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  • Mike Paterson

Softer risk tones return

Tuesday 2 November 2021

We're seeing another wobble in risk sentiment again this morning as equities and yields trade a little lower and with some JPY and CHF demand notable still pushing USDJPY and USDCHF lower again after the recent rallies but oil and gold remain underpinned overall. Rising COVID cases also casting a shadow still.

First of the central banks this week to make a decision was the RBA ( US Fed follow tomorrow then BOE on Thursday of course) and their dovish tones may be just the start of disappointing a few hawks along the way. We've seen AUD selling since the decision/rhetoric helped by the AUDJPY risk-off supply too.

You know my thoughts by now about not over-analyzing FX moves anyhow. It's really about deciding what presents value or not. It's important to identify on-going ranges and trade the momentum if broken but not getting greedy if they stay intact. Forex is not rocket science but it is ever-fickle so you have to stay in control of you/your trades as much as you can.

GBPUSD: The latest retreat has posted 1.3630 after failing at 1.3680. Once again the cap and retreat have been helped by some GBPJPY supply and EURGBP demand with BOE in focus too and a few hawks trimming positions. I remain a rally seller overall as we continue to range while keeping an eye on EURGBP and GBPJPY as always. .

EURGBP: 0.8480-85 now broken and providing a line of support amid the general GBP supply and some EUR demand elsewhere on other pairs but sellers poised at 0.8520-25 should the rally continue.

GBPJPY: Support at 155.00 now broken after the latest retreat as core pairs both find sellers this morning amid the softer risk tones and justfying my ongoing strategy. Sellers poised at 155.30-50 now.

I remain a GBP rally seller across the pairs overall as my preferred trading side albeit against the grain currently so being patient as ever. These markets are ever-fickle so good/tight position management essential.

EURUSD: Tightly bound still while the pair remains in the middle of cross-flow action, variable USD and dovish ECB overall, not to mention a bit of option interest in play today at 1.1585. USDJPY: Finding support around 113.50 as I type after failure to hold above 113.80-00. EURJPY: Support line at 131.60 broken but 131.40 holding further falls so far as EUR finds a bit of support elsewhere but with rally sellers ever poised.

USDCHF: 0.9100 support broken but back above now as I type with the SNB ever vigilant but sellers remain poised as I've been warning as EURCHF struggles to recover too far amid softer risk and general CHF demand. EURCHF: 1.0550 now holding after the extended fall to post 1.0536 amid notable CHF demand still but with the SNB ever vigilant. Sellers in the rallies poised again.

AUDUSD: In retreat from that 0.7520 resistance area after the RBA's dovish tones but holding 0.7460 so far. USDCAD: Rallying amid the renewed CADJPY supply on the softer risk/oil tones from 1.2350-60 which duly held yesterday helped by the option interest I highlighted and now testing 1.2400 as I type

Let's continue to be careful out there in all things. Staying safe must be our main priority still.

Interbank rates: 08.15 GMT

GBPUSD 1.3643

EURUSD 1.1597

EURGBP 0.8500

GBPEUR 1.1762

GBPJPY 155.10

GBPCAD 1.6917

GBPZAR 21.0480

GBPHKD 10.6256

USDJPY 113.68

EURJPY 131.85

EURCHF 1.0566

EURHKD 9.0338

AUDUSD 0.7464

USDCAD 1.2398

USDCHF 0.9167

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