Softer Greenback tones to welcome new month
Tuesday 1 November 2022
The first of the Central Banks off the ramp this week, the RBA, hiked by 25bps as mostly expected, and gave cautious tones to future moves. Will the Fed and BOE take a cautious tone too or feel that inflation still needs a decent rate hike ramp higher? Not long to find out with Fed next up tomorrow and the conjecture continues. The US Dollar has found a few sellers again helped by "re-opening" talk out of China but we're still ranging overall.
Meanwhile oil and equity markets making their minds up still, as is gold, while we wait along with the geopolitical risk. Final month-end flows yesterday did indeed see some EUR supply with EURGBP fall driving GBPUSD higher before reversing afdter the 4PM lonson fix so I hope the steer helped.
Whatever your view/take/analysis one thing is clear, we are experiencing global markets in panic/confused/second-guessing mode the like of which we haven't seen for many a year. Focus on the price action and let the algos do the heavy lifting/dropping.
GBPUSD: Another rally to test 1.1530 before a fall to 1.1460 before a good rally to look at 1.1550 again but capping there and now 1.1520.I remain a rally seller overall. EURGBP: A decent retreat into the 4pm London fix amid some EUR month-end supply but finding support at 0.8570-75 again. and I still expect some two-way business. GBPJPY: Finding decent support around 170.00 in the latest retreat with USDJPY retreat outstripping GBPUSD rally amid some JPY-weakness talk/concerns out of Japan. I would expect sellers to prevail for the time being.
EURUSD: 0.9950 capping this time after yesterday's good hold of 0.9860-80 area I highlighted on Twitter. Should see some good two-way business. Cross flows, risk, Ukraine all in the frame still as well as flows. Large option contract interest in play this week. USDJPY: Capping at 148.80 amid the softer USD tones and that JPY-weakness talk/concerns out of Japan. I would expect sellers to prevail for the time being.A good hold of 147.50 so far. I prefer rally-sell side but dip demand expected still. EURJPY: Supported so far at 146.25-30 after retreat from 147.25 this time and sellers will remain poised.USDCHF: I've been warning that sellers will be lurking despite some EURCHF demand and with SNB never far away. Sellers prevailing at 1.0020-30 again amid the softer USD tones and EURCHF retreat and now testing 0.9930 bids as I type. EURCHF: A sold retreat from 0.9920 on the softer EUR and USDCHF double whammy. SNB will still be keeping an eye but rally sellers still poised.
AUDUSD: Some good two-way business through the RBA announcement as the AUD jury remains out and we remain 0.6400-50 as I type.. NZDUSD also off its lows amid the softer USD help and testing 0.5880 again. USDCAD: Capped at 1.3685 then 1.3600 this time amid some month-end supply, USD supply generally and firmer oil prices to post 1.3540
Let's continue to be careful out there.