Firmer risk tones return after Jackson Hole wobble
Tuesday 30 August 2022
Some firmer risk/softer Greenback tones returning this morning after the hawkish rhetoric from the Jackson Hole central bank symposium sent equity markets into a bit of a tailspin running scared in the anticipation of higher interest rates to come. Nothing we didn't already know but these ever fickle markets had got ahead of themselves perhaps on the hike expectation curve and were looking beyond inflation peaks.
Either way we saw some strong USD demand in the wake of JH led by USDJPY again and EUR demand helped by some hawkish ECB tones too. Natural month-end flows on both (EUR demand/JPY supply) have also been playing out strongly too.
Jury will remain out and the second-guessing will continue as always so don't over-analyse but be ready with your preferred levels/strategy, place orders and let the algos do the heavy work. Discipline is key as always.
GBPUSD: New lows testing 1.1650 yesterday driven lower by the stronger USD and EURGBP demand. Some pips banked again in the retreat and poised for re-sells per ongoing strategy as we now test 1.1750 amid the softer USD tones. Patience a virtue still.
EURGBP: Month-end EUR demand playing out and helped by some hawkish ECB tones to test 0.8550 after a clean break of 0.8480. Looking for a reversal once the EUR demand subsides but some EUR dip buying expected too. GBPJPY: The jury remains out amid the mixed risk tones but underpinned overall between 161.20-50 still. We can expect some fragile price action still.
EURUSD: Holding 0.9920 then 0.9980 again as that month-end demand and softer USD provides a solid platform with EUR buying across the board.Rally sellers still poised though.USDJPY: Up and away after Jackson Hole and helped by the month-end JPY supply. Strong resistance/sell interest into 139.00 for the moment and now looking at 138.25 in the retreat. EURJPY: Double month-end flow whammy (EUR demand/JPY supply) helping to drive this pair higher despite the softer risk tones in the wake of JH but capping into 139.00.Sellers will be poised when flow needs reverse.USDCHF: Now finding good support at the old 0.9660 line in the USD reversal helped by some EURCHF demand but sellers poised still on both.EURCHF: Also finding good support of 0.9660 amid expected SNB smoothing and general EUR demand but capping at 0.9750 so far.
AUDUSD: Finding good support around 0.6880-00 now after the 0.6840-50 hold.Now testing 0.6950. GBPAUD capping at 1.7000 and now testing 1.6980 as AUDUSD rally outstrips GBPUSD again. NZD holding 0.6140 and now testing 0.6200 amid some softer USD tones. GBPNZD capping 1.9050 as NZDUSD rally outstrips GBPUSD with rally sellers still poised. USDCAD: Capping at 1.3060 then 1.3020 as USD selling returns and oil price finds some dip demand and now testing 1.2975. Expecting some two-way business overall still amid the fickle variables.
Mixed results for the mighty Shrimpers from the two weekend fixtures but reasons to be cheerful moving forward and plenty of points to play for. Great series-equalising performance from our cricketers vs SA. Bring on the decider!
Let's continue to be careful out there.
Interbank rates: 08.47 BST