Risk-on sentiment prevailing again but markets still very fragile
Tuesday 23 June 2020
It's another happy-clappy love-fest for equities, oil et al and we're seeing some risk-on sentiment return with some USD supply notable too but it's all so fragile out there still.
The US-China trade deal is still on said Trump and Kudlow after Navarro said emphatically not before then withdrawing his remarks and its been risk-on since the initial wobble. COVID-19 still casting a re-surgence threat but the algos aren't concerned for the time being.
Some EU PMI data already out and better than expected, with UK manufacturing and the key Services (80+% contribution to GDP )reading out at 08.30 GMT with US PMI released later.
GBPUSD has broken up through 1.2460 to post 1.2507 as I type after falling below 1.2440 on the initial Navarro trade deal comments.The risk-on GBPJPY rally helping to a bid under GBP generally with EURGBP also capping at 0.9060 where we had those large options rolling off yesterday as I warned here and on Twitter after my buy-backs into 1.2380 so I hope the steer helped. EURGBP has retreated to test the 0.9015-20 bids but holding so far as GBPUSD fails above 1.2500.
GBPJPY has based around 132.30 bids and apart from a clawback from 133.60 on the initial Navarro comment has made steady gains to test 134.00 amid the better risk this morning putting a bid under core pairs again.
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. I still expect to see some dip demand if risk appetite continues. As I type we've now seen the UK Mftg and Services PMI data and, like the EU readings earlier, they've been better than expected and given GBP a little nudge higher but GBPUSD still failing to clear those key lines/offers between 1.2520-25 as per my tweet.
USDJPY has been down to look at 106.75 again but finding dip demand on the better risk but still failing to clear through 107.20-25 while EURJPY found support/demand into 119.80 and rallied on the better risk appetite but failing above 121.00 on the bounce as I type. EURUSD is finding more support at the pivotal 1.1220 level helped by the better risk and PMI data but rallies failing above 1.1300 so far. USDCHF has now broken down through 0.9480 on the softer USD and EURUSD rally but holding 0.9440 so far where I reported bids yesterday as EURCHF holds in there with the SNB ever vigilant.
AUDUSD still enjoying the AUDJPY risk-on demand to break up through 0.6900 again and test 0.6935 from 0.6860.USDCAD failed into 1.3600 and seen a decent retreat to test 1.3500 but enjoying a bounce on the Navarro initial comments amid softer oil and risk but reversing those gains as I type on the better risk/firmer oil/softer USD tones again . Keep up at the back!
We know there's lots going on right now, and the foreseeable future, so don't forget to contact me if there's areas of trading these volatile markets or how to make best use of the order boards and expiries, 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: 08.43 BST