Firmer risk appetite back in town
Tuesday 1 February 2022
Better risk sentiment prevailing after a good day for equities with some month-end rebalancing in the frame to help underpin and that's brought with it softer yields and generally weaker USD tones as the new month gets underway after its own month-end demand passes.
The RBA left rates on hold which surprised some observers but ceased QE as expected although seemingly in no rush to hike rates just yet. Attention moves now to the next CBs off the block, BOE and ECB, on Thursday.
As ever, a case of not over-analysing or second-guessing but keeping your focus on price action in core and cross-pairs and identify ranges and what levels present value for money. Patience invariably a virtue but don't confuse patience with being stubborn either in entry or exit. I will repeat that he who hesitates is often lost in these trading conditions.
GBPUSD: Support now at 1.3430 after a good hold around 1.3400 and now testing 1.3480-85 offers. BOE on Thursday in focus along with the usual political fall-out potential but PM Johnson seems safe for the moment.
EURGBP: A test of 0.8360-65 has failed as EUR demand wanes a little and GBP breathes a political sigh of relief but good two-way business to be had still albeit in tight range. GBPJPY: Support still at 154.50 but failing around 155.00 as the risk jury remains out and core pairs find rally sellers.
EURUSD: 1.1220 support now amid the softer USD tones and good size option interest there today and testing 1.1265 but sellers remain poised if risk tones remain firm. USDJPY: Now testing bids at 114.75-80 amid the softer USD tones but some dip demand and JPY supply expected if risk tones stay firm but we're still ever-fickle on that one. EURJPY: 129.00 the support line now but failing around 129.50 this time as jury remains out. USDCHF: 0.9300-05 support broken and triggering a decent retreat on the softer USD tones and EURUSD rally but with SNB ever vigilant. EURCHF: Support line now at 1.0390 with SNB ever-present but sellers prevailing above 1.0430.
AUDUSD: Initial wobble post-RBA but a decent bounce from 0.7035 amid the softer USD/firmer risk double whammy and testing 0.7081-00 resistance/offers as I type. USDCAD: Failure into 1.2780 yesterday and a steady retreat since to 1.2655 as oil remains underpinned and with CADJPY demand once again notable on the firmer risk tones.
The mighty Shrimpers return to the hallowed Hall tonight on the crest of a wave, unbeaten in 7. Onwards n upwards!
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.25 GMT