Better risk tones return
Tuesday 21 September 2021
Yesterday's steep declines in equities, treasury yields and commodities led by concerns over Chinese property company Evergrande created another wave of risk-off plays in forex markets but the moves have perhaps been over-extended and that's seen JPY and CHF supply return pushing cross and core pairs a little higher again after holding some key support areas.
USDCAD has seen a retreat to 1.2743 amid some renewed better-risk CADJPY demand up to 86.00 and PM Trudeau seemingly getting over the line in the election after yesterday's test of 1.2900. Latest US Federal Reserve FOMC decision and Powell presser tomorrow casting a shadow over markets too.
So the feast/famine roller-coaster ride continues and amid all this uncertainty I will repeat that patience and discipline in trading are key, as ever, and not being greedy.
GBPUSD: The steady decline continued but duly found support around 1.3650 per my tweets and some more pips banked along the way. Beeter risk tones now seeing GBPJPY demand and EURGBP selling helping to push back up to test 1.3700 again. I remain a rally seller while keeping an eye on EURGBP and GBPJPY as always. EURGBP: Capped into the decent res/offers at 0.8600 and now testing 0.8560 as GBPUSD rally outstrips EURUSD which had failed at 1.1740 having found that good support into 1.1700. GBPJPY: Good support at 149.00 held the extended decline and now back above 150.00 on the better risk tones but sellers still poised when risk sentiment fades.
I remain a GBP rally seller across the pairs but being patient as ever. These are risk sentiment markets and ever fickle so good/tight position management essential.
EURUSD: 1.1740 providing a cap atm after holding 1.1700 where we have large option interest building on Thursday. USDJPY: Testing 109.65-70 again as I type after holding the good 109.30-35 support area yesterday per my tweets. Large option interest between 50-70 today should help contain. EURJPY: A good hold of 128.20 after yesterday's extended retreat amid the softer risk tones but now posting highs of 128.55. Good sellers poised still 128.80-00. USDCHF: 0.9340 capped yesterday's rally helped by the renewed risk-off EURCHF supply but now finding a new base at 0.9260 as EURUSD caps and with the SNB ever vigiliant as EURCHF continues its retreat through 1.0900. EURCHF: Capping at 1.0900 now and posting 1.0867 as I type but with SNB shadow ever present.
AUDUSD: Held 0.7220 yesterday and now looking to test 0.7280 helped by better-risk AUDJPY demand. USDCAD: Tested 1.2900 yesterday amid the thrust of risk-off CADJPY selling and election uncertainty but now in retreat at 1.2750 as risk/oil tones firm and Trudeau seems to be over the line (i.e. no shocks). Large option interest in play today AT 1.2800.
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.30 BST