Markets making their mind up still
Tuesday 12 January 2021
A slightly better tone to risk sentiment greets us this morning as the early-year testing of the murky financial waters continues with equities showing some gains and Bitcoin on the rise again after yesterdsay's tumble.
Some good two-way FX business to be had still as the jury remains out with price action fragile so continue to be patient but not greedy on your entry/exit levels.
GBPUSD fell further to test 1.3450 bids/support yesterday amid the general USD demand and some pips banked on the way down as per my tweet before finally rallying back above the pivotal 1.3535-45 area to post highs of 1.3568 helped by EURGBP falling below 0.8975 to now post 0.8950 (GBPEUR up to 1.1178) as BOE's Bailey spouts forth on the wires but seems reluctant to ease monetary policy/interest rates further atm.EURGBP held 0.9000 yesterday tried to hold 0.9000 helped by some large option expiries but needed little excuse to fall through afterwards helped by GBPUSD holding 1.3450. GBPJPY has seen a steady march up to 141.60 led by firmer risk sentiment and core pair dip demand after holding 140.80.
I still have a naturally bearish stance on GBP overall and remain poised to sell into rallies but respecting current demand again for the moment.
USDJPY finally broke 104.30 on the USD demand but rallies tempered at 104.40 from the JPY risk-off demand and a turnaround in USD sentiment since generally. Seems like we are entrenched 104.00-50 for the moment amid variable USD and risk tones.EURJPY broke lower yesterday on the softer risk tones but held 126.50 before rallying back on firmer risk sentiment. EURUSD held 1.2130 on its retreat yesterday amid the firmer USD tones but equally failing into 1.2180 on the subsequent rally. USDCHF remains underpinned, this time around 0.8860 with the SNB ever watchful and been up through 0.8900 before retreating on some softer USD tones this morning.
AUDUSD yesterday tried to cling onto 0.7720-25 where we had large option expiries but failed amid the firmer USD tones but held 0.7665 and lo and behold back up to 0.7730 as I type in a reverse move that confirms my view on the expected dip demand.USDCAD held 1.2730 and enjoyed a decent rally to look at 1.2840 on the firmer USD tones only to cap and fall back to where it came from and now testing 1.2750 support again.
There's little doubt that we live in strange times and rationale was thrown out the window a long time ago so as we look at trading opportunities to begin the year it's even more important not to over analyze but trade the price action with discipline and patience. I can help with this in my 1-2-1 sessions and now is the time, more than ever, to get on board with those if you haven't already done so.
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.32 GMT