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  • Writer's pictureMike Paterson

Softer risk sentiment sees further Yen demand

Friday 24 July 2020

Move over Euro, there's a new fave currency in town and it's the Japanese Yen as risk tones soften amid further US-China tensions and ongoing COVID resurgence concerns with US treasury yields also in retreat again. UK Retail Sales and PMI data out earlier this morning both beat expectations but the Pound rallies have been shortlived on both occasions.

I've been warnng to be patient on risk sentiment and it's all still very fickle out there though so we'll continue to trade with caution and not get greedy.

GBPUSD has found a new range of 1.2680-1.2780 for the moment amid the softer USD/variable risk and cross-pair contra-flows and provided excellent two-way business again. EURGBP has traded tightly between 0.9080-0.9130 underpinned still by the general Euro and looming month-end demand. I remain a dip buyer overall.GBPJPY found another burst of energy from 135.80 to post highs of 136.40 before slipping back on the softer risk tones and general JPY demand to now test 135.20 bids as I type.

I stay poised to sell GBP rallies overall as my preferred side and buy back in the dips as ever but patience continues to be a virtue and entry level key as always. I still expect to continue seeing some dip demand but cross-flows, risk sentiment and Brexit will continue to see a mixed bag as we've been witnessing.

USDJPY has finally fallen through strong support at 106.60 to post 106.17 on the softer risk Yen demand and patience has been a virtue for Yen buyers like me as per my earlier tweet. EURJPY has failed into 124.30 yet again and fallen to test 123.25-30 bids amid the softer risk/firmer Yen plays.

EURUSD duly found a base at 1.1550 and rallied to take out the 1.1600 barrier option only to fail into 1.1630 but demand building now at 1.1580-90. USDCHF broke down through 0.9260 but now supported into the 0.9230 tranche as EURUSD retreats a little and with EURCHF still underpinned with the SNB ever vigilant in the dips.

AUDUSD has been up to look at 0.7160 again but retreating on the softer risk tones with AUDJPY selling notable and now testing 0.7075. USDCAD found support at 1.3350 and now been back up to look at 1.3450 amid softer oil price and CADJPY selling. Yesterday the SA Reserve Bank cut rates by 25bps to 3.5% as expected and understandably remained cautious on future outlook.

Markets are ever-fickle but good two-way pips to be had so do contact me if there's areas of trading these markets that you might need some further help with.

Let's continue to be careful out there in all things. Staying safe must be our main priority still. Have a great week-end.

Interbank rates:  09.40 BST

GBPUSD   1.2727

EURUSD   1.1601

EURGBP   0.9114

GBPEUR   1.0970

GBPAUD   1.7975

GBPCAD   1.7092

GBPJPY   135.32

GBPZAR   21.3087

GBPHKD   9.8696

USDJPY   106.35

USDZAR   16.7392

EURJPY   123.37

EURCHF   1.0737

EURHKD   8.9968

AUDUSD   0.7077

USDCAD   1.3433

USDCHF   0.9258

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