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  • Writer's pictureMike Paterson

Busy start to a new month

Monday 3 October 2022

Reports of an OPEC+ oil production cut by up to 1.5m bpd has sent prices sharply higher in Asia, equities have rallied off their lows but still vulnerable, and the Pound has found a bit of support from a UK government U-turn on the 45pence top-end tax cut. Rumours also abound of Credit Suisse being in trouble.

It was a case of buy rumour/sell fact for the Pound as markets remain uconvinced by the Fin Min's explanation/decision which essentially has been made to appease the Tory party faithful as they begin their annual conference.There remains too, concerns over the level of government borrowing and associated cost and that's not going away anytime soon. JPY weakness still evident and USDJPY posting fresh recent highs of 145.34 isn't going to help their inflation concerns. Focus generally still centres on CBs in their inflation vs recession battle and Ukraine remains the elephant in the room.

GBPUSD: Been up to look at 1.1280 on the back of the Kwarteng/Truss U-turn rumours but back down to 1.1180 following the announcement helped by renewed USD demand. A good base has been created between 1.1050-00 and that should provide decent support in further dips. EURGBP: 0.8850 remains a good cap for this pair and we've seen another solid retreat testing 0.8700-20 support in the wake of the GBP U-turn rumour buying. Rally since to look at 0.8775 and I expect more two-way business with the Eurozone having its own issues. GBPJPY: Solid rally from 160.00 this time as core pairs both found good dip demand despite wobbly risk tones as JPY weakness remains a theme.

EURUSD: 0.9750-0.9850 covers it for the moment. Cross flows, Ukraine and ECB conjecture all in the frame still quite apart from USD flows. USDJPY: Finally breached 144.80-00 on the JPY weakness/USD demand but capping around 145.35 amid BOJ intervention fears. EURJPY: Underpinned at 141.50 now despite some wobbly risk tones along the way but sellers prevailing at 142.50 amid all the variables. USDCHF: Now holding 0.9800 and up through the 0.9850 resistance as CHF weakens a little on better general risk tones but also those Credit Suise concerns and some softer than expected CPI data earlier. EURCHF: A good base now at 0.9650 with SNB still casting its shadow to add to general CHF weakness (see USDCHF) in these ever fickle times

AUDUSD: Decent rally from 0.6400 amid some general USD supply and AUDJPY/AUDCHF demand after capping at 0.6520-30 again then 0.6500.RBA tonight will be hiking rates by maybe 0.5% with tones of more to come but not so great for the fragile economy. NZDUSD holding 0.5600 after solid retreat from 0.5740 as the two-way business continues. USDCAD: Decent support coming at 1.3700 on Friday but rally capped at 1.3835 and a sharp retreat in Asia as oil rallied on the OPEC+ rumours.

A scrappy but welcome win for the mighty Shrimpers of Southend on Saturday while off the pitch financial shenanigans sadly continue to haunt us. Grrrrrrrrrrrrrrrr.

Let's continue to be careful out there.

Interbank rates: 08.17 BST

GBPUSD 1.1205

EURUSD 0.9811

EURGBP 0.8758

GBPEUR 1.1414

GBPJPY 162.37

GBPCAD 1.5443

GBPCHF 1.1086

GBPZAR 20.2280

GBPHKD 8.7482

USDJPY 145.00

EURJPY 142.20

EURCHF 0.9679

EURHKD 7.6644

AUDUSD 0.6442

NZDUSD 0.5650

USDCAD 1.3753

USDCHF 0.9863

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