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  • Mike Paterson

Better risk sentiment prevailing

Tuesday 29 September 2020

Firmer equity and commodity prices have helped shape the last 24 hours and we've seen some further USD demand amid the risk-on sentiment, also notable into yesterday's 4pm London fix as I warned. Month/quarter demand has lessened a little given the equity rise in recent days but the signals are still USD positive.


There's been some more positive noises from the latest Brexit talks too but perhaps only confirming expectations hence the limited GBP reaction since the latest reports given that we had already had a strong rally.


Today we also have a number of CB speakers in the mix. Fed's Williams first up at 13.15 GMT then BOE's Bailey at 14.00 GMT. Fed's Clarida, Quaries and Williams again at 17.00 GMT.


GBPUSD continued its rally to test 1.2930 amid some better risk sentiment and EURGBP retreating further to 0.9026 but since fallen back to 1.2830 before finding fresh buy interest.EURGBP found itself in steady retreat to 0.9026 amid the general Euro softness which underpinned GBPUSD but then we saw the reverse move on both but failing to get back above 0.9100 and now posting 0.9065 as I type.GBPJPY found support at 134.60 as risk sentiment turned more positive and core pairs found decent dip demand to test 136.20 and since holding 135.40 on the retreat.


I stay poised to sell GBP rallies as my preferred side and buy back in the dips as ever.  Patience continues to be a virtue and entry level key as always. I still see dip demand though with markets still in a state of uncertainty overall.


USDJPY remains underpinned for the moment helped by large options contract interest and the general JPY selling as risk remains positive but USD sellers still poised and helping to cap at 105.70 again. EURJPY found support at 122.50amid the general JPY supply and dip demand on core pairs to post 123.44 this morning but remains vulnerable to EUR-negative flows into month/quarter end.EURUSD ran into decent demand at 1.1630 before rallying to test 1.1685 helped by cross pair demand but sellers remain poised. USDCHF capped at 0.9300 again and now retreated to test 0.9230 as EURUSD rallies but also EURCHF holding 1.0780 underpinned still by SNB.


AUDUSD found support at 0.7050 and has tested 0.7100 helped by some AUDJPY demand but rally sellers remain poised. USDCAD capped above 1.3400 again but supported at 1.3350 amid the firmer oil/risk combo with CADJPY demand/supply still helping to provide some 2-way business.


Markets are ever-fickle so do contact me if there's areas of trading these markets 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

GBPUSD   1.2873

EURUSD   1.1678

EURGBP   0.9072

GBPEUR   1.1024

GBPAUD   1.8157

GBPCAD   1.7226

GBPJPY   135.92

GBPZAR   22.0866

GBPHKD   9.9812

USDJPY   105.59

USDZAR   17.1445

EURJPY   123.29

EURCHF   1.0788

EURHKD   9.0541

AUDUSD   0.7087

USDCAD   1.3383

USDCHF   0.9238


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