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  • Writer's pictureMike Paterson

Softer Greenback but Yen weakness still evident

Thursday 14 October 2021

Firmer risk tones overall still prevailing in the wake of the US CPI data and FOMC Minutes but we've seen some USD supply with JPY weakness and CHF demand both notable still as equities and oil remain underpinned along with yields albeit all three off their tops as I type.

The FOMC Minutes confirmed the start of a tapering programme next month but all in all there was little that markets didn't already know hence lack of USD demand since. US PPI and weekly jobs data in the mix today along with a few Fed speakers to keep the rate hike talk on full alert/speculation.

Amid all this ongoing market uncertainty/second-guessing I will repeat that patience and discipline in trading are key, as ever, and not being greedy. Ignore the noise and countless amount of "analysts" trying to explain the reasons for moves. Just focus on the price action and decide what presents value or doesn't, and if in doubt, keep out.

GBPUSD: Yesterday's test of 1.3570 indeed turned out to be the last and once back above 1.3600 after the last attempt on 1.3580 we've seen a steady move higher albeit wiping its feet at the pivotal 1.3650-60 area as GBPJPY demand sora to new recent highs. Took my loss on some more re-sells up there (successful initially) when we broke and kept my powder dry since as we break 1.3700. I remain a rally seller overall but still respecting the ongoing dip demand as I've been warning all week while keeping an eye on EURGBP and GBPJPY as always. EURGBP: 0.8470 bids still providing support after yet another failure above 0.8500 as we continue to range with core pairs by and large moving in tandem. GBPJPY: Good support now at 154.80-00 and up through 155.30 to post 155.40 as I type.

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

EURUSD: 1.1560 support now again helped by the firmer risk/softer USD dip demand but rally sellers poised around the 1.1620-30 area now. The pair still finds itself in the middle of cross-flow action and variable risk plays.

USDJPY: Tightly bound still amid the softer USD tones versus the ongoing JPY supply generally. Underpinned still at 113.20 but equally finding sellers into 113.60 again. EURJPY: New support line in the sand at 131.50 now as the upward journey continues led by the JPY supply and core pair dip demand. Sellers certainly not winning this battle at the moment. USDCHF: CHF demand notable with a lot of CHFJPY demand unwinding short positions and that pair on a steady rise through 123.00 with the SNB ever vigilant but seemingly watching on for the moment, powerless to turn the market tide. 0.9200 now under threat amid the softer USD tones/EUR rally and as EURCHF falls into 1.0680. EURCHF: 1.0700-10 support now history amid the CHF demand with SNB shadow ever present but seemingly doing little atm but we can never rule them out.

AUDUSD: Finding a support line in the sand now at 0.7350 and up through 0.7380-00 on the softer USD/AUDJPY demand double whammy. USDCAD: 1.2460 now capping the rallies helped by the ongoing CADJPY demand and softer USD and now down through 1.2400 amid this strong trend. Option interest drifting ever further away seemingly for the moment.

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

Interbank rates: 08.45 BST

GBPUSD 1.3692

EURUSD 1.1605

EURGBP 0.8477

GBPEUR 1.1795

GBPJPY 155.22

GBPCAD 1.6967

GBPZAR 20.1975

GBPHKD 10.6723

USDJPY 113.37

EURJPY 131.58

EURCHF 1.0688

EURHKD 9.0482

AUDUSD 0.7398

USDCAD 1.2400

USDCHF 0.9207

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