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  • Writer's pictureMike Paterson

More grief for the Greenback

Thursday 3 December 2020

Another rollercoaster ride for the Pound in the past 24 hours amid the many Brexit headlines and we can expect more before the week is out. I stand by my view that we will see a deal of sorts to save face on both sides but that won't be the end of it. Let's see, as we count down to the end of this transition period on 31 Dec. One thing we can be sure of is the many headlines to keep the algos in overdrive.

Elsewhere we've seen more USD supply amid some firmer risk sentiment with EURUSD and AUDUSD both breaking up through recent highs and USDCHF falling to 0.8925 as EURUSD forges ever higher. USDJPY continues to fail in the rallies but finds dip demand on the risk-on JPY selling.

UK Services PMI data came in better than expected just now but still lower than previous and Brexit headlines remain the focus. All delicately poised still and another forex roller coaster ride for GBP expected today.

GBPUSD yesterday fell to test 1.3280 on negative Brexit vibes but since back up to 1.3414 amid reports from the BBC of a deal due tomorrow/week-end and some EURGBP supply at 0.9080-85 and underpinned EURUSD that kept a bid under GBPUSD. EURGBP rallied on the GBP retreat but failed at those 0.9080 offers and since been back to look at 0.9030 bids/support as GBP rallied again. Keep up at the back!. I remain a dip buyer overall but respecting the Brexit-led volatility.

GBPJPY has failed this time at 140.00 with core pairs both finding rally sellers but underpinned risk sentiment remains positive.

I stay poised to sell GBP rallies as my preferred side and buy back in the dips as ever.Patience continues to be a virtue and rally-selling in GBPUSD is still bringing some reward but entry level key as always. Definitely still expecting dip demand as I've warned for a while now. Brexit still the large elephant in the room.

USDJPY failed at 104.80 then 104.60 but has found support into 104.20 yet again as JPY risk-on supply continues to produce dip demand not to mention some large option interest at 104.00. EURJPY has found some solid support now at 126.00 as core pairs continue to find support/demand amid the generally firmer risk and EUR buying but failing above 126.60 this morning. EURUSD continues to find dip demand, this time into 1.2050, but equally finding sellers above 1.2130.

USDCHF bore the brunt of the EURUSD rally and fell through 0.8980 with EURCHF underpinned with the SNB still ever watchful and tested support/bids at 0.8930.

AUDUSD capped into 0.7400 but equally held around 0.7350 amid those large option expiries I mentioned here and on Twitter and has since taken full advantage of the softer USD and firmer risk tones to test 0.7430. Some more large expiries today (1.1bln Puts) between 0.7385-00 should help cap rallies.USDCAD failed above 1.2950 again helped by those large expiries and tested 1.2900 on the softer USD/firmer risk tones but bouncing as I type as some USD demand returns.

Markets are ever-fickle so don't forget to contact me if there's areas that you might need some further help with.

Let's continue to be careful out there in all things. Staying safe must be our main priority still.

Interbank rates: 08.23 GMT

GBPUSD 1.3401

EURUSD 1.2129

EURGBP 0.9051

GBPEUR 1.1047

GBPAUD 1.8040

GBPCAD 1.7302

GBPJPY 139.81

GBPZAR 20.5475

GBPHKD 10.3850

USDJPY 104.32

USDZAR 15.3216

EURJPY 126.55

EURCHF 1.0831

EURHKD 9.4007

AUDUSD 0.7429

USDCAD 1.2911

USDCHF 0.8930

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