Good morning,
FX markets now sit a little more nervously waiting for the Euro group and Eco fin ministers meeting tomorrow to discuss the fate of Greece and whether or not anyone will be helping them out of the mess they’re in. News from overnight focused mainly on China and comments regarding their reticence to revalue the Yuan. Nothing new in this and despite hints at overheating Chinese demand little (nothing) has been done this far about raising any the reserve requirements any further at this stage.
We walk in this morning to see that that EURUSD has tested resistance at the 1.3780 level and has since come back, but having said that still looks bid to me and as I wrote last week I am betting on a test of the 1.3840 level and in all likelihood a break and clean out to the upside from there. I suggest cautious longs on dips today looking for 1.3650 to hold and in all reality 1.3680 should keep the downside capped on what is going to be a quiet day given the lack of data releases only the Euro zone employment of any real note this morning.
The Cable has been offered all morning and continues to trade lower currently at lows of 1.5085. I look for 1.5050 to hold initially with more support to come in around the 1.5020 level. I don’t have an intraday view on this cross and truthfully now wait to see how it settles before the close of the European session today before I commit to any real direction. Naturally as I have been writing for quite some time I am a seller of the Cable and the 1.5200/5300 zone looks good now.
The USDJPY is still sideways and so far fails to do anything of substance above 91.00. All the same levels are still in play and after a sustained absence from the topside I look for more bid action to come in the coming days perhaps even getting as high as 91.80, at which point I start selling once again.
The AUDUSD reached higher overnight but was unable to sustain the momentum and slips back this morning, don’t be fooled though overall it’s still bid and will test 0.9250 in the coming days. I don’t play this cross as clearly I’m still sitting in my AUDNZD trade which is starting to look a little more legitimate this morning as the NZDUSD holds onto its recent gains. IMM positioning gives us a little bit of a clue as to the nature of what’s going on out there and lower down you’ll see how the week finished last week.
The USDCAD broke through a technically important 1.0200 level on Friday and this was the trigger for not only a mass of stop orders to get taken out but more importantly for model funds to start piling into fresh shorts on this move. I remain a buyer and feel that parity is just a word at the moment, rather than a reality.
On a personal note the countdown is well and truly on, I have another 2 days after today left in the office and then I am bound for the land of endless sun, or what I like to call home, Australia.
Best regards,
Ken Veksler.
IMM
EUR - Small increase in short positions (12%) and remains highly oversold.
JPY - Small decline in long positions (19%) and remains net position neutral.
GBP - Small decline in short positions (6%) and remains highly oversold.
CHF - Small decline in short positions (18%) and remains oversold.
CAD - Large increase in long positions (60%) and remains highly overbought.
AUD - Moderate increase in long positions (26%) and remains overbought.
NZD - Moderate decline in long positions (36%) and remains oversold.
MXN - Small increase in long positions (17%) and remains overbought.
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