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  • Writer's pictureMike Paterson

Firmer risk tones as another week gets underway

Monday 10 January 2022

Better risk appetite to greet a new week but markets providing some good two-way business still. Friday's headline US payroll number came in lower than expectation but unemployment dropped to 3.9% vs 4.1% expected.Household employment rose 651k too, plus average hourly earnings climbed to 0.6% MoM vs 0.4% forecast on top of an upward revision to the previous month to 0.4%.

Seems like the US and Fed still has decent reason to stay on their policy normalization path as markets are factoring in so Forex pairs are still contained in tight ranges.

As always, don't over-analyze or second-guess but keep your focus on price action in core and cross-pairs and identify recent ranges to see whether we hold or break and what levels present value for money. Patience will invariably be a virtue but don't confuse patience with being stubborn. A new year maybe but same rules of trading always.

GBPUSD: Support duly holding at 1.3515-20 as I highlighted on Friday and now testing strong 1.3600-20 resistance amid the firmer-risk EURGBP supply/GBPJPY demand double whammy. GBPUSD rally sellers, including me, ever poised while keeping one eye at least on the cross flows and risk sentiment. EURGBP: Ranging still but testing the strong 0.8330 support area again (GBPEUR resistance 1.2000) amid the firmer risk tones with sellers after failing this time above 0.8360 (GBPEUR support 1.1950). Should continue to see good two-way buiness but beware the downside break. GBPJPY: 156.80 support area now amid firmer risk flows but equally 157.30-50 providing some sell interest as risk remains fragile.

I remain a GBP rally seller across the pairs overall as my preferred trading side but being patient as ever. These markets are ever-fickle so good/tight position management essential.

EURUSD: 1.1320 now providing support after a failure around 1.1360 this time helped by the firmer risk EUR supply generally. USDJPY: Still capped at 116.00 where that large option interest on Friday helped contain but equally still holding 115.50-60. EURJPY: 130.80 support now but sellers prevailing at 131.40 this time amid the firmer risk EUR supply. USDCHF: 0.9200 support broke amid some general USD supply but more behind at 0.9180 again with the SNB shadow ever present and EURCHF back above 1.0420. EURCHF: Softer risk EUR demand and SNB ever vigilant helping to lit above 1.0400 to test 1.0425. Keep buying those dips.

AUDUSD: Duly contained around 0.7160 on Friday where we had that large option interest rolling off and the subsequent rally capping at 0.7200 as I type but equally support now coming in at 0.7160. USDCAD: One month lows now being posted at 1.2616 amid the firmer oil/softer USD flows after capping into 1.2730 on Friday and now 1.2650 in Asia. CADJPY demand in play again.

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

Interbank rates: 08.48 GMT

GBPUSD 1.3587

EURUSD 1.1334

EURGBP 0.8341

GBPEUR 1.1986

GBPJPY 157.15

GBPCAD 1.7145

GBPCHF 1.2505

GBPZAR 21.2005

GBPHKD 10.5861

USDJPY 115.65

EURJPY 131.09

EURCHF 1.0433

EURHKD 8.8321

AUDUSD 0.7188

USDCAD 1.2630

USDCHF 0.9204

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