Greenback under pressure on FOMC expectations
Wednesday 18 November 2020
I've highlighted previously the market's expectation of further FOMC monetary easing, even before the next announcement on 16th Dec, and Fed Chairman Powell did little in his latest speech yesterday to throw them off the scent.
While the conjecture continues we've seen some concerted USD selling amid some variable risk sentiment. Brexit continues to grab headlines with plenty of talk of a deal being announced yet equally difficulties still remain. Ever thus. UK inflation data out earlier had little impact understandably in these ever-changing times.
GBPUSD found a new base at 1.3240 yesterday and has climbed further to post 1.3292 amid the softer USD tones. EURGBP broke down through 0.8950 after capping lower at 0.8975-80 but failing to see any real follow through for the moment as core pairs both fall/rally in roughly equal measure. Decent support line at 0.8935-40 now but equally sellers at 0.8960 and 0.8980.GBPJPY found a base around 137.80 after a retreat from 138.30 and has ranged tightly since amid the softer USD/variable risk tones.
I stay poised to sell GBP rallies as my preferred side and buy back in the dips as ever.Patience continues to be a virtue and rally-selling in GBPUSD is still bringing some reward but entry level key as always. Definitely expecting dip demand still as I've said for a while now amid the current USD supply.Brexit remains very much in the room and the negative impact of COVID on the UK economy before any sort of vaccine-led recovery still in the mix.
USDJPY has held below the key 104.40 line and fallen to test the next decent level at 103.80 amid the softer USD. EURJPY failed at 123.80 but holding 123.30 for the moment as core pairs find some dip demand. EURUSD still finding good demand on the softer USD tones but failing at 1.1900 again as we did yesterday with those large options kicking in. None of note today but natural sell interest poised still. USDCHF failed into 0.9130 this time again as EURUSD found a base below 1.1850 and with EURCHF steady albeit capped with the SNB still ever watchful though and currently testing 0.9100 again.
AUDUSD duly capped at 0.7340 where there's also big technical resistance and fell back to test 0.7280 amid those large AUDJPY expiries that I highlighted here and on Twitter so I hope the steer helped. USDCAD failed into 1.3120 and has retreated below 1.3080 again on the softer USD/steady oil tones but equally holding 1.3060 so far.
Markets are ever-fickle so don't forget to contact me if there's areas that you might need 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: 08.36 GMT