Perky markets but FX pairs ranging still
Wednesday 8 December 2021
Markets remain in risk-on mode with yields rising as too are equities and oil prices. Bitcoin holding above $50k but not really making advances and Gold continues to tread water around $1790.
COVID/Omicron unknowns continue to lurk and second-guessing on Central Banks will continue to cast a shadow with the Fed meeting on 15 Dec and both ECB and BOE on 16th. Today sees the BOC decision at 15.00 GMT. No hikes expected til early next year but expect the usual cautious tones mixed up with their generally upbeat assessment per last outing.
As always, don't over-analyze but keep your focus on price action in core and cross-pairs and identify recent ranges to see whether we hold or break and what levels present value for money. If in doubt, stay out. Patience will invariably be a virtue but don't confuse patience with being stubborn.
GBPUSD: Based around 1.3210 helped by risk-on EURGBP supply/GBPJPY demand along with some option interest there tomorrow/Friday but capping at 1.3260 amid the general USD demand and EURGBP finding a base downstairs as I've been warning. GBPUSD rally sellers, including me, ever poised while keeping one eye at least on the EURGBP and GBPJPY cross flows. EURGBP: Testing the pivotal 0.8525 (1.1730) area again after failing to hold below 0.8500 per my warnings here and twitter. Expect more 2-way business amid the general uncertainty. GBPJPY: 150.00 now providing the support line after breaking down through 150.40-50 and capping there amid the variable risk tones. Should continue to see good two-way business as risk sentiment continues to be ever-fickle.
I remain a GBP rally seller across the pairs overall as my preferred trading side albeit still against the grain currently so being patient as ever. These markets are ever-fickle so good/tight position management essential.
EURUSD: Support at 1.1275 broken amid the general EUR supply initially but holding 1.1230-35 again albeit capping into 1.1300 still as we continue to range. USDJPY: Top of my forecast range at 113.80 still intact but equally 113.30 holding the retreats again as we continue to range.
EURJPY: 127.80 support now after the fall from 128.20 as Euro risk-on supply exceeds JPY selling again.
USDCHF: Support at 0.9230 still with the SNB ever vigilant after the failure above 0.9270 and EURCHF treading water amid the uncertainty. EURCHF: Holding 1.0410-20 with SNB shadow lurking still but now failing at 1.0440 with sellers poised into 1.0450 as I've been warning.
AUDUSD: AUDJPY demand and commodity currency demand generally still helping to underpin at 0.7080-85 and we saw a good rally through 0.7100 and hold as options expiry time approached but 0.7140 capping so far. USDCAD: Capped around the pivotal line of 1.2740 I've been highlighting helped by the rise in oil price and hence CADJPY demand again and now testing 1.2620 on the extended retreat.
Disappointing draw for Southend last night in a must-win game. Our current players just aren't good enough but our Chairman playing games with HMRC means we can't get any players in until embargo lifted. Sad times, and some.
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.45 GMT