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Fragile risk sentiment as another month ends

Friday 29 January 2021

Markets have continued in risk-off mode with equities generally in retreat stlll amid all the #GME/associated plays craziness and now seeing some USD demand again in this ever fickle ongoing scenario full of COVID-led uncertainty. Bitcoin jumped $6k this morning after Elon Musk added BTC logo to his twitter page.. Crazy days indeed.


Citi have now brought out another and final month-end USD flow forecast which sees a neutral average signal only seen once before in 2004 but still a sell-JPY bias, particularly versus EUR and GBP.We've been seeing that over recent sessions but still keep an eye on the final month-end London 16.00 GMT fix.


The Forex jury remains out so keep playing what's in front of you and don't over analyze.


GBPUSD held 1.3630 and found good demand amid the USD selling yesterday but has failed this time at 1.3740 and now testing 1.3660.EURGBP failed at 0.8885 and since been down to test 0.8825-30 again (GBPEUR up to 1.1332) and helping to underpin GBP on its rally but since the reverse being true as we bounce through 0.8860 (GBPEUR back down through 1.1285).GBPJPY found a decent base at our old friend 142.30 again but failing into 143.50 before finding a fresh base now at 143.00 amid that month-end JPY supply outstripping risk-off demand and USDJPY breaking up through 104.50.


I still have a naturally bearish stance on GBP overall and remain poised to sell into rallies but respecting dip demand still with price action ever fickle and that month-end demand also notable. Equally a case still for going long in the dips therefore as we continue to range. Patience and not getting greedy remain key.


USDJPY found a base at 104.20 as per my tweets and noting the line here yesterday and now broken up through 104.50 to post 104.94 this morning amid that month-end JPY selling.EURJPY broke and then held 126.30 amid the JPY supply and now testing 126.80. EURUSD duly held 1.2080 on its last retreat yesterday before rallying only to fail at 1.2140 and since falling to test 1.2100 again.EURGBP and EURJPY dip demand helping to support at the moment. USDCHF failed at 0.8920 but held 0.8870 this time around with the SNB ever watchful and as EURUSD retreated.


AUDUSD found good support at 0.7600 but equally failed into 0.7700 amid the general USD demand and now back down through 0.7650 while USDCAD found a good base at 1.2780 amid the firmer USD/softer risk tones but failed at 1.2880 with some CADJPY demand notable.


The currently not so mighty Shrimpers travel to Port Vale tomorrow in desperate need of points. We'll keep believing but something needs to change soon.


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


Interbank rates: 08.33 GMT

GBPUSD 1.3678

EURUSD 1.2110

EURGBP 0.8845

GBPEUR 1.1305

GBPAUD 1.7891

GBPCAD 1.7595

GBPJPY 143.28

GBPZAR 20.6772

GBPHKD 10.6045

USDJPY 104.63

USDZAR 15.1336

EURJPY 126.75

EURCHF 1.0767

EURHKD 9.3804

AUDUSD 0.7654

USDCAD 1.2850

USDCHF 0.8889


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