Softer risk sentiment noted as another week begins
Monday 4 May 2020
Increasing tensions between the US and China are starting to the rattle a few cages as I warned last night and spreading a little non-COVID concern amongst markets as our fragile worls continues to spin, albeit slowly.
In Japan the state of emergency has been officially extended until 31 May while in Europe the gradual unveiling of lockdown exit strateges is starting to slowly unfold but with understandable caution and the future still looks a very uncertain place.
GBPUSD held decent support lines at 1.2480 on Friday but has since broken down and through the next line at 1.2450 to post 1.2424 amid the risk-off plays and some USD demand before rallying only to fail into 1.2480 and retreat again. Some profit and re-sells duly made as I tweeted earlier and staying core short.EURGBP rally has extended to test 0.8800 and further helping to push GBPUSD lower but capping there so far. GBPJPY has found good support around 132.50 again on its latest risk-off retreat having broken back down through 133.60 but sellers reamin poised.
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.
USDJPY failed above 107.00 but equally can't get back below 106.60 atm as some USD demand notable to compensate the risk-off Yen buying. Re-sells duly placed and I'm still short but respecting dip demand.EURJPY has retreated on the risk-off plays and some general EUR rally supply to break back down through 117.00 before finding decent demand at 116.50-60 atm. EURUSD duly failed above 1.1000 and since retreated steadily to test the 1.0925-30 bids/support amid the risk off anf general EZ reality check. Rally sell still my preferred strategy overall.
USDCHF duly held 0.9600 as EURUSD fell and with EURCHF holding 1.0530 with SNB still supporting in the dips .
AUDUSD fell further to post 0.6373 amid the risk-off reality check after punching above its weight last week to test the 0.6570 resistance line. USDCAD held 1.4000 and rallied to test 1.4150 before retreating amid the variable oil/USD/risk plays.
Have a good day/week everyone. Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.35 BST