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  • Writer's pictureMike Paterson

Risk-off tones prevailing again

Thursday 19 August 2021

It's all looking very ugly and uncertain still out there on a number of fronts and we've seen further falls in equities, oil and bond yields with demand for JPY and CHF notable again after some recent pauses. Iron ore’s tumble has increased too as China continues with its promise to curb steel production. Gold capping as well after its recent rally.

The FOMC Minutes disappointed a few hawks but nothing really of note as we wait on Powell at Jackson Hole next month but the headline-reacting algos provided the perfect opportunity to take advantage per my tweets. Since then the hawkish hopes have returned.

Patience and discipline in trading are key as ever and not being greedy.Still some good two-way pips to be had as the jury remains out so picking your moments and levels are more important than ever.

GBPUSD: The retreat continues amid the GBPJPY selling to post lows of 1.3683 so far after failing at 1.3780 yesterday. I remain a rally seller while keeping an eye on EURGBP and GBPJPY as always.EURGBP: Still supported around 0.8510 but ranging and now testing 0.8550 again as GBPUSD fall outstrips EURUSD. GBPJPY: Yesterday's consolidation rally failed at 151.40 and now in serious retreat testing 150.00 as the risk-off tones continue, indeed accelerate, this morning.

I remain a GBP rally seller across the pairs but being patient as ever. These are risk sentiment markets and ever fickle so good/tight position management essential.

EURUSD: Capped at 1.1750 yesterday post FOMC Minutest and now finally breaking 1.1700 properly but finding support at 1.1665. Large option interest today nearby helping to hold and cross flows very much making an impact still. USDJPY: Capped into 110.30 again and now an extended retreat into 109.50 this morning with large option interest at 109.65-75 in play. EURJPY: 128.60-80 still providing resistance and now testing 128.00 in the latest retreat amid the softer risk tones.USDCHF: 0.9140 now providing a base with the SNB ever vigiliant and some general USD demand but sellers poised above 0.9200 with EURCHF still on the back foot.

EURCHF: 1.0750 capped yesterday's better risk rally but now dropping back to test 1.0700 again as I type but with SNB shadow ever present.

AUDUSD: Finding a cap at 0.7250 where we have that large option interest today (coincidence?) and a decent move lower to test 0.7150 now amid the risk-off AUDJPY selling and falling iron ore price. USDCAD: Now finding a base at 1.2650 amid some firmer USD tones and tumbling oil price with CADJPY selling in play again. Sellers poised into 1.2800. above 1.2640 now. Large options at 1.2580 no longer in play but seemingly done their job in supporting the recent dips.

Let's continue to be careful out there in all things. Staying safe must be our main priority still.

Interbank rates: 08.56 BST

GBPUSD 1.3698

EURUSD 1.1680

EURGBP 0.8531

GBPEUR 1.1716

GBPJPY 150.16

GBPCAD 1.7483

GBPZAR 20.7740

GBPHKD 10.6567

USDJPY 109.73

EURJPY 128.17

EURCHF 1.0707

EURHKD 9.0958

AUDUSD 0.7163

USDCAD 1.2745

USDCHF 0.9167

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