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  • Mike Paterson

Inflation data sparks further US Dollar demand

Thursday 11 November 2021

We will always remember.

Yesterday's strong US CPI reading has increased pressure on the US Federal Reserve to act to stop inflation running away even further and we've see firm gains in the Greenback since the data release despite consensus that rate hikes are still a way off yet.

Equity markets and yields initially seemed unfazed but later in the day we saw some risk-off plays with falls in those markets along with oil bringing demand back in JPY and CHF while gold enjoyed its renewed safe-haven status and broke up to 1864 so far, not seen since June. Whether this shake-out has more in it remains to be seen as equities firm again this morning.

Don't forget in these markets that it's key to identify on-going and new ranges and trade the momentum if broken but not getting greedy if they stay intact. Second-guessing is often futile. All things/moves must be considered in context. Forex is not rocket science but it is ever-fickle so you have to stay in control of you/your trades as much as you can.

GBPUSD: A good cap yesterday at 1.3550 and a steady retreat to 2021 lows now of 1.3365 amid the USD demand after the latest rally failed around 1.3430. EURGBP: Holding 0.8540 now but equally sellers poised into 0.8580 as core pairs move in tandem. GBPJPY: Some great two-way trading on this pair yesterday per my tweets amid the variable risk and core pair action.Sellers at 153.75 prevailing in the end and now testing the support between 152.50-70.

I remain a GBP rally seller across the pairs overall as my preferred trading side albeit against the grain currently so being patient as ever. These markets are ever-fickle so good/tight position management essential.

EURUSD: Support at 1.1550 vanished after the large option interest rolled off and has now extended losses to test 1.1450 not seen since July. USDJPY: Strong gains yesterday amid the USD demand but sellers helped by the risk-off JPY demand. Looks underpinned though still. EURJPY: 130.60 still providing support after the cap into 131.50 with rally sellers ever poised. USDCHF: 0.9140-60 resistance now broken and becomes support with the SNB ever vigilant but equally sellers around that old line at 0.9220 still poised. EURCHF: 1.0550 finally broke in the the latest retreat but 1.0530 still providing support with the SNB ever vigilant but sellers in the rallies between 1.0560-80 now.

AUDUSD: 0.7350 support broken amid the USD demand and now testing 0.7290 again as I type. Large option interest tomorrow should we rally. USDCAD: 1.2420-30 support gave way but the old 1.2380 pivot line came into play and we've since rallied strongly to 1.2530 as the pair continues to find itself caught up amid the variable CADJPY/oil/USD moves not to mention the option interest with more in play now up here tomorrow

Offers: 1.2530-35, 1.2550, 1.2575, 1.2600, 1.2620, 1.2650, 1.2675, 1.2700

Let's continue to be careful out there in all things. Staying safe must be our main priority still.

Interbank rates: 08.36 GMT

GBPUSD 1.3388

EURUSD 1.1470

EURGBP 0.8565

GBPEUR 1.1675

GBPJPY 152.68

GBPCAD 1.6765

GBPZAR 20.5135

GBPHKD 10.3813

USDJPY 114.02

EURJPY 130.78

EURCHF 1.0535

EURHKD 8.8920

AUDUSD 0.7300

USDCAD 1.2526

USDCHF 0.9182

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