Softer Greenback evident again
Wednesday 20 January 2021
US Dollar in retreat once more on a day that sees the inauguration of a new US President with equities and commodities on the rise again. BOE's Bailey is due to make a speech at 17.00 as Biden takes to the rostrum too with the first of his executive orders due around 22.15 GMT all preceded by the latest monetary policy decision from the Bank of Canada. Tomorrow brings the latest BOJ and ECB decisions too.
GBPUSD broke up through 1.3625 and now testing strong resistance at 1.3700 again amid the softer USD/firmer risk tones atm along with EURGBP falling amid the still struggling Euro.EURGBP has broken down through 0.8885 having failed around 0.8920 yet again given the generally soft EUR tones elsewhere and now the larger support into 0.8860 breaks (GBPEUR up to 1.1298) as I finish this report. GBPJPY has found a base at 141.30 on the firmer risk/GBP tones and broken up through 141.60. Bids at 141.50, 141.25-30, 141.00, 140.80, 140.60, 140.30 and 140.00 still. Offers at 142.00 now gone then 142.30,142.50,142.75 and 143.00 with more at 143.20 and 143.50.
I still have a naturally bearish stance on GBP overall and remain poised to sell into rallies but respecting dip demand still with price action ever fickle. Equally a case for going long in the dips still. Patience and not getting greedy remain key.
USDJPY failed above 104.00 again and now posting 103.70 as we continue to range. EURJPY found support at 125.80 but equally struggling to get back above 126.20 as core pairs find rally sellers despite the firmer risk tones. EURUSD based at 1.2080 where I warned of larger bids yesterday and has broken up through 1.2120 helped by the softer tones but now capped at 1.2160 with one eye on the ECB tomorrow. USDCHF has been in retreat again on the softer USD tones but finding support at 0.8860 again as we continue to range and with the SNB ever watchful.
AUDUSD found a base this time at 0.7680 and made a decent rally to 0.7740 helped by the softer USD tones and risk-on AUDJPY demand as the general Forex rollercoaster ride continues.USDCAD failed at 1.2760 on the softer USD/firmer oil combo but finding a bit of support around 1.2700 as I type where we also have large option contracts expiring today to lend support.
There's little doubt that we live in strange times and rationale was thrown out the window a long time ago so as we look at trading opportunities to begin the year it's even more important not to over analyze but trade the price action with discipline and patience.
Last night at the hallowed Hall was a tale of two halves and once again our general lack of firepower, not to mention lack of concentration in the first 10-15 mins of the second half, was our undoing as we went from 1-0 to lose 1-2 to high flying Cambridge. We go again Saturday and keep hoping.
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.13 GMT