Risk-on sentiment prevailing despite ongoing global concerns
Monday 22 October 2018
Plenty of noise/news over the weekend including Trump pulling US out of nuclear treaty with Russia and more Brexit rumblings/call for May's head but Chinese equity markets have spiked in fastest daily rally since 2015 on government talk of monetary easing/support and that's grabbing the algos' attention for the moment.
GBPUSD held 1.3000 on Friday and had a late spike to 1.3109 on Brexit-positive talk but sellers were poised again and we headed back down to post 1.3048. We've rallied to 1.3090 in Asian trading though on the risk-positive sentiment hence GBPJPY and GBPCHF demand. Delicately poised still as European trading gets underway with May's political future still in question but reports circulating that Brexit is 97% agreed.Immediate sell interest at 1.3100 then larger at 1.3120, 1.3150 then 1.3180 and 1.3200.Immediate demand around 1.3050 then 1.3030, 1.3000 and 1.2975-80 still. I remain a GBP rally seller for the moment whilst respecting the dip demand so still not getting too ambitious for the moment but the strategy continues to work well.
EURGBP has held 0.8780 and rallied to post 0.8835 (GBPEUR down to 1.1320) helped by some general Euro demand returning but we're retreating to 0.8800 as I type with large option contracts rolling off there today proving a bit of magnet and that retreat is helping to put a bid under GBP generally. Sellers now poised around 0.8830 then 0.8850 still. Immediate bids/support at 0.8800 and 0.8780-85 0.8770 then between 0.8750-60 still.
EURUSD has taken full advantage of the risk-positive sentiment to rally and post/test 1.1550 helped by the EURJPY and EURCHF buying. Large option contracts rolling off today at 1.1500 should also prove a bit of a magnet but help contain the range.Bids/support there then 1.1480, 1.1450 and 1.1430 still with sellers still poised between 1.1550-60 then 1.1580 and 1.1600.
USDJPY remains underpinned by the Yen selling but has failed to get back above 112.80 in this latest rally from 112.35. No option contracts of note rolling off today but bids/demand now around 112.50 then 112.30 and 112.00 still with decent sell interest still around 112.80 and 113.00. I remain a rally seller for the moment. USDCHF has also found buyers in the dips again to test 0.9980 on the Swiss Franc selling helped by EURCHF demand which has seen a test of 1.1500. Bids/support now at 1.1450 and 1.1430 with sellers at 1.1500 then between 1.1520-30 and 1.1560. USDCHF bids now at 0.9930 then 0.9900 and 0.9880 with sell interest around 0.9980 still then larger into 1.0000. I remain a dip buyer on both.
AUDUSD still remains on the back foot and has fallen below 0.7100 again in Asia as a week-end by-election saw the ruling Liberal government's slender 1 vote majority taken out. Some help given since from the Chinese equity rally and large option contract expiries today at 0.7090. Immediate demand still between 0.7080-90, then 0.7045-50 with sellers poised around 0.7130 then 0.7150 still, where we capped on Friday,then 0.7180 and 0.7200. USDCAD has been up to 1.3118 on softer CPI data before retreating to 1.3080 with focus now building on Wednesday's BOC interest rate meeting where a hike is widely expected and that is helping the Canadian $ a little in the near term.Immediate sell interest now at 1.3100 and 1.3120 with buyers at 1.3060, 1.3030 and 1.3000.
Fickle Forex markets ever prevailing so get your orders in to take full advantage of these moves.
On Saturday the mighty Shrimpers of Southend United returned to the hallowed Hall looking to build on a decent run only to end up with 10 men and conceding another late goal to hand Coventry all 3 points. Grrrrrr. We go again tomorrow night with another home league match so let's hope for better things and lessons learned. Meanwhile Lewis Hamilton has to wait a little longer to claim his 5th F1 title after rare tactical errors from Mercedes in Austin yesterday. Still his for the taking though.
Have a good week out there one and all.
Twitter: @MSPFX and @MikePatersonFX
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