Concerted Central Bank action being considered amid Coronavirus escalation
Monday 2 March 2020
Lots of talk of being ready to act from the world's central banks as the Coronavirus impact becomes more widely spread. Reports of a 0.5% co-ordinated cut this Wednesday but I question how effective that might be. Does the world really need even cheaper money for longer, and will it really have an impact on economies anyhow? Either way the volatility continues with some big gaps on the Asian opening prompted also by some awful Chinese economic data but subsequently filled with a little better risk-sentiment prevailing. Waning again as I type though.
On Friday I warned about the USD-positive month end flows and we saw concerted supply all day in EURUSD into the 16.00 GMT fix which had indeed got overstretched in the preceding day's rally but as the fix passed so we saw an immediate rally again. AUDUSD fell sharply ( I did mention commodity currencies might be impacted more ) as did GBPUSD which was offered all day and USDJPY failed to go higher. All per my update and producing some good opportunities.
GBPUSD has tested 1.2750 on the Asian open before rallying to test 1.2850 only to fail and now post 1.2764 again amid bearish BOE talk and EU-UK trade talk fears. EURGBP demand once again helping to push GBPUSD lower too along with renewed GBPJPY and GBPCHF supply. Good 2-way business still whatever your bias.
EURGBP continues to surge higher amid the softer GBP/stronger EUR double-whammy and now blown through 0.8650 to post 0.8685 (GBPEUR down to 1.1511) as EURUSD rallies sharply to 1.1093. GBPJPY saw a steady decline to test 137.00 amid all the risk off sentiment and selling on core pairs before rallying in Asia to look above 139.00 only to fail again.
I stay poised to sell GBP rallies and buy back in the dips as ever, but with ranges getting nicely stretched atm we can afford to be a bit more patient. As ever though, don't get too greedy as volatility increases.
USDJPY plunged to look at 107.30 only to rally back to 108.60 before once again retreating as I type as risk-off sentiment returns.EURJPY also enjoyed a rollercoaster ride but still contained in relative terms albeit with softer tones overall after a fall to 118.40.EURUSD found itself on the back foot on Friday amid the USD month-end demand and option expiry interest to test 1.0950 from 1.1055 highs only to bounce back and post 1.1093 this morning. USDCHF has also retreated again as EURUSD rallies but falls tempered by EURCHF rallying further to 1.0708 after the SNB inspired 1.0600 I banged on about for ages.
AUDUSD had a rapid tumble to 0.6435 just ahead of the 16.00 GMT fix on Friday but has since rallied to post 0.6568 helped by some AUDJPY and Gold demand earlier but since retreating a little again. USDCAD held onto gains above 1.3400 to test the 1.3460 offers but has since fallen back to 1.3320 amid some general USD supply and oil price gains.
Fickle Forex markets ever prevailing so be ready to maximize the moves by placing your orders as always.
Lots going on right now, and the foreseeable future, so don't forget that I offer 1-2-1 mentoring if there's areas of trading these volatile markets or how to make best use of the order boards and expiries, that you might need some further help with.
Southend's youngsters produced another spirited display at Oxford and deserved a point but once again ran out of puff and conceded a late winner for the home side.Support as ever though was incredible.
Have a good day/week out there one and all.
Interbank rates: 08.27 GMT