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  • Mike Paterson

Market risk underpinned still

Wednesday 2 February 2022

Risk sentiment remains bouyant as markets wait on the next CBs off the block, BOE and ECB, tomorrow and US NFPs on Friday. FX ranges remain tight as the jury remains out but we'll only find out what's factored in after the event.

As ever, a case of not over-analysing or second-guessing but keeping your focus on price action in core and cross-pairs and identify ranges and what levels present value for money. Patience invariably a virtue but don't confuse patience with being stubborn either in entry or exit.

GBPUSD: Support now at 1.3500 after a good hold around 1.3480 and since testing 1.3550 offers. Some pips banked and re-sells made at 1.3525 hedged by existing USDJPY shorts. I remain a rally seller overall and ever poised while respecting dip demand and therefore in no rush at the moment and keeping an eye on EURGBP and GBPJPY as always. BOE in focus with rate hike of 0.25% priced in but some analysts suggesting they might even go 0.5-0.75% in a one-hit remedy to combat inflation. I can't see it though amid the prevailing uncertain times. Some option interest tomorrow in play too. EURGBP: Still tightly bound as we wait on both BOE and ECB tomorrow so good two-way pips to be had still meanwhile. Option interest in play tomorrow. GBPJPY: Support still at 154.50 but failing around 155.20 this time as the risk jury remains out and core pairs find rally sellers.

EURUSD: 1.1240 support now amid the softer USD tones and testing 1.1280 but sellers remain poised if risk tones remain firm. ECB in focus too. USDJPY: Now chewing through bids at 114.50 amid the softer USD tones. Some dip demand and JPY supply still expected if risk tones stay firm but we're still ever-fickle on that one. EURJPY: 128.80 the support line now after failing around 129.40 this time as jury remains out. USDCHF: 0.9200 support broken briefly after the failure into 0.9240 then 0.9220 on the softer USD tones and EURUSD rally but with SNB ever vigilant despite saying they're not quite so active at the moment as CHF strength serves to help combat inflation. EURCHF: Further retreat to test 1.0370-75. SNB ever-vigilant but see previous comment for their current stance.Sellers prevailing above 1.0400 now.

AUDUSD: 0.7080-00 resistance now gone and looking at 0.7140 again I type amid the softer USD tones, AUDJPY demand and some commodity currency love. USDCAD: 1.2675 providing support but rallies limited to 1.2700 as oil remains underpinned and with CADJPY demand still on the firmer risk tones.

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

Interbank rates: 08.52 GMT

GBPUSD 1.3536

EURUSD 1.1288

EURGBP 0.8340

GBPEUR 1.1989

GBPJPY 155.09

GBPCAD 1.7156

GBPCHF 1.2454

GBPZAR 20.6947

GBPHKD 10.5398

USDJPY 114.48

EURJPY 129.33

EURCHF 1.0401

EURHKD 8.7913

AUDUSD 0.7130

USDCAD 1.2692

USDCHF 0.9214

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