Some Greenback demand but jury still out
Monday 18 October 2021
A new week begins with the main recent trend of weaker JPY prevailing still but amid some softer risk tones as European trading gets underway. The Pound remains perky overall too amid rate hike expectations shaking off the dreadful death of an MP on Friday but has come in for a bit of profit-taking again.
Equities and oil remain underpinned along with yields but all three off their tops again as I type as Chinese data failed to impress. Gold on session lows after failing above 1800 on Friday and the Bitcoin rally contiues again.
For FX markets focus on the price action and decide what presents value or doesn't, and if in doubt, keep out. Be aware of those rising support lines and/or falling resistance levels. 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: Has now held the rising lows of 1.3700-20 in its latest retreat from the fresh recent highs of 1.3768 amid GBPJPY capping and EURGBP rallying but looks underpinned still. I remain a rally seller overall but still respecting the ongoing dip demand as I've been warning while keeping an eye on EURGBP and GBPJPY as always. EURGBP: A steady decline from Friday's 0.8480 as GBPJPY demand lifted GBPUSD but equally the generally softer EUR tones continue and we've posted fresh lows of 0.8414 before a small rally that's failed at the pivotal 0.8440 area. GBPJPY: Good support now at 156.60 and up through 157.00 to post 157.42 before retreating but hanging onto 157.00 as I type. Still respecting current market sentiment on this and core pairs.
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: 1.1570 technical support and bids holding the retreat so far this morning but rally sellers poised above the 1.1600 area still as the pair continues to find itself in the middle of ECB interest rate hike lagging versus the Fed, cross-flow action and variable risk plays. USDJPY: Still underpinned amid the ongoing JPY supply generally as funding currencies get sold with oil prices ever rising and USD needed and now supported at 114.00, posting 114.45 not seen since 2018. EURJPY: Support line in the sand still at 132.00 but failing at 132.50 as I type amid some of the gneral EUR supply. USDCHF: A good hold of 0.9220 and now 0.0240 as EURCHF holds 1.0700 (hello SNB on both?) but rallies still limited amid the CHFJPY demand, EURCHF: 1.0700 support now with SNB shadow ever present after failing at 1.0740 on Friday.
AUDUSD: Finding that support line in the sand again at 0.7300 after failing at 0.7440 but underpinned by the general AUDJPY demand still. USDCAD: 1.2420 now capping the rallies helped by the ongoing oil-led CADJPY demand and generally softer USD after holding those new lows of 1.2345-50. Some option interest today in play should we rally.
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 07.33 BST