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  • Mike Paterson

Down and up and down we go again

Tuesday 26 April 2022

We've seen more wobbly risk tones this morning with equity markets in retreat off their highs after yesterday's NY closing rally and now once again a generally firmer USD and softer bond yields with returning JPY and CHF demand helping to drive core pairs lower once again.

Denials from the BOJ of any joint FX intervention with the Fed gave USDJPY and JPY pairs a temporary lift but ongoing Yen repatriation ans softer risk tones sees them all in retreat again as I type.

A reminder, per my update yesterday, that the preliminary estimate of month-end FX hedge rebalancing flows is signalling USD buying across the board. The average signal strength in G10 currencies is approximately twice the historical norm. As ever we should watch for these flows but certainly not the only game in town right now.

GBPUSD: Held 1.2700 well yesterday but equally failed to rally over 1.2780 and in retreat again this morning helped by renewed GBPJPY supply and general USD demand. I remain a rally seller overall while keeping an eye on EURGBP and GBPJPY as always.

EURGBP: A hold of 0.8390-8400 so far amid the general EUR retreat after yesterday's test of 0.8440. Expecting dip demand still but equally rally sellers poised as the uncertainty continues. GBPJPY: Support at 162.00 for the moment after a solid cap this time at 165.00 as the JPY risk-off demand sees both core pairs in retreat.

EURUSD: Softer risk tones/firmer USD/French election fallout/ECB rate hike conjecture has seen 1.0700 break this morning after rally highs around 1.0750. I remain a rally-selller as my preferred side. USDJPY: Good two-way pips whatever your bias after a drop to 127.35, rally to 128.25 and now testing 127.85 in the latest retreat risk-off JPY demand returning. EURJPY:Support at 136.50 holding so far after capping at 137.50 but jury remains out amid renewed softer risk and EUR tones. USDCHF: Holding 0.9550 now in the latest retreat amid firmer USD tones and EURUSD retreat but rallies tempered by risk-off CHF demand still. SNB casting a shadow as ever. EURCHF: A further retreat into 1.0240 amid the EUR selling and softer risk tones but with the SNB lurking in the dips.

AUDUSD: Still holding 0.7150 after capping at 0.7230 this time as AUDJPY selling returns along with some USD demand.I prefer rally-sell side still. GBPAUD capping into 1.7750 this time as GBPUSD retreat outstrips that of AUDUSD. NZDUSD holding 0.6600 in latest retreat but equally capping at 0.6650. GBPNZD currently on its lows at 1.9185 but buyers lurking 1.9150 again after capping at 1.9275. USDCAD: Commodity currency impact again but good two-way pips amid variable oil and risk tones. Ranging 1.2680-1.2780 for the moment. Two-way business still expected amid all the uncertainty.

As we look at trading opportunities it's even more important not to over analyze but trade the price action with discipline and patience. I can help with this in my 1-2-1 sessions and now is the time, more than ever, to get on board with those if you haven't already done so. Contact me to take advantage of currently reduced prices.

Let's continue to be careful out there in all things. Staying safe must be our main priority still.

Interbank rates: 08.40 BST

GBPUSD 1.2725

EURUSD 1.0700

EURGBP 0.8403

GBPEUR 1.1896

GBPJPY 162.75

GBPCAD 1.6212

GBPCHF 1.2197

GBPZAR 20.0756

GBPHKD 9.9126

USDJPY 127.90

EURJPY 136.67

EURCHF 1.0260

EURHKD 8.3303

AUDUSD 0.7185

USDCAD 1.2740

USDCHF 0.9597

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