Soggy risk sentiment prevailing again
Wednesday 28 October 2020
Market concerns are increasing with the US Election less than a week away, rising COVID concerns throughout Europe and Brexit trade talks still in the mix.
Equities and oil are falling again as risk sentiment weakens further, as I have warned here for a long while now. Sure, the ultra-cheap money happy-clappy brigade will still have their moments from time to time but the tide is turning.
Central Banks also in focus with the latest BOC decision today then BOJ and ECB tomorrow all helping to keep traders and markets second-guessing but all three are expected to deliver dovish tones.
Month-end flow forecasts show a moderate need to sell USD with the currencies to benefit most being EUR and GBP and we saw tha yesteday on GBPUSD into the 4pm London fix with that rally to test 1.3080 but the signals are definitely not so strong this time around.Even so, keep an eye on today's 4pm London fix which is dealing for month-end Spot date.
GBPUSD duly failed around 1.3080 again and now back down through 1.2980 helped by the EURGBP bounce this morning as per my tweets. EURGBP has held 0.9010-15 yet again helped by the usual month-end demand and now posting 0.9065 but large option expiries between 0.9085-0.9100 should help cap rallies. I remain a dip buyer overall especially with the usual month-end demand in play but respecting the current two-way business.GBPJPY found a cap around 136.30 this time but holding 135.20 on the retreat as I type.
No change in my basic view and I stay poised to sell GBP rallies as my preferred side and buy back in the dips as ever. Patience continues to be a virtue and entry level key as always. I still see dip demand though with markets and risk sentiment still in a state of uncertainty overall.Brexit remains the very big elephant in the room.
USDJPY remains on the back foot as JPY risk-off demand grows and now posting new recent lows of 104.16. EURJPY found a cap into 123.30 amid the softer risk and now challenging support at 122.50 as I type.EURUSD has also had another retreat amid the softer risk tones and general EUR supply still as markets expect a dovish ECB tomorrow and now testing bids around 1.1750 as I type after finally breakig down through 1.1770.USDCHF has based at 0.9060 again as EURUSD retreats and now back up through 0.9100 as EURUSD fails to bounce too far from its lows with EURCHF steady and SNB casting its shadow still.
AUDUSD ran into that decent sell interest around 0.7150 again and now falling back into the 0.7100 line this morning with AUDJPY supply evident again. USDCAD remains underpinned at 1.3160, and now 1.3180-00 amid the softer risk/oil tones and now testing 1.3250 as I type helped by CADJPY supply.
Markets are ever-fickle so don't forget to contact me if there's areas 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.
Interbank rates: 08.35 GMT