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  • Mike Paterson

Markets still second-guessing

Thursday 18 August 2022

Yesterday's FOMC Minutes disappointed the hawks on first sight and the algos helped send the Greenback a little lower initially before regaining its recent underpinned poise on Fed hike expectations/yield rises albeit with some key FX resistance levels still holding.

Oil and gold off their lows with equities making their minds up still and some variable JPY moves again this morning on the mixed risk tones and with USDJPY failing at the strong resistance 135.50-60 area.

GBPUSD: Capped at 1.2100 but holding around 1.2000 again this morning where we have some decent option interest rolling off today too as I warned previously. A few pips banked again per ongoing strategy. I will stand poised for re-sells as we continue to range with patience a virtue still. EURGBP: Now holding 0.8440 amid weaker GBP and EURUSD pinned down by cross flows and options interest but failing into 0.8470. Two-way opportunity still envisaged.GBPJPY: Now based around 162.25-50 after the retreat from 163.50 amid further GBP weakness but supported by USDJPY staging a decent bounce from 134.75. The risk and USD jury remain out and we can expect some fragile price action still.

EURUSD: Still ranging tightly amid the variable EUR cross-flows and some more sizeable option interest today as I've warned. Rally sellers still ever-poised. USDJPY: Another dip yesterday after failing at the strong resistance area of 135.50-60 and helped by the USD sales post-FOMC Minutes but equally good dip demand into 134.70-75 this time and longs will be happy with that too still as we post 135.30 on the rebound.EURJPY: Forming a base now around 137.00 on some core pair dip demand but with sellers poised still whenever sentiment turns.USDCHF: Currently capping around the old line of 0.9540 as EURUSD finds some dip demand again and EURCHF steady with the SNB ever vigilant. CHF demand still notable helped by rate hike expectations. EURCHF: 0.9670 support now with SNB smoothing but some inherent CHF demand still capping rallies too.

AUDUSD: Good support into 0.6900 after the retreat from 0.6950. GBPAUD now holding 1.7350 and testing 1.7380-00 as GBPUSD bounces from 1.2000. NZDUSD capping at 0.6320 and testing 0.6250 support this morning as the post-RBNZ sell-off continues. GBPNZD holding around 1.9150 now as NZD retreats/GBP bounces but rally sellers poised. USDCAD: Supported at 1.2880-00 amid the firmer USD tones but capping at 1.2940 as oil moves off its lows and some notable CADJPY demand again. Expect some good two-way business overall still amid the variables.

Let's continue to be careful out there.

Interbank rates: 08.36 BST

GBPUSD 1.2027

EURUSD 1.0160

EURGBP 0.8447

GBPEUR 1.1838

GBPJPY 162.74

USDJPY 135.30

EURJPY 137.48

EURCHF 0.9685

AUDUSD 0.6920

NZDUSD 0.6257

USDCAD 1.2928

USDCHF 0.9534

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