Jury still out despite some better risk sentiment returning
Wednesday 22 September 2021
Equities have staged a decent rally as concerns over Evergrande subside for the moment and that stock has rallied well but it's all relative and the potential danger/fallout has not gone away so we have seen limited gains/forex reaction while the jury remains out.
PBOC added liquidity in open market operations to stave off some of the Evergrande panic and the BOJ left rates/policy on hold again with the usual hot-air rhetoric. Next up from the CBs at 18.00 GMT is the latest US Fed FOMC decision and presser. Expecting some tapering talk but no action and Powell to dampen expectations when he steps to the rostrum.
So the feast/famine/variable-risk roller coaster ride continues and amid all this uncertainty I will repeat that patience and discipline in trading are key, as ever, and not being greedy. We've seen some extended moves again and hopefully you've taken advantage but don't beat yourself up if you've taken profit too early. It happens, and much better to be that side of the trade rather than having to take a loss. Equally if you've been the wrong side of these moves then I hope your stop-losses have been placed to minimize any damage.
GBPUSD: Another failure yesterday into 1.3700 and then 1.3680 and re-sells placed per my tweets.The retreats in each case duly found support around 1.3645-50 per again and some more pips banked along the way while keeping core shorts and now breaking lower to test 1.3630 as I type. I remain a rally seller while keeping an eye on EURGBP and GBPJPY as always. EURGBP: Currently testing the decent res/offers at 0.8600 again and helping to push GBPUSD lower. More sellers lurking at 0.8620-25. GBPJPY: Good support at 149.00 still holding the decline but now failing into 149.80 with sellers still poised when risk sentiment fades.
I remain a GBP rally seller across the pairs but being patient as ever. These are risk sentiment markets and ever fickle so good/tight position management essential.
EURUSD: 1.1740 still providing a cap atm after holding 1.1715-20 as the pair finds itself in the middle of cross-flow action and variable risk plays. USDJPYFurther declines yesterday to post new recent lows of 109.14 after failing at the top end of those large options at 109.70 and amid the variable risk tones. 109.60 capping rallies since. EURJPY: A brief break of 128.00 and a decent rally amid the better risk tones that followed but failing at 128.60. Good sellers poised still 128.80-00. USDCHF: 0.9250 capped yesterday's rally helped by the renewed risk-off EURCHF supply but now finding a new base at 0.9220 as EURUSD caps and with the SNB ever vigiliant as EURCHF holds 1.0820. EURCHF: Capping at 1.0900 now and posting 1.0867 as I type but with SNB shadow ever present.
AUDUSD: 0.7280 duly capped the rally and we've been down to look at 0.7220 helped by the intitial AUDJPY risk-off supply but since back up to 0.7265 (also some option interest there today) on the better news re Evergrande lifting confidence in Asia before retreating again on the European open. USDCAD: Yesterday's risk-off rally capped at 1.2850 after the hold of 1.2740 and some firmer risk/oil tones and Trudeau over the line. Holding 1.2775 in the subsequent retreat on the softer risk/firmer USD tones this morning so far. More option interest in play today.
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.32 BST