Move over Fed, here comes the ECB amid month-end Greenback supply
Thursday 30 April 2020
The FOMC duly offered little of note as per my preview and now it's the turn of the European Central Bank at 11.45 GMT and the 12.30 GMT presser that will keep traders on their toes. Again I'm not expecting too much from the ECB but Lagarde's presser is normally good for a few random comments/moves so stand poised with entry/exit levels as always.
It's month-end today though too and so far this week we have seen good evidence of the negative USD flow as I mentioned yesterday and we will have the additional risk into the final 15.00 GMT London fix of the month.
Rising tensions again between China and Trump are no great surprise and any risk-off rection is lmited for the moment with the month-end flows, ECB uncertainty and some large option expry interest in various pairs all in play.As I said in my FOMC preview there's some decent reasons to expect some further USD supply today but having said that we're still seeing good two-way business.
GBPUSD has once again capped at 1.2485 and re-sells duly made but a hold of 1.2430 since given the underlying USD supply. EURGBP capped at 0.8755 after rallying on the options interest and the usual month-end demand also helping. Retreats since limited to 0.8704 (GBPEUR sellers 1.1490) so still some underlying EUR dip demand.GBPJPY found good support around 132.00 but failing now above 133.00 helped by some GBP supply and and risk-off sentiment.
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. If we do get more month-end USD supply as expected then GBPUSD should remain supported in the dips and nudge higher but sellers are poised still as we've been seeing this week.
USDJPY has a large raft of large options rolling off today between 107-108 and now including 1.1bln right here at 106.60-65 and helping to contain further falls for the moment. EURJPY has held into 115.50 again but capping into 116.20 now with core pairs both finding rally sellers.EURUSD has been underpinned now at 1.0850 amid the generally softer USD but equally finding sellers into 1.0900 as we wait on the ECB. USDCHF is finding dip buyers between 0.9700-20 still with EURCHF now holding 1.0560 still and rallying to 1.1607 with SNB still supporting in the dips.
AUDUSD has held 0.6530 on its latest retreat after testing 0.6570 with those very large option expiries today there well in sight still.Also a decent 100DMA t/a level too. AUDJPY expiries of 510m at 70.00 in play too. USDCAD has held 1.3860 on the latest retreat which was led by a firmer oil/USD supply combo but capping now around 1.3900.
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 07.55 BST