Fed and Old Lady in focus this week
Monday 15 March 2021
Market focus still remains on bond yields generally but this week we have the added ingredients of the latest decisions and musings from the US Federal Reserve Bank on Wednesday and BOE on Thursday to throw into the ever changing cocktail.
Chinese equities had a wobble, as has Bitcoin after a strong rally through $62k, and that's given a bit of a cautious start to European trading risk sentiment while BOE governor Bailey has been out on BBC Radio to talk in optimistic albeit still cautious tones about the UK economy amid the vaccine rollout and added impetus from the US. Cue a small rally in the Pound but fading again as I type. Additional concerns about the Astrazeneca vaccine and German ICU doctors are calling for an immediate return to partial lockdown.
As always the FX jury remains out still so we need to focus on price action and value for money in our entry and exit levels. Discipline and patience needed more than ever in these ever fickle/fragile times. Be aware also that the US moved their clocks forward by 1 hour at the weekend so only 4 hours behind GMT now. Option expiries, data and the Fed will all be one hour earlier in Europe therefore.
GBPUSD continues to trade 1.3860-1.3960 with a post-Bailey cap at the earlier Asian high of 1.3950 again after holding 1.3900 in early Europe. EURGBP still ranging 0.8550-0.8600 after a break above 0.8585 on Friday but below 0.8560 again this morning after the earlier Pound rally and EU vaccine rollout concerns still. GBPJPY has found a new base around 151.20 after Friday's fall through 151.50 but equally still capped around 152.20 with USDJPY underpinned with rally sellers on core pairs both poised still and some fragile risk sentiment.
I remain poised to sell GBP into rallies as a jobbing preference but respecting dip demand still with price action ever fickle. Equally a case still for going long in the dips therefore as we continue to range at these lower levels. Patience, entry/exit level and not getting greedy remain key.
USDJPY found support at 108.80 this time and has made steady gains through 109.20-25 now to post 109.35 amid some firmer USD tones earlier but rally sellers prevailing again to test 109.00 as I type. EURJPY found a higher base at 129.80-00 but now finding a good cap at 130.50 on the softer risk tones.EURUSD has found a base at 1.1910 but equally sellers at 1.1960-70 as the jury remains out amid variable USD demand and EUR sentiment. USDCHF found support at 0.9270 this time as EURUSD and EURCHF holding that 1.1080 line for the moment and rallying to 0.9330 with the SNB ever watchful/helpful.
AUDUSD has found a decent base at 0.7720-30 again helped by more large expiry interest but failing at 0.7780 while
USDCAD failed at 1.2560-80 this time amid softer USD and firmer oil tones but since finding support at 1.2440 as oil trades off its highs this morning.
Two points dropped again on Saturday by the mighty Shrimpers and showing our lack of firepower will be crucial to our survival. We'll keep believing though. Some wonderful 6 Nations rugby action across the w-e to soothe my sporting soul.
Let's continue to be careful out there in all things. Staying safe must be our main priority still. Have a good week everyone.
Interbank rates: 08.50 GMT