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Month-end US Dollar selling sends FX pairs into a spin

Friday 1 May 2020

Yesterday the ECB and Lagarde produced little of note but the month-end Greenback selling that I had warned about here and on Twitter for a few days certainly did.


No point me going through all the ups n downs n ups as but suffice to say that after a rollercoaster ride in most pairs we finally saw the move we were expecting as the 4pm London fix approached. What I wasn't expecting was the degree of Yen weakness but that was accelerated by GBPJPY breaking up through 133.60 as per my Tweet and the generally better risk sentiment prevailing.


Lots of Europe closed today for Labour Day so beware of thin liquidity and UK and US slugging it out later.


GBPUSD's surge capped into 1.2650 and re-sells were duly placed as I tweeted at the time after standing back and watching the rally as the 4pm fix approached and indeed afterwards for a while. We've seen a reality check since to post 1.2533 this morning.EURGBP was already looking a little soggy again but fell further to 0.8670 (GBPEUR up to 1.1535) as GBP surged before now rallying again as EURUSD remains underpinned above 1.0930. The EURGBP rally to 0.8745 helping to push GBPUSD lower too this morning.GBPJPY found good support around 132.50 and surged through the 133.60 cap into the 4pm fix triggering stops and finally posting 135.35 but since retreating to test 134.00 as I type amid a little risk-off sentiment and correction in core pairs.


I stay poised to sell GBP rallies overall and buy back in the dips as ever but patience continues to be a virtue and entry level key as always. The caution I had been expressing into month end was duly justified and I'm still not expecting a free-fall but do see GBP weakness resuming overall.


USDJPY struggled to break out of 106.60-65 as those expiries played out but an hour later was up through 107.00 and testing 107.30-50 amid the Yen weakness triggered by month-end flow.EURJPY has rallied strongly to test 117.50 with the Euro finding good demand generally as EURUSD held above 1.0900 then 1.0930 and with EURCHF still finding SNB support. EURUSD kicked its heels around 1.0900 on yesterday's month-end rally but has since remained underpinned after breaking through to look at 1.0980-00 sell interest. USDCHF duly fell as EURUSD rallied and now testing 0.9625-30 with EURCHF holding 1.0550 with SNB still supporting in the dips and EURUSD still underpinned.


AUDUSD duly capped at 0.6570 where we had those large expiries and strong tech resistance. The failure to take full advantage of the month-end USD supply was telling and re-sells were duly placed. GBPAUD had a brief look below 1.9000 but since rallied strongly to test 1.9500 as the A$ finds its own reality check.USDCAD duly held the 1.3860 i mentioned yesterday and has rallied strongly to test 1.4040-50 on some month-end supply nd softer oil price since its strong rally yesterday.


Let's continue to be careful out there in all things. Staying safe must be our main priority still. Make sure you get some rest over the weekend.


Interbank rates:  08.25 BST

GBPUSD   1.2553

EURUSD   1.0955

EURGBP   0.8728

GBPEUR   1.1456

GBPAUD   1.9485

GBPCAD   1.7629

GBPJPY   134.28

GBPZAR   23.5785

GBPHKD   9.7339

USDJPY   106.96

USDZAR   18.7737

EURJPY   117.17

EURCHF   1.0560

EURHKD   8.4968

AUDUSD   0.6444

USDCAD   1.4037

USDCHF   0.9637


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