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  • Mike Paterson

Jury out again as we wait on ECB

Thursday 6 June 2019

D-Day landings 6 June 1944. We will, and must, always remember....

Horrible US ADP jobs data yesterday ahead of the key Non-Farm Payroll numbers tomorrow saw the Greenback in rapid retreat again but with some key levels holding we've seen a decent bounce back and the jury remains out. The US Fed may yet cut rates this month, next month, this year and the US Dollar may stay on the back foot but once again we're seeing some reality check come into an over reaction.ECB announce their latest interest rate thoughts today and the markets remain delicately poised.

GBPUSD finally took out the 1.2720-30 resistance and triggered stop losses to run up toward the next big tranche at 1.2750 only to fail and retreat to 1.2668. EURGBP retreated further amid some general Euro supply but finding support below 0.8850 still with traders cautious ahead of the ECB.GBPJPY remains range-bound but with good two-way business with USDJPY also holding 107.80-108.50 but sellers remain poised.

I remain GBP bearish overall and continue to rally-sell as my preferred strategy amid all the uncertainty/indecision including Brexit. I repeat no change to this view for the foreseeable future. Dip buyers will still expect to find better value for money the lower we head but that's still not happening in any big fashion at the moment.

The ECB deliver their rate announcement at 11.45 GMT with the more important Draghi presser at 12.30 GMT and the Euro duly failed above 1.1300 before falling back only to hold 1.1220 again where we have large option expiry interest today. ECB should remain dovish/cautious and that is priced in but the algos will feed on any news bombs so we must remain aware/vigilant.

USDJPY remains on the back foot but those bids at 107.80-85 held once again yesterday post ADP data but sellers at 108.50 remain poised.USDCHF also retreated in rapid fashion to take out support at 0.9900, 0.9980 and 0.9860 but 0.9850 proved a step too far and the combination of all the dip demand saw an impressive bounce back to test 0.9950 supported by the usual EURCHF dip demand with the SNB ever casting their shadow.

AUDUSD found life above 0.7000 hard to consolidate with those large expiries at 0.7000 playing out as I warned yesterday. Large expiries today at 0.6900 not in immediate play but will lend support on any significant dips.

USDCAD found the expected support around 1.3360, failing to yield even with the general USD tumble post-ADP data, but failed in the subsequent rally at the 1.3430 offers.

Fickle Forex markets ever prevailing so be ready with your entry/exit levels and orders as always.

Have a good day out there one and all.

Interbank Rate 09.10 BST

GBPUSD   1.2693

EURUSD   1.1238

EURGBP   0.8854

GBPEUR   1.1293

GBPAUD   1.8189

GBPCAD   1.7016

GBPZAR   18.8578

GBPHKD   9.8409

USDJPY   108.21

USDZAR   14.8689

EURJPY   121.61

EURCHF   1.1174

EURHKD   8.7141

GBPJPY   137.32

AUDUSD   0.6977

USDCAD   1.3408

USDCHF   0.9942

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