Markets in a whirl again
Monday 24 October 2022
Friday's FX trading was given a sharp injection of volatility as the MOF/BOJ stepped in again to combat the incessant USDJPY rise, and again in early Asia, despite declining to comment.Despite lows around 145.00 in Asia from Friday's 151.83 highs we're still at 149.22 which tells us that longer-term traders are still dip-buying. No pair is an island of course so we've seen volatility across all FX pricing, mostly because of the JPY related reaction on cross and core pairs but also the USD sentiment volatility.
In the UK it seems we will have Rishi Sunak as our PM by default within the next 24 hours. Markets seem to be encouraged by this news and we've seen some GBP demand amid a more settled gilt market with yields down sharply but in reality there is a very tough job to be done and this is no time for complacency. I remain unconvinced that anyone can bail out the UK at this time.
Oil and equity markets looking wobbly again with gold also off its highs as it continues to decide exactly what role it serves in these ever-fickle markets. ECB set to announce a 50-75bps on Thursday but how much is already factored in ? Soggy PMI data out of EZ and UK this morning.
GBPUSD: Solid falls to post 1.1060 on Friday amid the UK political/economic uncertainty and firmer USD but decent rally to 1.1410 since. I still can't see any good news to be had from the current fallout though. EURGBP: Finding support at 0.8660-65 again in latest retreats having capped at 0.8780 on Friday and I still expect some two-way business with the Eurozone facing issues of its own and ECB on Thursday.GBPJPY: A real roller-coaster ride between 169.80-165.00 amid the MOF/BOJ interventions as I had been warning. USDJPY still vulnerable to sell-offs but should still find some two-way pips.
EURUSD: Support at 0.9700 on Friday but after capping around 0.9900 on the bounce. I remain a rally seller as my preferred side. Cross flows, risk, Ukraine and ECB conjecture all in the frame still as well as USD flows and ECB. USDJPY: 145.30-151.80 since my report on Friday with plenty of roller-coaster riding in-between per comments above. EURJPY: Capping into 147.50 again but holding 144.00 area so far. JPY the driver still overall for the moment but ECB casts a shadow. USDCHF: Having a roller-coaster ride of its own between 1.0150 and 0.9950 .Climbing back above 1.0000 as I type amid some general USD demand as EURCHF remains underpinned for the moment with SNB never far away. EURCHF: Holding 0.9820-30 still but rally sellers still poised.
AUDUSD: Retreating into 0.6200 again on Friday amid the USD demand before capping around 0.6400.AUDJPY a big driver too atm. NZDUSD 0.5600-0.5800 in its own volatile ride. USDCAD: Holding 1.3600 this time after capping at 1.3850 on Friday and a decent climb to 1.3750 this morning amid general USD demand and oil prices retreating.
A solid win for the mighty Shrimpers on Saturday that moves us ever closer to the play-off places. A must-win tomorrow too for immediate back-up and extend our unbeaten run.
Let's continue to be careful out there.
Interbank rates: 08.30 BST