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  • Writer's pictureMike Paterson

Move over Fed, bring on the BOE

Thursday 4 November 2021

Yesterday the US Fed duly delivered their taper announcement to start this month by $15bln per month initially and to vary as required but still not looking for any rate hikes until next year at the very earliest.

We saw mixed reactions from algos and markets given the headlines versus it was factored in anyhow and amid all the noise we saw good two-way Forex interest with the net result this morning of softer risk tones providing JPY and CHF demand again pushing core pairs lower as we continue to range. All per printed programme. Oil has seen some fun n games dropping sharply but recovering almost as fast.

Today sees the turn of the BOE to let us know what they want to do in these inflation days. We can't rule out a 0.1-0.15% hike but I'm not convinced and in any case the market has priced that in for a while anyhow. Yes, we've seen some GBP decline since in the past week so markets are better balanced but risk should be to the downside as we can expect the usual cautious tones on inflation and post-COVID economic recovery. As always, keep an eye on the vote count too and let's hope for some volatility.

GBPUSD: A good test of 1.3700 on the latest rally post-FOMC after holding 1.3630 and breaking up through 1.3665 earlier in the day helped by the EURGBP retreat from that 0.8520 area again and some GBPJPY demand after 155.00 held. Rinse n repeat with one eye on the BOE. I remain a rally seller overall as we continue to range while keeping track of EURGBP and GBPJPY as always. EURGBP: 0.8480-85 support finally broken amid the general GBP demand yesterday but 0.8465 holding so far. Sellers poised at 0.8485, 0.8500 then 0.8520-25 still where we also have decent option interest today with more the other end of the range at 0.8440 tomorrow. GBPJPY: Support at 155.00 still but sellers above 156.00 prevailing as risk turns softer again and now testing 155.30-50 again. Keep selling those rallies

I remain a GBP rally seller across the pairs overall as my preferred trading side albeit against the grain currently so being patient as ever. These markets are ever-fickle so good/tight position management essential.

EURUSD: Another failure at 1.1620 and now testing the bottom side of 1.1545-50 as we remain tightly bound still while the pair remains in the middle of cross-flow action, variable USD and some decent option interest with more today in play right here. USDJPY: Yesterday's rally capped at 114.30 post-FOMC amid the softer risk tones where we also have large option interest today but support at 113.80 while we continue to range but I know my preference. EURJPY: An old support line at 131.60 now being tested again after failing at 132.60 in the post-FOMC euphoria with rally sellers ever poised. USDCHF: 0.9100 support holding again post-FOMC with the SNB ever vigilant but failing to hold above 0.9140 and sellers remain poised as EURCHF struggles to recover amid softer risk and general CHF demand. EURCHF: 1.0530 now holding the retreat after failure into 1.0600 again amid notable CHF demand still but with the SNB ever vigilant. Sellers in the rallies poised still.

AUDUSD: Still testing the old 0.7420 support line in its latest retreat after failure above 0.7460 where I warned yesterday here that sellers were poised. USDCAD: Still underpinned at 1.2380-00, amid some CADJPY supply as oil caps again after rally sellers prevailed at 1.2460 where we capped on Monday.

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 1.3634

EURUSD 1.1554

EURGBP 0.8472

GBPEUR 1.1802

GBPJPY 155.56

GBPCAD 1.6903

GBPZAR 20.8285

GBPHKD 10.6177

USDJPY 114.09

EURJPY 131.84

EURCHF 1.0557

EURHKD 8.9981

AUDUSD 0.7433

USDCAD 1.2403

USDCHF 0.9135

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