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  • Mike Paterson

Jury still out as another month gets underway

Tuesday 3 May 2022

Some firmer risk tones this morning after another rollercoaster trip since Friday with European equities opening higher again as US markets rallied late into their close after Friday's late fall caused a few wobbles. US 10-year bond yields are testing 3% again after yesterday's attempt and German 10-year yields have hit 1% for the first time since June 2015. Talk of a possible coup against Putin from his generals has added fuel to the fire this morning.

FX pairs are seeing some good two-way business again while Gold and oil remain on the back foot for the most part. The RBA hit markets earlier this morning with a 0.25% rate hike and hawkish tones which has seen a quick rise in AUD but some sellers returning as I type with Lowe hedging his bets a little in the presser. More CB action tomorrow, or possible inaction compared to markets expectations, with the US Fed then BOE on Thursday.

GBPUSD: A failure again around 1.2600 has seen yesterday's further retreat into 1.2470 but now at 1.2550 again helped by some GBPJPY demand and EURGBP supply. I remain a rally seller overall while keeping an eye on EURGBP and GBPJPY as always. I don't think BOE should/can be too hawkish but may feel obliged to do something. EURGBP:Testing 0.8380 again after yesterday's look at 0.8365 then failing at 0.8420 in the rally as the two-way business continues. Expecting dip demand still but equally rally sellers poised as the uncertainty continues. GBPJPY: Support at 162.00-20 still keeping the pair underpinned and now posting 163.20 again. A coin flip still here but should see some further dip demand overall for the moment.

EURUSD: The 1.0480-00 bids still building but equally struggling to hold above 1.0550. USDJPY: Holding 129.30 in Friday's retreat then 129.50-60 again but equally capped at 130.50 for the moment. EURJPY: Support at 136.50 now as the Euro still finds general dip demand as does USDJPY but 137.50 capping now amid the general EUR supply. USDCHF: A further rally per recent trend and now testing 0.9800 amid generally firmer USD tones and with EURUSD finding some dip demand with the SNB never far away. EURCHF: A good hold of 1.0200-20 still with the SNB lurking in the dips and that decent EURUSD 1.0480-00 demand but rally sellers poised into 1.0300.

AUDUSD: Holding 0.7030 in yesterday's retreat and a quick rush up to 0.7150 post-RBA but once again proving a step too far. NZDUSD holding 0.6400 in the latest retreat after capping into 0.6500. USDCAD: Capping around 1.2900 yesterday after that test of 1.2725-50 on Friday. Two-way business still expected amid all the fickle market tones.Some option interest in play at 1.2900 today.

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

Interbank rates: 08.37 BST

GBPUSD 1.2527

EURUSD 1.0517

EURGBP 0.8391

GBPEUR 1.1916

GBPJPY 163.20

GBPCAD 1.6126

GBPCHF 1.2274

GBPZAR 20.1065

GBPHKD 9.7609

USDJPY 130.20

EURJPY 137.00

EURCHF 1.0287

EURHKD 8.1886

AUDUSD 0.7100

USDCAD 1.2865

USDCHF 0.9780

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