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  • Mike Paterson

Markets gear up further for rate hikes

Monday 11 October 2021

Hawkish comments/inflation concerns from BOE's Bailey and Saunders (known hawk) over the weekend have sent markets into a BOE rate hike frenzy with makets now pricing in a rise of 0.15-0.2% by year-end which has helped underpin GBP pairs along with the firmer risk sentiment prevaiing again as oil, equities and bond yields all pery still.

US NFP data on Friday came in much weaker than expected and we saw a sharp algo-led USD move lower per printed programme but then some good two-way business to be had before this latest round of risk-on has provided cross and core pair support across the board. FOMC Minutes on Wednesday in play too as the central bank second-guessing continues. Canada Thanksgiving hols today. ECB's Lane speaks at 12.00 GMT.

Amid all this general market uncertainty I will repeat that patience and discipline in trading are key, as ever, and not being greedy. Ignore the noise and countless amount of "analysts" trying to explain the reasons for moves. Just focus on the price action and decide what presents value or doesn't, and if in doubt, keep out.

GBPUSD: The BOE-led rally has capped at 1.3674 and some re-sells placed having trimmed back some losses prior and Friday so let's see what happens now as we trade back below 1.3640. I remain a rally seller but respecting the ongoing dip demand as I've been warning while keeping an eye on EURGBP and GBPJPY as always.

EURGBP: 0.8480-85 giving way again after failures into/above 0.8500 amid the general EUR weakness and GBP demand per the "sellers poised" warning I gave here on Friday. GBPJPY: A further solid rally amid the firmer risk tones and GBP demand double-whammy having held 152.00 and now breaking 154.00. I still feel it'll get top-heavy but respecting current market sentiment.

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: A good hold of 1.160 now helped by the firmer risk tones and cross pair dip demand again but rally sellers remain poised above 1.1580 area. The pair still finds itself in the middle of cross-flow action and variable risk plays. USDJPY: A further move higher amid the risk-on JPY supply and USD demand after its post-NFP test of the 111.60 support and now sees a test of 112.85. EURJPY: New line in the sand at 129.50 now having broken amid the firmer risk tones and core pair dip demand. USDCHF: 0.9260 support back as I type after a failure at 0.9290 but with the SNB ever vigilant. EURCHF: 1.0710 held this morning's retreat with SNB shadow ever present on this and USDCHF and helped by the firmer risk tones but rallies weak still.

AUDUSD: Buyers into 0.7280 on Friday per my mention here and now and up through 0.7320 testing 0.7350 amid the firmer risk AUDJPY demand. USDCAD: 1.2500 finally broken and now testing 1.2450 amid the firmer oil tones and risk-on CADJPY demand.

New lows at Southend on Saturday with a 0-4 loss, pitch invasion during second-half and management team sacked immeidately afterwards. It's painful to watch.

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

Interbank rates: 08.47 BST

GBPUSD 1.3650

EURUSD 1.1573

EURGBP 0.8476

GBPEUR 1.1796

GBPJPY 154.13

GBPCAD 1.6995

GBPZAR 20.3787

GBPHKD 10.6335

USDJPY 112.83

EURJPY 130.64

EURCHF 1.0723

EURHKD 9.0144

AUDUSD 0.7340

USDCAD 1.2448

USDCHF 0.9265

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