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  • Mike Paterson

FOMC taper talk again

Thursday 20 May 2021

Markets were drifting along after the bounce in Bitcoin from its big drop to 30k which had unsettled risk sentiment again but then we saw the FOMC Minutes released with more confirmation of taper talk.

Cue USD demand and renewed risk-off plays but once the initial algo knee-jerk reaction was over we saw USD selling once again although risk remains fragile on the uncertainty. I don't think the Minutes told us much more than markets already knew/suspected but once the algos in over-reaction mode.

Jury on the Greenback still out therefore so ignore the noise and, as always in these fickle times, be careful with your trading. Pick your preferred entry/exit levels and don't be greedy or over-analyze. Patience and discipline are key too of course,as highglighted perfectly by those post-FOMC moves yesterday.

GBPUSD: In retreat for most of the day and found a cap at 1.4180 before holding 1.4130. A small rally was reversed and more by the FOMC noise and we've seen a test of 1.4100 helped by GBPJPY supply and now rallies capped at 1.4150.EURGBP: Still holding 0.8600 amid general EUR demand but capping above 0.8640 now. Option interest today should help underpin still as well as cap GBPUSD.GBPJPY: Now underpinned at 153.50 after yesterday's risk-off fall but sell interest at 154.30-50 now.

I remain a GBP rally seller across the pairs but still not getting over greedy with expectation on the retreats.

EURUSD: A good hold of 1.2160 post-FOMC but some general EUR demand still helping to lift. More option Put interest today should help underpin. USDJPY: A good hold of 108.60 yesterday and then strong rally to 109.30 post-FOMC EURJPY: 132.60 now a decent base after yesterday's risk-off retreat after sellers at 133.50 prevailed again.USDCHF: 0.8985 holding the fall but failing at 0.9040 as EURUSD rallied and EURCHF retreats but with the SNB ever watchful and ready to help but sellers still poised. Option interest in play today.EURCHF: Capped into 1.1020 this time as USDCHF fell and helped by some risk-off selling but some general EUR dip demand and SNB shadow keeping it underpinned.

AUDUSD: A good hold of 0.7700 post-FOMC but sellers poised around 0.7760 and 0.7780. USDCAD: Capping at 1.2140 on the softer/USD firmer oil tones but now holding 1.2100 amid some CADJPY supply.

Let's continue to be careful out there in all things. Staying safe must be our main priority still. Have a good week-end everyone.

Interbank rates: 08.35 BST

GBPUSD 1.4132

EURUSD 1.2200

EURGBP 0.8633

GBPEUR 1.1581

GBPAUD 1.8211

GBPCAD 1.7100

GBPJPY 154.05

GBPZAR 19.8687

GBPHKD 10.9550

USDJPY 109.03

USDZAR 14.0945

EURJPY 133.01

EURCHF 1.0988

EURHKD 9.4595

AUDUSD 0.7756

USDCAD 1.2104

USDCHF 0.9008

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