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  • Writer's pictureMike Paterson

Range trading still as the uncertainty continues.

Tuesday 27 October 2020

The usual topics in focus still with the US Election now only a week away, rising COVID concerns and Brexit trade talks still creating algo-led headline moves and FX pairs remain tightly bound. Senate head McConnell effectively ruled out any pre-election U stimulus by adjourning the Upper House until Nov 9 adding to the fragile risk sentiment.

Central Banks also in focus with the latest BOC decision tomorrow then BOJ and ECB on Thursday all helping to keep traders and markets second-guessing.Today's US Durable Goods and Consumer Confidence data should make interesting reading too.

Inital month-end flow forecasts show a moderate need to sell USD, entirely driven by foreign investor needs to hedge gains in US equities. Currencies to benefit most are EUR and GBP atm. I will, as always, report more on these flows as the week plays out.

GBPUSD failed around 1.3080 again yesterday but equally finding support at 1.2990 still. EURGBP saw a decent retreat from 0.9100 in European trading but based at 0.9040 this time ahead of those large option expiries between 0.9000-20 with month-end demand in play too.Sell interest still between 0.9080-0.9120. I remain a dip buyer overall especially with the usual month-end demand in play but respecting the current two-way business.GBPJPY found a cap around 137.00 this time  but holding 136.20 on the retreat as I type.

No change in my basic view and 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 entry level key as always. I still see dip demand though with markets and risk sentiment still in a state of uncertainty overall.Brexit remains the very big elephant in the room.

USDJPY failed above 105.00 where we also have large option expiries today and now on the retreat to 104.65 amid softer risk tones but with decent bids still at 104.50 looming. EURJPY found a cap into 124.20 amid the softer risk and now in retreat from 124.00 challenging support into 123.50 as I type.EURUSD has capped lower now at 1.1835 amid the softer risk tones and general EUR supply still as markets expect a dovish ECB this week and now testing bids round 1.1800 again. USDCHF has based at 0.9060 this time around now now testing around 0.9080-85 again as EURUSD fails to bounce too far from its lows with EURCHF steady but SNB casting its shadow still.

AUDUSD duly ran into that decent sell interest at 0.7150 again but holding since at the 0.7100 support line and now failing again above 0.7140 on the softer risk tones this morning with AUDJPY supply evident again. USDCAD remains range-bound too amid the variable USD/oil tones and now testing 1.3200 as I type after holding 13170 from the 1.3225 retreat. Ranging tightly overall still but good two-way trading opportunity.

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:  08.38 GMT

GBPUSD   1.3018

EURUSD   1.1809

EURGBP   0.9069

GBPEUR   1.1025

GBPAUD   1.8271

GBPCAD   1.7164

GBPJPY   136.38

GBPZAR   21.0014

GBPHKD   10.0866

USDJPY   104.74

USDZAR   16.1335

EURJPY   123.68

EURCHF   1.0723

EURHKD   9.1488

AUDUSD   0.7127

USDCAD   1.3181

USDCHF   0.9080

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