Another mixed bag as a new week crawls into action
Monday 27 May 2019
All the usual fragile global conditions prevailing as we begin another week but we have a holiday in the UK and the US today so it might take until tomorrow to get really cranked up.On Friday UK PM May confirmed widespread expectation she will step down on 7 June but stay on as caretaker-manager until the long-winded process of finding a successor unravels. A rudderless government still trying to deliver Brexit but her WA is dead and buried. Talk of a potential General Election and a No-Deal Brexit but the Pound is currently behaving in a sell-rumour/buy-fact manner and holding its own on the news.
In UK and Europe we've seen most of the results of the EU Parliament elections and in the former we've seen Nigel Farage's Brexit Party and the Liberal Democrats wipe the floor as the two extremes (Leave and Remain) of Brexit play out. All as expected though per my updates last week and no surprise to FX markets. In Europe we've also seen the expected mixed bag of protest votes and that's leaving the Euro a little vulnerable.
GBPUSD has rallied well to test the 1.2750 offers/resistance after drawing a line around 1.2650 after another failure at 1.2720. The subsequent rally has been helped by slightly better risk sentiment on firmer equities with GBBJPY posting highs of 139.65 and EURGBP sellers from 0.8820 amid the Euro fade sells but trading tightly still. GBPJPY held 138.50 again on Friday after its spike to look at 139.50 and has made a solid recovery on the GBP demand/better risk-sentiment combo.
I remain GBP bearish overall and continue to rally-sell as my preferred strategy and buy back in the dips amid all the uncertainty/indecision including Brexit. No change to this view for the foreseeable future but I won't be getting involved today as I am out all day once I send this out.
EURUSD rallied well on the general USD selling but now failed into 1.1220 as the EU Election results give cause for a little concern over the political landscape as expected. USDJPY has been in retreat again amid the general USD weakness but holding 109.25-30 again helped by some better risk sentiment in Asia/early Europe and still not going too far in a hurry. USDCHF held 1.0000 and rallied as EURUSD retreats and EURCHH holds 1.1200 with the SNB ever watching closely.
AUDUSD has been holding its own again but going nowhere in a hurry still as the jury remains out as to how much the expected RBA June rate cut is factored in June amid the US-China trade talks too. Large option expiries today at 0.6930 will help contain range further.
USDCAD failed around 1.3480 and since fallen back amid the USD supply again albeit tempered by softer oil price again too.
Fickle Forex markets ever prevailing so be ready with your entry/exit levels and orders as always.
Have a good day and week there one and all.
Interbank Rate 08.03 BST