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  • Mike Paterson

Happy clappy brigade back in town

Tuesday 6 September 2022

Firmer risk sentiment to start the European session with fIrmer USD tones still prevailing overall and JPY supply which sees cross and core pairs underpinned as USDJPY surges to 141.70 helped also by rising US bond yields. Expectations building that next week's US CPI will show inflation capping. Gold still finding a few dip buyers but off its $1727 highs while oil continues to find some dip support too on supply issues.

The Reserve Bank of Australia duly hiked rates by 0.5% to 2.35% . Next up the CB ramp is the Bank of Canada tomorrow then ECB on Thursday. The UK got a new PM in Liz Truss who seems to be credited with a GBP rally priced on energy bill cap plans but I think it's more GBPJPY buying-led. The political/economic uncertainty will still continue and weigh on the already vulnerable Pound.

The second-guessing will continue as always so don't over-analyse but be ready with your preferred levels/strategy. Discipline is key as always but equally hesitation can often ruin a great idea.

GBPUSD: Formed a base around 1.1480 yesterday and now this morning posting 1.1610 driven by the stronger USDJPY/risk-on JPY supply which has seen GBPJPY up to 164.30.Re-sells made into 1.1600. Patience a virtue still.EURGBP: Still making its mind up ahead of Thursday's ECB decision and the ongoing EZ gas supply issues. We've seen a dip below 0.8600 but a good hold again so far and now 0.8620 as some GBPUSD supply returns. Sellers poised again between 0.8650-80. GBPJPY: Firmer risk tones and USDJPY surging higher has seen a sharp spike to 164.30. I think it's an over-extended move so we can expect some fragile price action still.

EURUSD: A good hold of 0.9880 yesterday but a decent bounce back to look at 0.9980 this morning helped by the EURJPY demand. Rally sellers including me still poised. ECB/gas supplies still the elephants in the room. USDJPY: USD demand/firmer risk double whammy helping to underpin at 140.50 this time and a surge to 141.73 this morning. Good two-way business to be had I think still albeit admittedly with an upside bias. EURJPY: Support yesterday into 139.50 and a surge toward 141.50 since on the firmer risk JPY supply lifting core pairs too. Expect more two-way business. USDCHF: Support at 0.9780 broken yesterday but more lurking at an old line at 0.9760 . Now capping at 0.9820 as rally sellers remain poised with EURCHF capping too and some CHFJPY demand too this time.EURCHF: Finding good support at 0.9720 still but capping at 0.9785 this time helped by that CHFJPY demand with sellers ever poised on inherent CHF demand too.

AUDUSD: Now broken down through 0.6780 after the cap into 0.6840 again. RBA decision was factored in to the bone so this is all USD demand/JPY supply moves. GBPAUD rallying from 1.6950 as GBPUSD enjoyed the GBPJPY love and now testing 1.7100 with AUDUSD retreat outstripping GBPUSD. NZD testing 0.6080 again after capping at 0.6130 as USD remains underpinned overall. GBPNZD holding around 1.8900 as GBPUSD and GBPJPY rallied but finding sellers at 1.9050 as I type.USDCAD: Capped at 1.3150 before a fall to 1.3100 amid firmer oil and some CADJPY demand but looking at 1.3130 again as I type amid some profit-taking. Expecting some two-way business overall still amid the fickle variables but looks underpinned overall for the moment.

Let's continue to be careful out there.

Interbank rates: 08.28 BST

GBPUSD 1.1592

EURUSD 0.9970

EURGBP 0.8600

GBPEUR 1.1623

GBPJPY 164.17

GBPCAD 1.5200

GBPCHF 1.1342

GBPZAR 19.8095

GBPHKD 9.0130

USDJPY 141.65

EURJPY 141.27

EURHKD 7.7545

EURCHF 0.9770

AUDUSD 0.6785

NZDUSD 0.6083

USDCAD 1.3114

USDCHF 0.9800

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