EUR – Remains the most resistant to USD strength for the time being as we see from rally in eur x’s. Supported from RM and corp names at 1.2840/55 area yest we had the squeeze to clean out most of the orderbook post Bullard and Dudley – First to 1.2932 and then to 1.2940 in Asia. These moves have pretty much cleaned the orderbook of stops and we are left with selling 1.2965-1.300. With Bernanke speaking at 3pm today I expect a relatively tight range 1.2880 should be supported while 1.2940/60 should cap us topside. For now i think we in the wider 1.28/1.30 range and will fade accordingly.
GBPUSD – Developing into a lower range, and risks are firmly on the downside in my view. I am holding a short position, and I intend to add, should the Minutes of the May meeting increase confidence. Alternatively, I would suggest selling interest will emerge on any correction into the 1.5200-20 initially, regardless of the tone of today’s UK information. Selling a rally, with a stop above 1.5285 makes sense to me, whilst any close below yesterdays 1.5113 would add to the bear case further. Volumes were much higher on Tuesday relative to the recent average, with Hedge Fund, Corporate and Real Money clients all selling.
EURGBP – Achieved a NY close above the upper end of recent ranges. To my mind, we have now had confirmation of a topside break, which will add further pressure to the Pound more broadly. EURGBP has been rangebound since the last week of April, and signs that this cross is coming alive are now there. I am holding longs and will add to the position further if this morning’s UK information permits. Some resistance will be found on the approach to .8590 (22.4 high), with .8637 (17.4) forming a further target. On Tuesday we were better buyers of EURGBP on behalf of Leveraged and Spec accounts and I expect interest to increase further now .8500 has been breached.
JPY – So the BOJ comes and goes and the range slowly contracting 102.35-102.75 now. Definitely feel we are in a holding pattern to Bernanke with the mkt sitting long but looking to add rather than cut if given the excuse. 102.90 then 103.30 first lvls topside a break there and i think we see further momentum towards our ultimate 105 target. Downside 101.80/102 remains key support zone and stops are building below that lvl.
CHF – While usdchf jumps up and down in this 96.50/97.50 range eurchf continues to grind towards those old highs at 1.2569. Asia high o/n 1.2543 – seeing some profit taking first thing this morning early LDN however expect it to be supported at 1.2480/1.25 for now on dips – Topside a break at 1.2569 and clean move through 1.26 i think signals the next squeeze topside as models start to chase. In usdchf 0.9650 has held well then 0.9580 below that while we run into gd profit taking at 0.9740/60 from lev guys on the last 3 pops higher. Prefer to play from long side and will take a stop below 0.9580 now in the short term targeting 0.9800/30 first.
AUD & NZD – AUD/USD has set up a defined trading range now 0.9751-0.9850, with a load of chop in between. I suspect it will be down to Bernanke to crack that range. NZD/USD stopped shy of its Q4 2012 low at 0.8053 and struggles into tech resistance at 0.8220. The bird is even looser than it big brother but still hangs onto his coat tails. 1.20 in the cross is a tough big figure to shake off. Today, watch commodities, the major USD pairs, equities and yields and wait for the FED. Simple.
CAD – Made a new high on the month at 1.0321, once again on good volume (VolT: top 25 volume day for the past year in CAD, and above the 1-month average) suggesting there is still good appetite for the trend continuation of USD/CAD higher, but corp. offers and profit taking continue to dominate on any rally above 1.03. Next resistance to the topside is now 1.0337/1.0343 which are the highs for the year but I think we see pretty tight ranges until Bernanke speaks. Canadian March retail sales at 13:30LDN the only possible spanner in the works but low forecasts suggest to me little chance of surprise. Downside support in USD/CAD comes in around 1.0257, which also coincides with some short-term trendline support, but series of higher lows (Fri-Tues: 1.0217, 1.0237,1.0257) suggests the 1.0220-1.0250 region should provide good support on the day while 1.0150 remains the key level to the downside. EUR/CAD stops are building around 1.33 after we saw good interest to sell the cross 1.32-1.3250 from macro and real money names, but don’t see a huge amount of impetus here whilst the USD story remains in vogue in the run-up to Bernanke’s testimony.
Scandies – The main driver over the last 24 hours in Scandiland was the comment by Olsen that there was no reason to consider an alternative rate path. This caught the market at the lows in NOK/SEK and just shy of stops at 1.1350-70. It also saw EUR/NOK push through range lows and crack 7.4800-7.5000 support. EUR/SEK turned heavy later in the day taking out stops sub 8.5500. So now, EUR/SEK has previous range lows in sight and support 8.5100-8.5270 with stops again likely to build sub 8.5000. Resistance 8.5850-8.6000. EUR/NOK has room to creep lower again with 7.4400 next support but we need to stay sub previous support in the 7.4850-7.5000 zone. NOK/SEK still the main play, with longs saved by Olsen. 1.1450-60 saw sellers on the last visit and expect the same theme should we revisit those levels. Norges bank deputy governor is giving a speech in Stavanger as I type this, keep an eye on the wires.
Barclays