All very fragile out there still
Friday 8 January 2021
Some good two-way FX business to be had still as the jury remains out with price action fragile within recent ranges so continue to be patient but not greedy on your entry/exit levels. Some USD demand still notable but all relative given recent sell flows. Metals had a quick knock lower this morning while Bitcoin has retreated from fresh highs around 40k. Equities still firm but it's going to be one crazy ride if/when the reality check fully gets underway.
US jobs report is the data focus today but definitely not the major player it once was given all the COVID impact uncertainty and ever-changing playing field.
GBPUSD duly based into 1.3535 again yesterday and some pips banked on the way down as per my tweet before rallying back to look at 1.3580-00 helped by the EURGBP retreat.EURGBP duly failed at 0.9060 (GBPEUR support at 1.1037) and since been in steady retreat to 0.8995 (GBPEUR up to 1.1117) as EURUSD continues to fall with that support around 0.9030 now history but pivotal.GBPJPY held our old pivotal friend 140.20-30 and now testing 141.20 led by better risk/core pair dip demand again.
I still have a naturally bearish stance on GBP overall and remain poised to sell into rallies but respecting the current vagaries also. Range trading still for the moment.
USDJPY held 103.50 and made it's test on 104.00 before retreating but not very far as I warned here yesterday and still looks underpinned.EURJPY held 126.80-00 again and tested 127.50 but now back down into 127.00 with EUR sellers prevailing generally. EURUSD fell through 1.2300 and this time there was no recovery given the USD demand and general EUR supply acorss core pairs too. We've now broken down through the strong 1.2230-40 support to post 1.2214 and rally sellers still evident.USDCHF remains underpinned with the SNB ever watchful and helping EURCHF stage another decent rally to breach 1.0850 as it broke up through 0.8830 then 0.8860 helped by the EURUSD retreat.
AUDUSD held 0.7725-30 this time helped by some large AUDNZD option expiries (no coincidence as per my tweet)and some pips banked as per my ongoing strategy but still looks underpinned.USDCAD capped above 1.2730 as oil headed higher again but based so far at 1.2670 amid some general USD demand.
There's little doubt that we live in strange times and rationale was thrown out the window a long time ago so as we look at trading opportunities to begin the year it's even more important not to over analyze but trade the price action with discipline and patience.
Tomorrow the mighty Shrimpers return to action having had last week's game called off. Hoping for 3 very needed points. I hope your teams, in whatever sport you follow, also do you proud to help lift some of this current COVID gloom.
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.24 GMT