FX G10/EM Morning Trader Views

EUR – Start of a busier week this week after the flush out of positioning wed/thurs killed momentum into end of friday. 1.2980/1.30 downside remains pivotal in the short term while rallies towards 1.3150/60 offer gd fade opportunities with a stop above 1.3210 (1.3208 wed spike high) – We have retail sales out in states later before CPI tomorrow and then Bernanke on wednesday. Still prefer a long usd bias against the eur selling 1.3120/50 with a stop at 1.3210.

GBPUSD – Holding a 1.5060 – 1.5225 range for the time being, as we await more information on both the UK and US outlooks. I am cautiously operating from the short side, but would like to see a NY close below 1.5009 sooner rather than later, to suggest the downside can begin to develop again. After the initial reduction of shorts, client interest has faded for now, though I do expect that interest to resurface in the middle of this week. Positions have been much reduced, but clients continue to look for opportunities to be short the Pound.

EURGBP – Remains well supported, within an .8575 – .8695 range. I am square here right now, but would willingly buy weakness below .8600, seeking to trade recent ranges. Client volumes remain low here, with the USD continuing to be the markets central focus. On balance, we have noted Real Money supply above .8600 and Spec buyers below .8620.

JPY – Stabilised around 99.00 handle after the flush out to 98.20 on wednesday. On dips we have seen Japanese investors buying while exporters have been happy to sell into 99.50/70 rallies. We are now coming into the Japaanese upper house elections this weekend so looking at things to get moving again in Japan once ABE’s party wins. This week Bernanke on wed should be key so support 98.70 then 98.20 as support while topside 99.50/70 then 100.30 resistance – On the day looking to play 98.80-99.50 range.

CHF – Usd chf trying to consolidate on this 0.94 handle after the flush out from 0.9750 last week. The RM demand stopped Thursday Friday but model supply was met with fresh spec/lev demand against 0.9430/50 area – While we stay above 0.9380 i looking for us to regain a hold back above 0.9530 and target 0.9650 again in shoprt term as w continue this choppy accent to parity into the end of the year. Eurchf backed off from the rally above 1.24 and looking at trendline support at 1.2350 initially – While we hold above here looking for 1.2450/70 again topside – If we slip below then room to 1.2270 again then that key 200 day at 1.2235

AUD & NZD – Squeezes in both against the USD as AUD/USD does a lot of work below on Friday taking out 0.9000 barriers and springs back, NZD/USD short end rates squeeze due to technical factors. Liquidity continues to deteriorate with algo type prices showing ghost interest. Today I stay patient and look to fade rallies in both pairs. 0.9150-60 in AUD/USD and 0.7880 in NZD/USD are my fade areas. Support in AUD/USD at 0.9000 again and NZD/USD 0.7760 and 0.7684. EUR/AUD broke multi-year highs to 1.4478 but looks a little stretched up there. Back below 1.4300 should signals further retracement.

CAD – Focus will be on the BoC rate decision on Wednesday (first from Poloz) and support levels pretty well defined now in USD/CAD having traded down a low of 1.0326 on Thursday and 1.0350-60 good region of support on Friday should be first level, now starting to gather some demand sub 1.0360. Whilst not expecting too much from the BoC on Wednesday, the risk remains that Poloz steps away from the tightening bias that was synonymous with the Carney era. To the topside, 1.0440-50 should be first level of strong resistance which capped the bounce on Thursday, and beyond there we are back to pre-Bernanke breakdown level at 1.05, where we have some small stops gathered 1.0505-1.0520. Ahead of Wednesday, am happy to try and trade what I expect to be a pretty tight range 1.0350-1.0450 but keep an eye out for US retail sales at 13:30LDN (cf. 0.8%mm).

Scandies – Very volatile within pretty defined ranges as RM names still looking to sell EUR/NOK on rallies against last week’s range highs 7.95-7.9550, but cautious about stops which are now back in place above 8.00. EUR/SEK range 8.65-8.75 also pretty well defined over last week and now entering a data-free period from Sweden so expect NOK to dominate the Scandie space. Have started to pick up some leverage offers in USD/NOK 6.10-6.12, but some short-term trendline resistance comes in ahead of that at 6.09 off last week’s highs up around 6.25. Trade balance data from Norway trade data out at 09:00LDN.



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