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  • Writer's pictureMike Paterson

All aboard for another roller coaster ride.

Wednesday 3 August 2022

A very lively market which certainly seemed to have got itself over-extended on the risk-off side in the wake of Pelosi's visit to Taiwan, China's retaliatory threats and US Fed speakers ramping up the hawkish rate hike talk. US 10 year bond yields rallied strongly pushing up the Greenback particularly USDJPY which saw a move back to test 134.00 from 131.00 before the recent model sellers in Asia pushed it back down to 132.28 only to rally back above 133.00 as European trading got underway.

Mixed risk sentiment this morning obviously with equity markets off their highs. Gold is still underpinned while oil is off its rapid rally highs of yesterday as the jury remains out.

More Fed speakers today and another lively day in prospect amid the fragile geopolitial landscape. BOE decision tomorrow on the horizon too.

As always, don't over-analyse but be ready with your preferred levels/strategy, place orders and let the algos do the heavy work. Discipline is key as always but equally hesitation can often ruin a great idea.

GBPUSD: Capping into 1.2250 and an extended retreat to test 1.2135 amid the USD demand yesterday but now back testing 1.2200 helped by some GBPJPY demand. I will stand poised for rally resells but patience a virtue still. EURGBP: Still holding 0.8340-50 in the latest retreatss amid the general EUR supply after failure into 0.8400 and then 0.8370. I still think we'll see two-way pips jobbing opportunity but looking heavy still overall.GBPJPY: A hold of 159.50 in the retreats but a sharp rally to test 162.75 with USDJPY once again leading the way but this time higher. Yesterday I warned that "some caution required down here given the rapid decline" so I hope the steer helped.

EURUSD: Support at 1.0180 finally broke yesterday amid the USD demand but a decent hold of 1.0150 albeit failing at 1.0200 where we have option contract interest in play today. USDJPY: A sharp rally from 131.00 to 134.00 in the wake of WWIII not starting and the Fed speak/yield-led USD demand and holding 132.25 in the Asian retreat.EURJPY: Capping at 136.00 after the solid rally from 134.00 but holding 135.00 in the retreat. Sellers poised still whenever risk turns amid general EUR weakness.

USDCHF: We've support now at the old 0.9540 resistance amid the general USD demand/EURUSD retreat and with SNB keeping an eye on things seemingly as EURCHF finding decent support too. Sellers at 0.9600 again prevailing atm. EURCHF: A hold of 0.9720 yet again where I've warned SNB have been watching/smoothing and another rally since to look at 0.9770 as I type but sellers poised amid the variable risk and EUR weakness overall.

AUDUSD: Capping around 0.6940 after holding the next decent support line at 0.6885 after breaking 0.6920. GBPAUD capping at 1.7650 but holding 1.7550 as core pairs make their minds up. NZDUSD holding 0.6220 area and now testing 0.6260 as I type helped by the better risk tones. GBPNZD holding 1.9425 after failing into 1.9550 but in retreat again as GBP wobbles a little and testing 1.9450 so still tightly bound.USDCAD: Capping at 1.2890 with oil price rising and some CADJPY demand returning after holding 1.2840. I expect some good two-way business still overall amid the variable risk/oil and USD tones. Some option interest 1.2900.

Let's continue to be careful out there.

Interbank rates: 08.48 BST

GBPUSD 1.2186

EURUSD 1.0176

EURGBP 0.8350

GBPEUR 1.1976

GBPJPY 162.40

GBPCAD 1.5676

GBPCHF 1.1687

GBPZAR 20.3578

GBPHKD 9.4960

USDJPY 133.25

EURJPY 135.65

EURCHF 0.9754

EURHKD 7.9292

AUDUSD 0.6929

USDCAD 1.2864

USDCHF 0.9581

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