Fickle markets still as we wait on the ECB
Thursday 16 July 2020
From firmly risk-on tones yesterday we eventually saw the move run out of steam late in the European day and with Chinese equity markets suffering some serious reversals we have had another risk-wobble in Asia and early European trading.
Main item on today's agenda is the latest announcement and presser from the ECB at 11.45 and 12.30 GMT. No change in policy expected but as always the algos and traders will look for clues/impact in the rhetoric. Meanwhile markets remain ever-fickle with headlines on COVID vaccines grabbing the attention but certainly not the only game in town with US-China tensions still to the fore.
UK wages and jobs data out earlier had little impact but a drop in wages remains a concern albeit understandable in these strange times.
GBPUSD eventually broke 1.2625 and continued its rally to test 1.2650 but from there it's been a slide back down to 1.2536 amid the softer risk/firmer USD. Rinse n repeat. EURGBP duly held around 0.9050 and has been underpinned since helping the GBPUSD retreat and now testing 0.9100. Dip demand notable still ahead of today's ECB meeting but let's see what happens after.GBPJPY failed above 135.00 again as the risk-on rally faded and since been down to test 134.00 again with core pairs both finding rally supply.
I stay poised to sell GBP rallies overall as my preferred side and buy back in the dips as ever but patience continues to be a virtue and entry level key as always. I still expect to continue seeing some dip demand but cross-flows, risk sentiment and Brexit will continue to see a mixed bag as we've been witnessing.
USDJPY failed at 107.30 and has been down to test strong support lines at 106.60-65 amid the softer risk/USD plays. Rinse n repeat.EURJPY has found support at 121.80 on its latest retreat from 122.50 amid the variable risk and upcoming ECB meeting. EURUSD failed around 1.1450 as risk appetite faded but equally finding support below 1.1400 as we wait on the ECB and what most expect as cautious but more upbeat tones overall. Still the EU Summit tomorrow/Saturday casting a shadow though. USDCHF held 0.9360 and enjoyed the risk-on/EURCHF rally to test 0.9460 and supported now at 0.9435-40 with the SNB ever vigilant in the dips.
AUDUSD enjoyed yesterday's risk-on rally to post 0.7037 but since seen a risk-off retreat to look at 0.6980 as I type. USDCAD failed into 1.3600 as the BOC left rates on hold and saw no great change for the foreseeable future and since fallen to test 1.3500 where there is decent demand and options rolling off tody.
Markets are ever-fickle but good two-way pips to be had so don't forget to contact me if there's areas of trading these markets or how to make best use of the order boards and expiries, that you might need some further help with.
I wish you good trading and let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.18 BST