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  • Mike Paterson

Some risk-off sentiment returns as fragile conditions continue

Wednesday 8 April 2020

UK PM Boris Johnson spent another night in ICU but condition is described this morning as stable and the Pound remains tightly bound for the moment. Part of the reason for that is the fragile state still prevailing generally and after some risk-on sentiment yesterday we've since the reality check that I warned about.

COVID-19 continues to claim lives and there is no receding trend of note despite some hopeful optimism. Even when this awful time is over the full cost both socially and economically is all pure guesswork still.

The highly anticipated Eurogroup meeting took place but no decisions taken with the Dutch seeming to be the ones providing the dissent on "Coronabonds". A press conference for this morning has been cancelled and the meeting will resume at 17.00 CET tomorrow. The failure for unanimous agreement (anyone really surprised given the logistics and variables on which all member states have to agree?) has put a cap on the Euro gains and we've seen a steady retreat.

GBPUSD has found support into 1.2280 but similarly sellers around 1.2380 and 1.2350-60 since helped by some risk-on GBPJPY supply so there's your range now for the moment until broken.Some support though from the EURGBP retreat into 0.8800 from 0.8850 (GBPEUR up to 1.1360 from 1.1305). GBPJPY has capped at 135.00 helped by the softer risk sentiment and rally sellers on core pairs but since finding support around 133.80.

I stay poised to sell GBP rallies overall and buy back in the dips as ever but patience continues to be a virtue and entry level key as always.

USDJPY has capped around 109.20 and fallen to test 108.50-60 on the softer risk plays but finding support amid some general USD demand. EURJPY has failed around 119.00 as I warned that sellers still poised on the softer risk and rally-sell interest in core pairs anyhow.EURUSD capped around 1.0925 and since retreated to test those bids at 1.0850 on the softer Euro/firmer USD combo and not helped by the Eurogroup decisions failure.USDCHF has capped into 0.9750 but based into 0.9680 as EURUSD falls and retreat tempered by more EURCHF dip demand at 1.0540 with the SNB still in the frame.

AUDUSD rallied again only to fail around 0.6200 and now fallen to look at 0.6120 helped again by more AUDJPY supply and downgrades by S&P and Fitch. USDCAD fell further to test 1.3950 on the firmer oil/softer USD and CADJPY demand triple whammy yesterday but since seeing a correction to test the 1.4080 pivot on the softer risk sentiment.

Fickle Forex markets ever prevailing so be ready to jump on moves with your orders as always. Caution advised as ever if you're not sure.

Lots going on right now, and the foreseeable future, so don't forget that I offer 1-2-1 mentoring if there's areas of these volatile markets that you might need some further help with.

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

Interbank rates: 08.20 BST

GBPUSD   1.2302

EURUSD   1.0848

EURGBP   0.8815

GBPEUR   1.1342

GBPAUD   2.0059

GBPCAD   1.7283

GBPJPY   133.83

GBPZAR   22.5910

GBPHKD   9.5377

USDJPY   108.81

USDZAR   18.3651

EURJPY   118.03

EURCHF   1.0552

EURHKD   8.4092

AUDUSD   0.6135

USDCAD   1.4052

USDCHF   0.9729

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