Markets still second-guessing
Wednesday 28 September 2022
Another day begins amid the usual second-guessing and hyperbole which sees the Pound and US Dollar both ranging as the jury remains out. BOE's chief economist Pill toed the party line and said more action would be taken if needed but also seemed to rule out inter-meeting rate hikes while the IMF published an unprecedented (for a G7 country) report damning the UK's fiscal policy in the wake of Friday's measures.
Cue the Pound having another wobble with GBPUSD leading the way down to 1.0630 from 1.0840 amid some general USD demand that has also seen other major currencies fall as 10yr US treasury yields touch 4%. Risk-off sentiment as equities tumble again before recovering a little.
Conjecture remains in these ever-fickle markets so don't over-analyse but be ready with your preferred levels/strategy. Look for appropriate risk verus reward. Discipline is key as always but equally hesitation can often ruin a great idea.
GBPUSD: My technical analysis man Les @fxcharttopper called the top and bottom of this pair yesterday and rally-sells proved prudent again but equally dip buyers (at the right levels) would have made money too as we fell from 1.0840 to 1.0630 and rallying again to 1.0690 as I type. Patience a virtue again but I prefer rally-sell side still. Cross flows still having a big impact too as well as the UK govt/BOE fallout. EURGBP: Now in a tight 0.89000-0.9000 range as core pairs continue to move in tandem amid the variable risk and USD tones. Expect more two-way business still, pending news shocks from both sides of the English Channel. GBPJPY: Also tightly bound at lower levels amid the fragile risk tones. Support building at 153.50-00 still but equally sellers poised now into 156.00.
EURUSD: 0.9520-0.9620 covers it for the moment and I remain a rally seller as my preferred side. Cross and month-end flows, Ukraine and ECB conjecture all in the frame quite apart from USD flows. USDJPY: Capping into 145.00 again and re-sells duly placed per yesterday's tweet with some rally-tempering from the fragile risk JPY demand but holding 144.30-50 in the retreat so far. Expecting more 2-way business. EURJPY: Underpinned at 138.00 but sellers poised at 139.00 amid all the variables.USDCHF: Capping above 0.9960 again amid some USD supply and risk-off CHF demand (EURCHF retreat) but support expected around 0.9880. SNB will be keeping an eye on matters. EURCHF: Now capping into 0.9550 and testing support at 0.9480 as core pairs cap too.
AUDUSD: Capping at 0.6450 in the extended retreat and testing 0.6360 amid the soggy Chinese tones still and some AUDJPY risk-off supply despite better retails data. GBPAUD capping at 1.6800 again but holding 1.6600 in the retreats this time. NZDUSD still soggy overall but holding 0.5570 in latest extended retreat after capping at 0.5630-50. GBPNZD capping at 1.9150 but underpinned 1.9030-50. USDCAD: Decent support coming at 1.3700 now but capping at 1.3800 amid the firmer oil/softer USD tones.
Let's continue to be careful out there.
Interbank rates: 08.07 BST