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FX pairs still making their minds up as month-end approaches

Friday 26 June 2020

Ranges have been tight overall in the past 24 hours with little by the way of fresh news but month-end flows starting to become evident.


Today's 4pm London fix will be dealing for month-end Spot date and we'll see some evidence of the flows which once again are calculated to be USD negative against most G10 currencies. The signal to sell USD is driven by the need of global equity investors’ to increase hedges as the gains in the US market are likely to have left them under-hedged. The EURUSD signal is reported to be the weakest due to the outperformance of the European equity and bond markets. These strong performances are likely to mean that global investors also need to sell EUR so we can expect some two-way interest.


We've been seeing USDJPY cap already and GBPUSD and EURUSD find decent dip demand and this should be the pattern right up until the 30th June 4pm fix. That's not ruling out though that flows generally will continue to be governed by risk sentiment and options expiries but we can never under-estimate the month-end flow impact too.


GBPUSD has found support into 1.2380 but equally finding sellers on the bounce into 1.2440.Some pips from re-sells duly banked. Rinse and repeat still.EURGBP fell through 0.9020 but held 0.9000 with those larger bids I warned about yesterday as month-demand kicks in and now up testing 0.9050 (GBPEUR down to 1.1040). GBPJPY retreated from 133.60 as USDJPY capped above 107.25 but found demand at 133.00 before having another pop lower below 132.80 as I type amid softer risk plays.


I stay poised to sell GBP rallies overall and buy back in the dips as ever but patience continues to be a virtue and entry level key as always. I still expect to see some dip demand though.


USDJPY capped at 107.30 and now lower at 106.95 on those early month-end flows and softer risk. EURJPY is also lower testing 120.00 from 120.50 but ranging tightly still as are core pairs.EURUSD yesterday was in steady retreat again, this time from 1.1250 to test below 1.1200 but those large expiries I warned about here and later on Twittter did their job. More at 1.1200 today along some month-end flows are seeing both dip demand but rally selling around 1.1230 again.


USDCHF found a base at 0.9480 as EURUSD fell but failed above 0.9500 and now dropping below 0.9480 as I type as EURUSD re-tests 1.1230 but with EURCHF falling through 1.0650 but with the SNB ever vigilant.


AUDUSD has based ar 0.6850 but equally failing at 0.6900 and since back down on the risk-off/retreat to post 0.6875 as I type after an earlier dip and hold into 0.6860. USDCAD has found a base into 1.3600 then 1.3630 since but equally can't get back above 1.3680 amid the variable risk/oil price combo with the shadow of aluminium tariffs to be imposed by the US still in play.


Let's continue to be careful out there in all things. Staying safe must be our main priority still. Make sure you get some rest over the week-end.


Twitter: @MSPFX and @MikePatersonFX



Interbank rates:  08.35 BST

GBPUSD   1.2407

EURUSD   1.1215

EURGBP   0.9039

GBPEUR   1.1060

GBPAUD   1.8023

GBPCAD   1.6934

GBPJPY   132.80

GBPZAR   21.3360

GBPHKD   9.6192

USDJPY   107.04

USDZAR   17.1975

EURJPY   120.08

EURCHF   1.0632

EURHKD   8.6972

AUDUSD   0.6883

USDCAD   1.3650

USDCHF   0.9480


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