Better risk tones return
Tuesday 21 December 2021
Yes folks, in these ever-fickle markets we've seen some better risk appetitite return and equity/commodity markets and yields have felt some love again after yesterday's wobble and that's helped to underpin risk sentiment again, bringing a return of JPY supply bur Forex pairs ranging still overall with CHF demand still notable. Increasing Omicron concerns lurking though and markets second-guessing Central Banks still.
As always, don't over-analyze or second-guess but keep your focus on price action in core and cross-pairs and identify recent ranges to see whether we hold or break and what levels present value for money. Last week before Xmas and we can expect some reduced liquidity/ increased volatility.
Patience will invariably be a virtue but don't confuse patience with being stubborn. Let the algos do their work and have orders in or fingers poised to take advantage.
GBPUSD: That support line around 1.3160-70 duly held as has the 1.3250-60 resistance I highlighted in a tweet but 1.3200 providing a base now. GBPUSD rally sellers, including me, ever poised while keeping one eye at least on the EURGBP and GBPJPY cross flows. EURGBP: A good hold of 0.8515-20 (GBPEUR cap 1.1744) now but a couple of failures above 0.8550 (GBPEUR support 1.1695) amid the GBP better risk dip demand on GBPJPY. Ranging still overall. GBPJPY: 149.80-00 now the latest support line amid the firmer risk tones but we continue to range.
I remain a GBP rally seller across the pairs overall as my preferred trading side but being patient as ever. These markets are ever-fickle so good/tight position management essential.
EURUSD: 1.1275-80 now providing support again but struggling to hold above 1.1300-10 as I type amid the cross play flows. USDJPY: Capping still at 113.80 after the hold of 113.30 then 113.50 as we continue to range.EURJPY: 128.00 support now but rallies capping into 128.40 as I type so far. Mixed tones with risk-on EUR and JPY supply.USDCHF: Capping at the pivotal 0.9220-30 again and retreating amid some general USD supply and CHF demand but with the SNB ever vigilant. EURCHF: Back down testing 1.0380 as risk-off CHF demand prevails but tempered by EUR dip demand elsewhere and with SNB shadow lurking still.
AUDUSD: 0.7100 support now helped by the risk-on AUDJPY demand and firmer commodity prices after the retreat from 0.7130 this time. USDCAD: Solid base at 1.2900 now but capped at 1.2962 amid rising oil prices and risk-on CADJPY demand.
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.43 GMT