Softer Greenback tones but going nowhere in a hurry
Friday 9 December 2022
Markets are still pre-occupied by the raft of CB action next week with the US Fed on Wednesday the prime focus then SNB, BOE and ECB on Thursday. Liquidity is notably thinner still but we're ranging essentially albeit having broken out a little only to reverse as traders second-guess the Fed.
Equities have had another wobble and oil has fallen further but gold is consolidating a little still and been up to $1798. China's COVID relaxtion measures have analysts out on whether that's a positive or negative for sentiment and the global economy at large. Geopolitical risk in Ukraine still lurking too. Today's US CPI and Michigan Sentiment may have the algos running around to add some volatility.
GBPUSD: A good hold of 1.2150 again yesterday and a decent rally up through 1.2230-50 recent resistance amid some general USD softness but the stronger 1.2280 area providing the cap this time. Good two-way business whatever your bias.I remain poised to re=sell rallies. EURGBP: Support line at 0.8600 still but capping at 0.8640.I expect the two-way business to continue as jury remains out on both currencies and outlook. GBPJPY: A good cap at 167.20-40 this time but equally still holding 166.50 as core pairs both find dip demand again. I would still expect two-way business as markets remain ever-fickle.
EURUSD: A decent hold at 1.0530-40 this time amid the softer USD tones having broken up through 1.0525 again but sellers prevailing above 1.0580.Should still see some mixed business.Large option interest if we rally again. USDJPY: A solid hold of 135.75 in the retreat after failing into 137.00. I expect more two-way business into FOMC. EURJPY: Holding 143.30-50-144.50 still as we continue to range. USDCHF: Capping at 0.9380 this time amid the softer USD tones and with traders still looking at SNB tightening/hawkish tones next week and EURCHF in retreat again now. but holding 0.9320-30 for the moment. SNB ever-vigilant. EURCHF: A hold at 0.9850 then 0.9875 this time but capping at 0.9900 amid hawkish SNB expectations and we continue to range.
AUDUSD: Good support around 0.6720 this time then a break up through 0.6740 amid the softer USD tones and a decent rally through the next line at 0.6780 before finally capping at the larger 0.6800 level where we also have decent options interest today. I remain a rally seller as my preferred side/strategy. NZDUSD now capped at 0.6410 after yesterday's break up through 0.6380-00 and now testing 0.6375 as I type as we see some USD demand return. USDCAD: Underpinned still and now that line coming in at 1.3550 on the softer oil price story after the retreat from 1.3650 amid yesterday's softer USD.
Let's continue to be careful out there. Have an enjoyable weekend.
Interbank rates: 08.52 GMT