424 forming a major corrective target (38.2pcnt retrace of the 2013 losses).
EURGBP – Making slow progress to the topside. Focus is elsewhere really, though the resilience of this cross in recent weeks is very impressive. I am square for now, but would advocate buying weakness into the .8470 – .8490 band if seen, in order to take advantage of rather rangy conditions. Corporate buying interest should remain anywhere close to .8450, whilst a close above .8575 would suggest to me some sharper gains may develop. Client flows on the light side thus far this week, though some Real Money supply has been noted.
JPY – has settled around this 99 figure level, perhaps it is option related or simply taking a breather following the aggressive move higher. I chopped myself to pieces yesterday trading spot, despite the ‘small range’ it was still whipping about 60-70 ticks on no news flow and thin liquidity. Book still harbours a similar skew to yesterday, bids immediately below with stops kicking in 98.50 and below. Topside offers from 99.50 and above. EURJPY pain still above 130.00, with European IP data out today coupled with FOMC minutes this cross will remain topical for now. Still prefer to buy on dips, ideally a s/l run through 98.50 will present a dip down toward 98.20/00 region which I think is the first broader level we should be buying.
AUD/CAD/NZD – AUDUSD continued to gain yesterday but this time the catalyst a little clearer, John Edwards on the wires saying the high A$ doesn’t require a policy response and that the economy is coping with it better than expected kicked things off and then leverage chaps came out to play. We triggers stops on the break of 1.0450 and also saw fresh RM and leverage buying, we also saw some spec guys selling EURAUD around 1.2460/50. We have finally cleared 1.05 barrier and offer interest overnight but not exactly exploded, orderbook skew now interesting stops up to 1.0550 but then offers above up to 1.06, clearly after yesterdays sentiment people happy to be long AUD but more about the green back this evening with the FOMC minutes, going with AUDUSD momentum not always been the best method so happy to be selling around 1.0550 for now but Bernanke and co sticking to QE could change that. NZDUSD still making gains having broken through 0.8500 yesterday sitting around yearly highs at 0.8530 as we sit down, really no strong view here wiser people than me have been fading this for a while to no avail, tough to get bullish up here but given some of the names buying the bird also difficult to take the other side, technically above 0.8600 looks off to the races, a hawkish Bernanke might be able to stem the tide. Still long funds but going nowhere fast, we saw model and RM demand yesterday which was absorbed well at the time. Stops will lurk below 1.0100 but for now 1.0230 high from Friday seems on the horizon.
Scandies – EURSEK still trading pretty soft despite the insatiable demand for EURUSD at the moment, should be good support around 8.34/35 and think its worth buying it against here for a more short term trade within backdrop of medium term SEK bullishness. IP data this morning mixed worse MoM 0.5% but the YoY figure not too bad, for now feels like we get better levels to sell EURscandies given the price action in EURUSD. NOK CPI this morning as well which given some of the worse data I think people will be gearing themselves for disappointment, I am long EURNOK and will assess either below 7.40 or square up above 7.55. EURSEK support: 8.35 8.30 8.28 resistance: 8.42 8.46 8.50. EURNOK support: 7.42 7.40 7.34 resistance: 7.50 7.56 7.60.
Barclays