It's the waitin' Sarge...
Tuesday 25 October 2022
The UK has a new PM in Rishi Sunak who will be officially appointed today and will be making a speech at 11.30 BST but markets now waiting to see what plans he has to get through the very choppy waters ahead. The fiscal statement is still due for the 31st as far as we know and the Pound has understandably seen a bit of a reality check since the initial optimism but gilts seem settled for the moment. Markets and traders also waiting for the ECB on Thursday.
Oil and equity markets making their minds up too as is gold still as it continues to decide exactly what role it serves in these ever-fickle markets.
Whatever your view/take/analysis one thing is clear, we are experiencing global markets in panic/confused/second-guessing mode the like of which we haven't seen for many a year, indeed decade.Focus on the price action and let the algos do the heavy lifting/dropping.
GBPUSD: A further retreat into 1.1250 but decent support found down there as expected given it provided good resistance on the way up through for a while. I remain a rally seller. Large option expiries above 1.1400 today in play should we rally well. EURGBP: Finding support at 0.8660-65 yet again yesterday but capped at 0.8760 this time on some renewed GBP demand helped by GBPUSD holding 1.1250. I still expect some two-way business. GBPJPY: More settled in the past 24 hours amid the threat of MOF/BOJ interventions. USDJPY still vulnerable to sell-offs but should still find some two-way pips on the underpinned USDJPY tones overall
EURUSD: Support for the Euro generally being seen ahead of the ECB's expected rate hike on Thursday and amid decent option interest yesterday but sellers at 0.9900 capping the rally so far. Cross flows, risk, Ukraine and ECB conjecture all in the frame still as well as USD flows and ECB. Decent option interest again tomorrow too. USDJPY: Flatlining for the moment per my comments above with the intervention threat still real but underpinned by yield differential and that's not changing anytime soon.EURJPY: Also tightly bound amid the intervention threat. JPY the driver still overall for the moment but ECB casts a shadow. USDCHF: Underpinned still, currently at 0.9980 and climbing back above 1.0000 as I type as EURCHF remains underpinned for the moment with SNB never far away and ECB looming. EURCHF: Holding 0.9860-80 now with EUR dip demand still into the ECB. SNB still keeping an eye and supporting dips too but rally sellers still poised.
AUDUSD: Holding 0.6275-80 after capping above 0.6400 amid some general USD demand and China concerns still and I remain a rally seller as my preferred side. Option interest today at 0.6300. NZDUSD 0.5660-5780 in its own up n down ride. Options nearby at 0.5720 again today. USDCAD: Holding 1.3675-80 this time after capping at 1.3775 amid the oil and USD variables.
Let's continue to be careful out there.
Interbank rates: 08.48 BST