Another month closes but it's not over just yet
Tuesday 30 June 2020
We've seen some USD demand but it's all still very mixed out there. China PMIs were better than expected but there's been reports of another virus developing out there too. They've also threatened retaliation on the US for them suspending preferential treatment of Hong Kong. All in all risk sentiment remains fragile but it's mostly about natural flows today.
BOE economist Haldane, the dissenter to the increase in QE last time, will be speaking at 10.00 GMT and Fed head Powell testifies at 16.30 GMT. Also need to keep vigilant into the 15.00 GMT London fix for the final month and quarter-end flows. Latest info I have suggests it's going to be very mixed now with variable USD supply and demand and, as I mentioned previously, we could see some EUR supply and JPY demand. Strong performance of EZ assets combined with weak performance of Japanese assets produces a EURJPY sell-signal. Plenty of EURUSD option expiry interest too in the mix.
GBPUSD fell again yesterday helped by GBPJPY supply and EURGBP demand but found support at 1.2250 but equally finding sellers on the bounce into 1.2320. Rinse and repeat still.EURGBP continued its march higher to test 0.9175 as month-end demand kicked in and pips duly taken into 0.9150 and 0.9175 as per my tweets. I remain a dip buyer overall but think we may have seen most of the month-end rally.GBPJPY held 132.00 but failed above 132.60 on the bounce this time before retreating back from where it came only to bounce again as I type.
I stay poised to sell GBP rallies overall and buy back in the dips as ever but patience continues to be a virtue and entry level key as always. I still expect to see some dip demand but cross-flows and Brexit will continue to produce a mixed bag.
USDJPY capped above 107.80 but has held 107.50 so far while EURJPY broke 120.00 but held 119.80 on Friday but since failing above 120.60 on the bounce atm.EURUSD had a decent rally helped by the EURGBP demand but failed above 1.1280 and re-sells duly placed. Support found again into 1.1200 and some pips banked but staying core short. Large option expiries in the mix today along with month/quarter-end flows. USDCHF held 0.9440 on the latest retreat and rallied as EURUSD fell into 1.1200 but failing above 0.9520 as EURCHF retreats from 1.0700 after its own decent rally. Expect the SNB to be ever vigilant in the dips.
AUDUSD based ar 0.6840 again but equally failing above 0.6880 again and since back down to post 0.6845. Rinse and repeat for the moment.USDCAD has found a latest base into 1.3650 where I noted bids building yesterday but equally still can't hold above above 1.3700 amid the variable risk/oil price/month-end combo.
Lots going on right now, and the foreseeable future, so don't forget to take advantage of my 1-2-1 mentoring sessions if there's areas of trading these volatile markets or how to make best use of the order boards and expiries, that you might need some further help with.
Let's continue to be careful out there in all things. Staying safe must be our main priority still. .
Interbank rates: 08.43 BST