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  • Writer's pictureMike Paterson

Some risk-on sentiment returns but jury still out

Tuesday 5 May 2020

Some risk-on sentiment returns but jury still out

Renewed optimism about the US re-opening its economy, as indeed we're seeing in Europe and elsewhere still, has seen a little risk-on sentiment return but to me it's all a bit too early and too many unknowns still to get too carried away.

We remain in fragile times and while I understand the desire for good news I, and many others, continue to be less than convinced. Everyone out there, including the algos, will have their own take on where we might go over the next 6-12 months and beyond so we should expect the ever fickle nature of FX markets to continue.

GBPUSD has held decent support lines at 1.2400 but since rallied only to fail into 1.2480 and retreat again. EURGBP duly capped around 0.8800 (GBPEUR support at1.1360) and has retreated to 0.8739 (GBPEUR up to 1.1446)  amid some general EUR supply as the EZ tries to agree its way out of trouble. The retreat has helped put a bid under GBPUSD too. GBPJPY has found good support around 132.50 still but the better-risk rally has failed above 133.00 so far.

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 failed above 107.00 again but equally can't get back below 106.50 atm amid some USD demand and the risk-on plays. Re-sells duly placed in the rally around 107.00 as we're ranging still. EURJPY has retreated on the general EUR supply to break back down through 116.50 before finding decent demand at 116.20 as I type. EURUSD failed above 1.0950 and since retreated steadily to test the 1.0880 bids/support amid the general EZ reality check with the German constitutional court due to rule on the legality of the ECB QE measures soon today. USDCHF has held 0.9630, where we also have USD 460m expiries today, as EURUSD fell and with EURCHF holding 1.0520 with SNB still supporting in the dips.

AUDUSD held 0.6375-80 and rallied to test 0.6460 amid the better risk plays and the RBA leaving interest rates on hold but springing no real dovish surprises. USDCAD failed around the 1.4150 I highlighted yesterday and now retreating to look at 1.4020 support lines as the C$ find support amid some fimer oil/risk plays.

 *******  1-2-1 Mentoring Session Price Special: ******** GBP 55 per hour from GBP 95 per hour for existing clients. Limited offer extended for one more week so make sure you take advantage.

A special price as a gesture to clients in these strange times and proving to be very popular so don't miss out. You don't need me to tell you that there's lots going on right now, and the foreseeable future, so don't forget to take advantage of my 1-2-1 mentoring sessions if there's areas of trading these volatile markets 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:  08.25 BST

GBPUSD   1.2447

EURUSD   1.0887

EURGBP   0.8746

GBPEUR   1.1431

GBPAUD   1.9319

GBPCAD   1.7487

GBPJPY   132.92

GBPZAR   22.9005

GBPHKD   9.6564

USDJPY   106.76

USDZAR   18.3607

EURJPY   116.26

EURCHF   1.0532

EURHKD   8.4475

AUDUSD   0.6443

USDCAD   1.4045

USDCHF   0.9670

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