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Softer risk tones return but jury still out

Tuesday 12 October 2021

Yesterday saw a trend of firmer risk/yields and the ongoing JPY supply but we seem to have paused for the moment and some correction/retreat notable as European trading gets underway but changing again even as I type. Commodity currencies remain underpinned


UK jobs/wages data came in better than expected but I still have a concern over the rising number of job vacancies (now 1.1m) if a UK economic recovery is to happen at the pace some analysts are calling for. GBP pairs have been less than impressed at this point with the data pulled around by temporary factors/end of furlough.


New Japanese PM Kishida has made some comments this morning wanting a weaker Yen but, hey,nothing new there.


Amid all this general market uncertainty I will repeat that patience and discipline in trading are key, as ever, and not being greedy. Ignore the noise and countless amount of "analysts" trying to explain the reasons for moves. Just focus on the price action and decide what presents value or doesn't, and if in doubt, keep out.


GBPUSD: Yesterday's early BOE-led rally turned out to be the top and after subsequent failures at 1.3650-60 we've now seen a move back down to test the old support line at 1.3580 (breaking as I type. Pips banked in the retreat. I remain a rally seller but respecting the ongoing dip demand as I've been warning while keeping an eye on EURGBP and GBPJPY as always. EURGBP: Those 0.8470 bids provided support yesterday as GBP failed to make further gains elsewhere and now back up through 0.8510 as GBP[USD retreats. GBPJPY: A further solid rally yesterday amid the yield-led JPY supply but capping at 154.50. Finding a base though now at 153.75-80. I feel it'll get top-heavy again but respecting current market sentiment.


I remain a GBP rally seller across the pairs but being patient as ever. These are risk sentiment markets and ever fickle so good/tight position management essential.


EURUSD: A good hold of the old 1.1540 support now helped by the cross pair dip demand again but rally sellers remain poised above 1.1580 area as I warned here yesterday. The pair still finds itself in the middle of cross-flow action and variable risk plays. USDJPY: A further move higher yesterday amid the ongoing JPY supply and we saw a test of 133.50. Re-sells eventually made at 113.39 and some pips banked into the 113.00 retreat but still short of some. EURJPY: New support line in the sand at 130.50 now having broken higher amid the firmer risk tones and core pair dip demand. Sellers above 131.00 which we're testing again as I type. USDCHF: 0.9250-60 support still after a failure at 0.9280 this time with the SNB ever vigilant. EURCHF: 1.0710 has held again in this morning's early retreat with SNB shadow ever present on this and USDCHF and helped by the firmer risk tones but rallies weak still.


AUDUSD: Finding a line in the sand now at 0.7320 and up through 0.7350 as commodity currencies remain in favour and some further AUDJPY demand. USDCAD: 1.2500 capping the rallies helped by some renewed CADJPY demand this morning after holding 1.2450 yesterday. Large options interest in play today.


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


Interbank rates: 08.30 BST

GBPUSD 1.3594

EURUSD 1.1560

EURGBP 0.8503

GBPEUR 1.1758

GBPJPY 153.86

GBPZAR 20.3880

GBPCAD 1.6940

GBPHKD 10.5866

USDJPY 112.83

EURJPY 130.83

EURCHF 1.0713

EURHKD 9.0037

AUDUSD 0.7354

USDCAD 1.2465

USDCHF 0.9268


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