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  • Mike Paterson

Fragile risk tones again as another month closes

Thursday 30 June 2022

Softer risk sentiment again this morning overall with equities off yesterday's rally highs and JPY demand notable again helping to cap cross and core pairs but a little rally as I type amid the ongoing backdrop of war in Ukraine. Gold still trading around recent lows but oil price coming off its lows again.

Month-end USD demand still the final flow signal with asset markets having performed poorly in June with bond and equity indices in all advanced economies down and with non-US based investors having a greater need to hedge. Strongest signal is in USDJPY and weakest EURUSD and although I would guess much of it may have been done but we never say never so keep an eye on/into the 4pm London fix as always. OPEC+ meeting underway at 12.30 GMT but no policy change expected.

As ever, deal on fact not second-guessing. Be ready with your preferred levels/strategy, place orders and let the algos do the heavy work. Discipline is key as always but equally hesitation can often ruin a great idea.

GBPUSD: A good hold of 1.2100 in the latest retreat helped by the general and month-end USD demand again with some GBPJPY and GBPCHFF supply and EURGBP demand. Pips banked along the way and I remain poised to sell rallies. Ranging since the lows so timing as ever is crucial. EURGBP: Capping at 0.8660 in the latest rally yesterday and back down testing 0.8585 before a bounce to 0.8610 as jury remains out and plenty of second-guessing of the ECB and BOE still. GBPJPY: 165.00 holding the latest retreat this morning after capping around 166.30 again as the latest firmer risk rally faltered. I think the variable risk tones will help to keep contained still for the moment.

EURUSD: Capped into 1.0520 then 1.0480 amid the month-end USD demand and softer risk tones but supported around 1.0430. Ukraine still remains a very big elephant in the room.USDJPY: Capped around 137.00 on the latest extended rally helped by month-end demmand and some re-sells duly placed. Holding 136.00 in the retreat with dip demand still expected for the moment. EURJPY: 142.00 broken after failure around 142.75 this time but back up to 142.20 as I type. Rally sellers poised still when sentiment turns softer. USDCHF: Support at 0.9540 broken but a holfd of 0.9500 and 0.9960 on EURCHF suggests SNB finally having some influence. sellers poised into 0.9560-80 now. Jury remains out on SNB and amid variable risk but CHF still in demand as further tightening expected.EURCHF: CHF demand outstripping EUR demand still and now with softer risk tones we've seen a break of 1.0000 but support notable at 0.9960 per my SNB comment above. Sellers will remain poised.

AUDUSD: Capping at 0.6900 but holding 0.6850 this time in the extended retreat through 0.6875 amid some softer risk /firmer USD double whammy. GBPAUD failing above 1.7650 now after holding 1.7580 this time amid another extended AUDUSD retreat. NZDUSD still looking soggy amid the firmer USD and some NZDJPY and NZDCHF supply but holding 0.6200-20 again for the moment. GBPNZD bid into 1.9450 still. USDCAD: Back up through 1.2900 amid the general USD demand and some CADJPY supply but sellers still poised on the variable risk/oil tones.

Let's continue to be careful out there.

Interbank rates: 08.47 BST

GBPUSD 1.2135

EURUSD 1.0450

EURGBP 0.8611

GBPEUR 1.1612

GBPJPY 165.22

GBPCAD 1.5655

GBPCHF 1.1597

GBPZAR 19.7415

GBPHKD 9.4532

USDJPY 136.17

EURJPY 142.22

EURCHF 0.9978

EURHKD 8.1422

AUDUSD 0.6881

USDCAD 1.2913

USDCHF 0.9552

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