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  • Mike Paterson

China in focus still

Tuesday 29 November 2022

Lots of two-way business in the past 24 hours as markets try to make their mind up about the China COVID restrictions. They have announced some increase in vaccinations for the elderly (much needed I hear) but jury still out as to whether this is the beginning of a bigger move. Protests still happening too and very much in the mix.

Some USD supply returning this morning with equities and oil both looking firmer again with gold also underpinned. Geopolitical risk in Ukraine still lurking too, quite apart from all the CB second-guessing. Fed's Powell speaking tomorrow with BOE's Bailey and Mann out n about today along with SNB's Schlegel.

Monh-end flow signals are mixed as indeed we saw into/at the 4pm London fix yesterday. Some small USD supply but EUR demand too. Remember that conjecture and second-guessing should stand to one side on data and news releases. Focus on the price action and let the algos do the heavy lifting/dropping. The important thing is to identify your preferred risk/reward entry/exit levels prior.

GBPUSD: A good hold of 1.1950 after the break down through 1.2020 which had provided decent support lately and as I highlighted on Twitter. I remain bearish overall and poised to re=sell as we rally back up thru but capping around 1.2050.

EURGBP: Finding good support at 0.8580-85 still in the dips but failing at 0.8680 amid yesterday's initial EUR demand. I expect the two-way business to continue as jury remains out on both currencies and outlook. GBPJPY: A good cap at 167.50 but holding 166.00 by and large.

EURUSD: A decent hold at 1.0330 this time after capping into 1.0500 yesterday on general EUR (month-end?) demand. Should still see some mixed business.USDJPY: The downward trend seems to be in place still but some good two-way business meanwhile amid the variable USD and risk tones. rally-sell remains my preferred side overall. EURJPY: Capping at 145.00 after yesterday's EUR-led rally but in retreat to 143.00 again this morning. Expect more two-way business. USDCHF: 0.9500 resistance being tested now amid some firmer USD tones and EURCHF demand again overall. SNB ever-vigilant. Schlegel speaking today. EURCHF: A hold around 0.9800 again and now on the bounce (again) to look at 0.9850-60 again amid the firmer EUR tones outweighing CHF demand for the moment and we continue to range.

AUDUSD: Holding 0.6680-00 this time after yesterday's fall to 0.6640 amid the ongoing/escalating China COVID concerns and potential RBA hike slowing. NZDUSD supported at 0.6200 again after yesterdy's hold of 0/6160 in the extended USD-demand retreat but capping at 0.6245 as I type. USDCAD: Capping at 1.3500 this time after a good hold and rally from 1.3400 amid the softer oil prices again.

Let's continue to be careful out there.

Interbank rates: 08.38 GMT

GBPUSD 1.2045

EURUSD 1.0379

EURGBP 0.8616

GBPEUR 1.1606

GBPJPY 166.58

GBPCAD 1.6092

GBPCHF 1.1412

GBPZAR 20.3900

GBPHKD 9.3480

USDJPY 138.27

EURJPY 143.50

EURCHF 0.9857

EURHKD 8.0586

AUDUSD 0.6736

NZDUSD 0.6240

USDCAD 1.3410

USDCHF 0.9495

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