Pound in positive mood amid all the turmoil.
Tuesday 2 June 2020
Seems my long-held view that the world is a very fragile place is playing out, and some, yet markets are taking the view that the glass is definitely half-full and the various unwindings of COVID 19 lockdown are bringing renewed optimism.
Meanwhile the rioting on the streets of the US has got Trump promising military action and the general underbelly of discontent has seen some USD supply but somehow risk-sentiment remains to the positive and helping to underpin USDJPY above 107.50 and USDCHF at 0.9580-00 albeit undoubtedly with some help from the SNB. EURUSD has not exactly been racing north either (but is now as I type). Not a complete USD collapse then as I see some commentators stating and the whole picture is, frankly, a bit of a mess at the moment.
The Pound though has seen a good move higher on the better risk, with various lines of resistance being broken to trigger stops and with reports of the UK being prepared to make Brexit trade talk concessions if the the EU move first also helping to underpin atm.
GBPUSD found support in the pivotal 1.2380 area and since risen on the softer USD to take out the strong offers/resistance at 1.2420-25, then 1.2450 and 1.2500 before failing around 1.2550 but still looks underpinned as I type. I did warn yesterday that there was still some dip demand to be expected but frankly I didn't see such a rally in the pipeline. We must never assume anything in Forex moves, as I tweeted, and "if in doubt stay out" is a strong mantra of mine.
EURGBP spent all day retreating on the GBP demand generally and EURUSD failing to rally with any purpose and we've broken down to post lows of 0.8866 in a rush but rallying back to 0.8900 agin as I type.GBPJPY broke up through 133.60 then the stronger 134.00 and 134.60 to test 135.20 amid the GBP strength and better risk 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. No need to stand in the way of a truck hurtling at speed.
USDJPY has held 107.50 but equally sellers around 107.80 still. Rinse and repeat for the moment. EURJPY has now broken up above 120.00 after holding 119.50-60 as EURUSD finally decides to break 1.1150 and now testing 120.30 on the better risk. EURUSD is now up through 1.1150 in a rush and posting 1.1170 as USD supply accelerates while
USDCHF is giving up a strong line at 0.9600 as I type as EURUSD bursts higher with EURCHF tightly bound around 1.0700. Still expect SNB in the dips though.
AUDUSD is also still enjoying the USD supply/better risk combo to post new recent highs of 0.6848 with the RBA leaving rates on hold and talking in upbeat tones as expected. China still casting a shadow though.
USDCAD failed at the strong 1.3730 resistance and has now fallen to test 1.3500 in a fairly straight line amid the softer Greenback and better risk/firmer oil combo with CADJPY demand notable too.
You don't need me to tell you that there's lots going on right now, and the foreseeable future, so don't forget to get in touch if there's areas of trading these volatile markets 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: 08.44 BST