ECB in focus
Thursday 28 October 2021
Variable risk and USD sentiment still evident this morning in the ever-fickle world of Forex with the latest decision and presser from the European Central Bank today in focus. Some JPY and CHF demand notable still but equities and oil remain underpinned overall. Gold back above 1800.
I'm not expecting much of note from the ECB, nor indeed is anyone else it seems understandably, but as always we'll stand poised in case the algos can feed off anything unexpected. Large EURUSD option interest rolling off today between 1.1600-25 should keep ranges contained though.
The latest estimate of month-end FX hedge rebalancing now points to a reduced "average" USD selling this week with the strongest sell signal in USDJPY so keep that in mind still until tomorrow's 4pm London fix even though the Spot date is now passed.
The UK's Autumn Budget 2021 and Financial Statement gave us little that we didn't already know amid a mish-mash of tax rises and giveaways that the BOE will be combing through ahead of their latest MPC meeting next Thgursday.
For FX markets focus on the price action and decide what presents value or doesn't, and if in doubt, keep out. Be aware of those rising support lines and/or falling resistance levels. Forex is not rocket science but it is ever-fickle so you have to stay in control of you/your trades as much as you can.
GBPUSD: The pair held 1.3700-10 yesterday and some pips banked in the retreat per my tweet. Still seeing softer tones this morning after capping into 1.3780 helped by some GBPJPY supply and EURGBP demand still.I remain a rally seller overall but still respecting the ongoing dip demand as we continue to range while keeping an eye on EURGBP and GBPJPY as always. EURGBP: 0.8420 now providing a line of support but sellers still poised between those old marks of 0.8440-60 as I warned yesterday. GBPJPY: Support coming in around 156.00 now after yesterday's retreat on the renewed core pair supply.
I remain a GBP rally seller across the pairs overall as my preferred trading side albeit against the grain currently so being patient as ever. These markets are ever-fickle so good/tight position management essential.
EURUSD: 1.1600 once again gave way after that decent option interest rolled off per my tweets but held 1.1580 with expiries between 1.1600-25 today while the pair remain in the middle of cross-flow action. ECB casting a shadow.USDJPY: Finding good support around 113.40 and pips banked in the latest retreat amid the renewed JPY demand/softer EOM USD tones. Rally sellers poised still though. EURJPY: Support line now at 131.50 but with rally sellers ever poised again as the picture remains murky and the Euro finds supply in the bounces. ECB casting a shadow. USDCHF: 0.9160 still holding the retreats with the SNB ever vigilant but equally sellers remain poised at 0.9200 as EURCHF struggles to recover. EURCHF: 1.0630-35 support holding the extended fall with the SNB ever vigilant. Sellers in the rallies still though.ECB casting a shadow.
AUDUSD: 0.7480 still providing good support (decent option interest at 0.7475 today) and another rally above 0.7520 since but AUDJPY supply helping to push back down this morning. USDCAD: Sharp fall into 1.2300 from 1.2420 after a hawkish BOC yesterday but rallying on some CADJPY selling since amid mixed oil price. Also some large option interest today at 1.2375 in play.
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.38 BST