Global Markets: 

  • Japan (JPY) Adjusted Current Account: -0.78T, Expected: -0.54T, Previous: -0.04T
  • Australia NAB Business Confidence: 6, Previous: 4
  • Australia NAB Business Conditions: 0, Previous: 1
  • Asian equity markets are mixed this morning
  • As of 04:00 GMT, the Nikkei is down 0.20 %, while Australia’s ASX lost 0.40 %
  • The Shanghai Composite and Hang Seng both gained 2 % on the day
  • Gold at $1289 (+0.10 %), Silver at $19.20 (+0.40 %), Crude Oil at 100.12$ (+0.10%)
  • US 10 year yield stands at 2.636 

FX Flows/Orders: 

  • AUD – 0.94 has held again and there are still rumors about a barrier option resting there. There are large bids noted around 0.9320. Buying a dip towards that area with a stop around 0.9285 for a break above 0.94 seems like a reasonable play.
  • CAD – Disappointing employment data out of Canada led to a sharp rally in USD/CAD on Friday. Short-term CAD sentiment remains slightly bullish though, with short positioning still crowded. Good selling interest from leveraged names report at 1.0920, while to the downside, there are bids ahead of the 1.08 barrier option.
  • EUR – The Draghi press conference did quite a damage in the EUR/USD and another decent sell-off followed on Friday. It is now priced in that the ECB will act in June and plenty of longs got washed out, so a slight bounce in the pair seems likely. 1.3810/20 will be good resistance in the near-term, while to the downside, 1.3650 will be closely watched. EUR/JPY briefly traded sub-140.00 and closed the week just a few pips above that level. A clear break below the level could pave the way for a 138.50 test, as there is little support on the charts until then. Looking ahead, there is little data risk until Thursday, when we have German GDP and Euro Zone CPI figures.
  • GBP – Cable dropped on Friday to a low of 1.6830, driven mainly by position covering from leveraged funds rather than anything fundamental. Key events this week are employment data and the Bank of England Inflation Report, which is followed by a speech from Governor Carney. Markets expect the unemployment rate to drop to 6.8 %, but the Carney speech might inspire some longs to cover their positions. Good support at the 1.68 level, but plenty of stops resting beneath, down to 1.6775.
  • JPY – Hedge funds were sellers of USD/JPY around the 102.00 level and this has capped the topside so far. Offers in decent size ahead of 102.20 and large stops resting through 102.25/30. The pair has been quite resilient as of late, especially given the drop in US yields, and it feels like tech resistance at 102.40 could be tested soon.

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