Some fragile risk tones to greet the new week
Monday 21 November 2022
Firmer US Dollar sentiment this morning but the jury remains out with equities, oil, gold and cryptos all softer again not helped by fresh and seemingly increased COVID concerns out of China.
Geopolitical risk in Ukraine still lurking too and while it may be a quiet week on the Central Bank front we have a few CB speakers up to the rostrum with ECB's Lane this morning pouring some cold water on a 75bps rate hike in December. Not a lot on the options front either and we have a US Thanksgiving-shortened week ahead to reduce liquidity.
As always though we should expect the unexpected and not get complacent. Remember that conjecture and second-guessing should stand to one side on data and news releases. Focus on the price action and let the algos do the heavy lifting/dropping. The important thing is to identify your preferred risk/reward entry/exit levels prior.
GBPUSD: A solid cap of 1.1950 on Friday and a steady decline since to test 1.1800 as I type amid the general USD demand. Some EURGBP selling helping to underpin a little along with GBPJPY being dragged higher by the latest USDJPY rally despite softer risk sentiment. I remain bearish overall and poised to re=sell. EURGBP: Broken down through 0.8700 after retreating from 0.8725 on some soggier EUR tones albeit ranging quite tightly still. I expect the two-way business to continue as jury remains out on both currencies and outlook. GBPJPY: Holding 166.00 in the latest retreats and testing 167.35 as I type despite the softer risk tones as USDJPY motors higher. I would still expect two-way business as markets remain ever-fickle but with sellers to prevail overall despite a slight upward trend still atm.
EURUSD: A solid cap at 1.0400 on Friday and now testing 1.0240 amid the firmer USD tones and more dovish take on the ECB decision in December. Should still see some two-way business still.USDJPY: The notable cap at 140.80 now very much history amid the general USD demand after a solid hold of 139.80-00. Threat of intervention remains real especially after such a rapid rise. EURJPY: Holding 144.50 yet again and testing 145.10 as USDJPY marches ever higher. Expect more two-way business. USDCHF: A strong hold of 0.9500 on Friday then 0.9550 in Asia and now testing 0.9580-00 as USD demand returns. Rally tempered by EURCHF retreating. SNB ever-vigilant both sides of the coin. EURCHF: Support at 0.9800 in latest retreart after capping at 0.9880 again amid some sofer EUR tones/CHF demand double whammy.
AUDUSD: Forming a cap around 0.6680 this time but holding 0.6600 in the firmer USD retreat. GBPAUD trading 1.7750-7850 for the moment. NZDUSD supported at 0.6100 now after the retreat from 0.6160-80 amid the firmer USD tones. USDCAD: A hold of 1.3360 on Friday and now 1.3400 this morning and testing 1.3430 amid fresh USD demand with oil softening too.
Interbank rates: 08.52 GMT