Ranging still as the new week gets underway
Monday 6 December 2021
Good two-way business still prevailing after a weak set of US jobs/wages data on Firday keeps markets secon guessing. Some better risk risk sentiment being shown in Asia and early European trading with equities, yields and oil making some gains off their lows seen on Friday. PBOC cut RRR by 0.5bps as widely expected but further adding to some better risk tones.
COVID/Omicron fears and unknowns very much still lurking with markets going to keep second-guessing how it might all impact CB action amid the increased economic uncertainty. Bitcoin had a 20% plunge at the weekend. Gold continues to tread water.
As always, don't over-analyze but keep your focus on price action in core and cross-pairs and recent ranges to see whether we hold or break and what levels present value for money. If in doubt, stay out.
GBPUSD: Capped around 1.3315 this time post-NFP data and an extended retreat to 1.3210 helped by softer risk tones before rallying from 1.3220 this morning. Pips gratefully banked again. GBPUSD rally sellers, including me, ever poised while keeping one eye at least on the EURGBP and GBPJPY cross flows. EURGBP: Friday's retreat failed to crack 0.8490 and we saw a sold rally to 0.8568 (GBPEUR down to 1.1670) amid the softer risk/EUR demand but another retreat in the reverse move/sentiment since and now 0.8515 (1.1740) as I type helping to underpin GBPUSD. Expect more 2-way business amid the general uncertainty. GBPJPY: 149.00 providing the support line this time around after the retreat from 150.75-80 and now 150.20. 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 1.1275-80 now after failing to rally above 1.1330 this time round amid the firmer USD and risk tones. USDJPY: Another fall on Friday and proving my 112.60-113.60 trading range and some pips gratefully banked in the retreat per my tweets. EURJPY: 127.40 support now after the fall from 128.35 once again but capping at 128.20 this time so far as Euro risk-on supply exceeds JPY selling. USDCHF: Support at 0.9160 this time around with the SNB ever vigilant and EURCHF back above 1.0400 abnd testing the 0.9220-25 area gain in a solid rally. EURCHF: Lows of 1.0365 but now back above 1.0400 on the better risk with SNB shadow lurking still.Sellers poised 1.0430-50 again.
AUDUSD: 0.7000 support tested but holding helped by the PBOC RRR cut and better risk AUDJPY demand and back to 0.7030 but sellers poised. USDCAD: Capped around 1.2850 this time helped by the rise in oil price and hence CADJPY demand again after the hold of 1.2740 in Friday's risk-off fall. Support now between 1.2780-00 again.
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.48 GMT