Greenback grabbed again after Powell fuels bond yield rise
Friday 5 March 2021
Fed's Powell disappointed those with hope of bond yield cap discussion and with him seemingly unfussed by recent trends and suggesting markets will do what they want we've seen further yield rises and renewed demand for the Greenback, breaking the back of a few key levels in core pairs along the way.
As always though the jury remains out still so we need to focus on price action and value for money in our FX entry and exit levels. Discipline and patience needed more than ever in these ever fickle/fragile times. US jobs/wages data at 13.30 GMT might give the algos something to play with.
GBPUSD spiked above 1.4000 again prior to Powell's speech but has since retreated to 1.3813 this morning amid the US Dollar demand.EURGBP found support around 0.8600 again (GBPEUR sellers 1.1630) where we also have large option contracts rolling off again today but equally finding rally sellers into 0.8630 this time per my tweets yesterday with more lining up at 0.8650. GBPJPY has found a new base at 149.50 with JPY supply still notable and USDJPY rallying through 108.00 but failing into 150.80 this time.
I remain poised to sell GBP into rallies as a jobbing preference but respecting dip demand still with price action ever fickle. Equally a case still for going long in the dips therefore as we continue to range but I still feel the recent rally somewhat over-cooked. Patience, entry/exit level and not getting greedy remain key.
USDJPY needed little excuse to move higher yesterday and Powell provided another help[ing hand and now testing 108.50 on the USD demand/JPY supply double-whammy.EURJPY found a cap around 129.60 but equally a base at 128.90 this time as USDJPY rally outstrips EURUSD reteat. EURUSD has needed little excuse to retreat further given recent weakness and now tested 1.1920 after breaking down through 1.1980 which now becomes a decent cap. USDCHF has now broken up through 0.9300 as EURUSD retreats but rally tempered by EURCHF back down through 1.1100 but with the SNB ever-watchful. buying the preference still .
AUDUSD had a last hurrah amid some ongoing AUDJPY demand but failed into 0.7820 and with the Powell-led USD demand we've seen lows of 0.7660 so far. USDCAD rallied from 1.2575 this time and now testing 1.2700 amid the USD demand but tempered by oil remaining underpinned too.
The mighty Shrimpers travel to Oldham tomorrow and we will be hoping for at least a point, if not all three, after a disappointing loss on Tuesday. Englands cricketers letting it slip a little as I type after two good sessions today but delicately poised still.
Let's continue to be careful out there in all things. Staying safe must be our main priority still. Have a good week-end everyone.
Interbank rates: 08.40 GMT