FX pairs still ranging amid variable risk sentiment
Tuesday 4 August 2020
Seems like the jury is still out on the Greenback as FX pairs find themselves mostly contained for the moment as markets tread warily but amid generally firmer tones overall.
COVID continues to cast its resurgence shadow but equities and commodities don't care ( albeit turning a little lower as I type) as investors revel in the ultra-cheap money swashing around still and expected even further if further COVID lockdowns return. Strange times indeed but once again we need to analyze less and just go with the flow. As always, picking value-for-money levels to enter/exit trades is crucial, and don't get greedy. Yesterday's 4pm London fix provided some USD-negative flows so we'll keep an eye on that again too.
GBPUSD broke down through 1.3050-60 support to post lows of 1.3014 but since rallied again before failing above 1.3100 again as I type. Let's see how far we come back down this time but I still prefer the fragile risk/sell plays. EURGBP has duly held the 0.8980-85 support line again but still struggling to progress through 0.9020-30. GBPJPY found support at 137.80 but failing around 139.00 resistance/offers although still underpinned.
I stay poised to sell GBP rallies overall as my preferred side and buy back in the dips as ever.Patience will continue to be a virtue and entry level key as always. I still expect to continue seeing dip demand though amid the generally softer USD tones atm.
USDJPY duly found a base this time between 105.50-60 but equally capped again into 106.50 and now 105.95 with large option expiries today at 106.00 in play. EURJPY found support at 124.00 again but capped at 125.00 this time around but now underpinned at 124.60 on the generally better risk sentiment. EURUSD had a brief look at 1.1700 but was soon enjoying the USD London fix supply and since tested 1.1800 again and now seemingly underpinned into 1.1760 for the moment. USDCHF enjoyed a run up to 0.9240 as EURUSD retreated into 1.1700 and with EURCHF still underpinned with the SNB ever vigilant in the dip but since reversed back into 0.9160.
AUDUSD broke down through 0.7100 to test 0.7080 amid the general USD demand ahead of the 4pm London fix but then reversed to test 0.7150. Victoria COVID lockdown still in focus but the latest RBA decision to keep rates on hold as expected came with a relatively upbeat economic assessment overall, however wish-list.
USDCAD failed at 1.3450 and then retreated amid softer USD/firmer oil to post fresh recent lows of 1.3362. Large expiries today at 1.3330 and 1.3440-55 helping to now contain the range.
Markets are ever-fickle so don't forget to contact me if there's areas of trading these markets or how to make best use of the order boards and expiries, that you might want some further help with.
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.12 BST