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  • Writer's pictureMike Paterson

Risk sentiment wobbles again as Trump launches air strike in Iran

Friday 3 January 2020

Be afraid, be very afraid. I've long warned of global fragility and last night saw an air strike in Iran ordered by Trump and killing Iranian general Qasem Soleimani who was seen as the second most powerful figure in Iran behind the Ayatollah Khamenei. Cue renewed risk-off sentiment with JPY, oil and gold demand as Iran threatens retaliation and revenge.

On the data front we've seen some stronger German regional and EZ CPI numbers this morning with UK Construction PMI shortly (not a game changer) but US ISM Manufacturing PMI at 15.00 which will impact if wide of the mark. Market liquidity is still thin as I've been warning so caution/discipline is required in your trading.

GBPUSD fell down through that decent support at 1.3190-00 and then 1.3150 on the thin conditions and reality check after the recent rally, then 1.3130 and now 1.3100 on the GBPJPY supply. EURGBP has made an impressive rally to post 0.8526 on the GBP retreat but tempered by EURUSD falling back from 1.1200 to test 1.1150 helped by EURJPY supply. GBPJPY has broken down to post lows of 141.20 amid the risk-off plays and core pairs both breaking down.

I stay poised to sell GBP rallies and we've seen good opportunity in the past few days but we should continue to see some good two-way business albeit with a bearish bias.

EURUSD has now broken down through 1.1150 as I type helped by that EURJPY and EURCHF supply while USDJPY has also fallen  on the risk-off sentiment as per my ongoing strategy and now posted 2-month lows of 107.92. USDCHF has rallied as EURUSD retreats but tempered by EURCHF still finding a few sellers amid the general CHF demand with the SNB being ever vigilant but seemingly not too bothered atm.

AUDUSD has also had a reality check helped by some good AUDJPY supply and now fallen to 0.6945 after failing to hold above 0.7000 but USDCAD has held its ground with CADJPY selling tempering the CAD demand on firmer oil prices.

Fickle Forex markets ever prevailing so be ready with your entry/exit levels and orders as always.

Have a good day/week-end out there one and all.

Interbank rates: 08.07 GMT

GBPUSD   1.3097

EURUSD   1.1157

EURGBP   0.8518

GBPEUR   1.1735

GBPAUD   1.8833

GBPCAD   1.6974

GBPJPY   141.35

GBPZAR   18.7219

GBPHKD   10.1542

USDJPY   107.96

USDZAR   14.3162

EURJPY   120.45

EURCHF   1.0838

EURHKD   8.6528

AUDUSD   0.6953

USDCAD   1.2965

USDCHF   0.9712

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