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  • Writer's pictureMike Paterson

Softer Greenback as markets wait on FOMC

Wednesday 10 June 2020

Yesterday's risk-off return moment is still playing out to a degree but the notable theme is the weaker USD across the board as we wait on the US Fed's latest policy announcement at 18.00 GMT today.

Powell & Co on the FOMC are expected to offer more dovish tones,with no rate cut but more easing in the long-end quite possible either as an increase in the Fed's bond buying or steps toward yield curve control. Seems like markets are now pricing this in at some point if not this time around after some happy-clappy risk-on USD buying in recent times and better than expected (massaged?) jobs data last week so now we have to see whether the FOMC has any surprises up their sleeves.

GBPUSD yet again found the expected dip demand I highlighted , this time around 1.2620 and we've been up to the new heady heights of 1.2786 not seen since March on that general USD supply and another EURGBP retreat from 0.8920. EURGBP failed above 0.8930 again and some longs unloaded again and has been down to look at 0.8880 ( GBPEUR up to 1.1260) and helping to put a bid under GBPUSD again. GBPJPY found support around 136.25 and rallied to look at 137.30 as risk-off appetite lessened before finding support into 136.80 as I type and USDJPY finds expected support around 107.30 as I just tweeted.

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. Dip demand still expected though given the recent rally.

USDJPY still looks soggy amid the general USD supply and some Yen demand to retreat from 108.20 to 107.30 but much will depend later on the FOMC.EURJPY found support into 121.30 but failed into 122.50 and drifting back off again this morning as core pairs find supply again.EURUSD has rallied well to post 1.1369 on the USD supply but the Euro still finding sell interest elsewhere and suggesting some inherent softness as I've been pointing out.

USDCHF capped at 0.9560 as EURUSD rallied and we've tested 0.9460 bids as EURCHF also retreated to look at 1.0760 from 1.0800 amid some risk-off sentiment. SNB will still be propping up the dips but seemingly not rushing in atm.

AUDUSD found support at 0.6900 ( I did warn that I wasn't sure how much lower it could go from 0.6925 yesterday) then 0.6950 and now tested 0.7000 again as I type on the USD supply.USDCAD failed above 1.3480 and has retreated in steady fashion to 1.3370 amid the general USD selling and steady-ish oil price.

Feel free to contact me if there is any area of current market volatility that you would like some guidance on.

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

Interbank rates:  08.11 BST

GBPUSD   1.2768

EURUSD   1.1352

EURGBP   0.8889

GBPEUR   1.1248

GBPAUD   1.8273

GBPCAD   1.7090

GBPJPY   137.18

GBPZAR   21.1675

GBPHKD   9.9006

USDJPY   107.42

USDZAR   16.5707

EURJPY   121.98

EURCHF   1.0767

EURHKD   8.8021

AUDUSD   0.6989

USDCAD   1.3382

USDCHF   0.9483

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