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  • Mike Paterson

Softer risk sentiment prevailing again

Thursday 23 June 2022

Another risk and USD rollercoaster ride in the past 24 hourds and we're now seeing some softer risk tones again in Asia and early Europe with equities falling and JPY demand notable again although with USD still underpinned overall. Some recovery being seen as I type but it remains a very fragile landscape out there still as I've been saying for a long time. Similar story for gold and oil price.

Fed Chair Powell yesterday suggested that hikes will likely be front-loaded, with rates moving higher faster if inflation warrants. He acknowledged that achieving a soft landing is becoming increasingly more challenging but that the data, both inflation and economic, will be important for the size and speed of rate hikes ahead. Part 2 today at 14.00 GMT but what more he can add is debatable.

EZ PMI data out this morning has been very soggy further suggesting that the ECB will have even more to consider/re-consider in their rate hike policy. Two by-elections in the UK today amid another rail strike will keep GBP in the spotlight and a tad vulnerable although after yesterday's rally we must take nothing for granted.

As ever, deal on fact not second-guessing. Be ready with your preferred levels/strategy, place orders and let the algos do the heavy work. Discipline is key as always but equally hesitation can often ruin a great idea.

GBPUSD: A good base at 1.2160 yesterday and a solid rally to 1.2315. Keeping core shorts and remain poised to sell rallies but timing as ever is crucial.Patience and discipline have indeed been a virtue on this one yet again.EURGBP: Holding 0.8610 now on the GBP retreat but capping at 0.8640 amid the soggy EZ data as jury remains out and plenty of second-guessing the ECB and BOE still. GBPJPY: 166.50 the new cap and testing 165.00 in the latest softer risk/retreat which has dragged core pairs lower too.

EURUSD: Capped around 1.0600 yesterday and now 1.0500 amid the softer risk/data and USD variables. USDJPY: Finding support into 135.00 in the retreat from 136.25 with help from the softer risk JPY demand returning. EURJPY: Testing that base at 142.00 now amid the softer risk tones and some general EUR supply this morning. Rally sellers poised still when sentiment turns softer.USDCHF: Sellers still poised into 0.9700 after support around 0.9600 this time in the extended retreat as jury remains out on SNB and amid variable risk.EURCHF: Failing above 1.0170 now on a few occasions amid softer risk tones and weak EZ data but holding the 1.0130 support line still as markets continue to evaluate the SNB position

AUDUSD: Yesterday capped at 0.6950 and now back below 0.6900 again helped by the earlier AUDJPY supply and softer iron ore price. GBPAUD testing/holding 1.7700 after capping at 1.7800 as GBPUSD retreat outstripped AUDUSD but reverse now being seen.NZDUSD on the back foot still amid the NZDJPY supply and testing 0.6250 again as I type after capping at 0.6280-00. GBPNZD finding support at 1.9450 again and now posting 1.9507 in the bounce.USDCAD: Supported at 1.2950 again after another fall to test 1.2900. Some CADJPY supply and softer oil helping to underpin once again.

Let's continue to be careful out there.

Interbank rates: 08.55 BST

GBPUSD 1.2185

EURUSD 1.0503

EURGBP 0.8629

GBPEUR 1.1595

GBPJPY 165.21

GBPCAD 1.5849

GBPCHF 1.1797

GBPZAR 19.5406

GBPHKD 9.5038

USDJPY 135.59

EURJPY 142.58

EURCHF 1.0162

EURHKD 8.1929

AUDUSD 0.6885

USDCAD 1.2975

USDCHF 0.9665

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