FX pairs still making their minds up
Thursday 5 March 2020
Another 0.5% rate cut yesterday, this time from the Bank of Canada, and plenty of rumours of impenduing action from the ECB and BOE (perhaps leaning to the fiscal side though) has seen markets in a quandery as to what to do next and FX pairs mostly ranging still. Variable USD sentiment and currently on the slide again as European trading gets underway in full flow.
A little risk-off sentiment prevailing too as I type with European equities and oil prices turning lower. Also be aware we have speeches later today from BOE gov Carney at 17.00 GMT and BOC gov Poloz at 17.45 as well as a key OPEC meeting beginning too.
GBPUSD had a look at 1.2760 again yesterdy amid early morning talk of a BOE rate cut but when nothing came of the rumours we duly bounced back above 1.2800 and from there traded 1.2800-35 for a while again before finally breaking through 1.2850 then 1.2880 this morning as EURGBP continues its fall from 0.8747 to post 0.8621. I highlighted the break down through 0.8680 and subsequent bid under GBPUSD around 1.2800 on Twitter so I hope you took heed. Good 2-way business still whatever your bias. EURGBP duly capped at the 0.8750 offers and started to fall in a general Euro retreat as noises from Germany and elsewhere in the Eurozone suggested some imminent action to combat the Coronavirus threat. However if this leans to the fiscal side then the retreat should be minimal. GBPJPY continues to see good two-way business amid the variable risk sentiment but currently underpinned as core pairs also find dip demand.
I stay poised to sell GBP rallies and buy back in the dips as ever.
USDJPY has enjoyed good 2-way business amid the variable risk/USD sentiment since holding 106.80 then 107.00 and 107.20 to test 107.75-80 offers/res before retreating in Asia and further now into 107.00 as I type. EURJPY also in retreat and now testing 119.20 after failing above 120.00.EURUSD fell below 1.1100 yesterday amid the Coronavirus measures talk but duly found dip demand again to post 1.1159 this morning amid a general USD retreat. USDCHF has retreated again but still holding 0.9530 as EURCHF finds underlying dip demand 1.0630 too.
AUDUSD held around 0.6600 and has rallied to 0.6635 but tempered by some AUDJPY supply. USDCAD yesterday surged from 1.3330 to 1.3410 after the BOC cut by 0.5%. A rate cut was expected following the Fed's move on Tuesday but 0.5% was at the bigger end of a 0.25-0.5% expectation. Now holding above 1.3380 the pair has been contained since by the softer USD/softer oil/CADJPY impact.
Fickle Forex markets ever prevailing so be ready to jump on moves with your entry/exit levels and orders as always.
Have a good day out there one and all.
Interbank rates: 08.45 GMT