Tech stocks wobble but markets waiting on FOMC
Wednesday 5 January 2022
Yesterday saw a retreat for tech stocks and some USD selling return but both underpinned as markets continue to second-guess the FOMC Minutes out tonight at 19.00 GMT. Fed's Kashkari came out talking two rate hikes this year compared to his previous no hikes in 2022 view and markets are pricing in a March start. 30 year US bond yields facing good technical resistance.
Forex pairs have been mostly contained in tight ranges still but with slightly softer USD tones. JPY weakness still being seen amid the generally underpinned risk tones and the Pound is taking advantage still.
As always, don't over-analyze or second-guess but keep your focus on price action in core and cross-pairs and identify recent ranges to see whether we hold or break and what levels present value for money. Patience will invariably be a virtue but don't confuse patience with being stubborn. A new year maybe but same rules of trading always.
GBPUSD: We saw a test of 1.3480 support afte another failure into 1.3520 but the GBPJPY demand/EURGBP supply double whammy has given the pair a solid platform since Monday's wobble but still failing to break over 1.3560. Support now at 1.3520. GBPUSD rally sellers, including me, ever poised while keeping one eye at least on the cross flows and risk sentiment. EURGBP: 0.8360 now providng good resistance after yesterday's break and a further retreat to test strong/key support between 0.8320-20 (GBPEUR 1.2000 resistance) amid the general risk-on EUR selling. Keep an eye on a break but if not then the rally should help cap GBPUSD. GBPJPY: 156.50-80 now the decent support area amid the renewed better risk tones after the fail into 157.50 as USDJPY caps at 116.33. Sellers remain poised on this and core pairs when momentum fades but caution still required for the moment.
I remain a GBP rally seller across the pairs overall as my preferred trading side but being patient as ever. These markets are ever-fickle so good/tight position management essential.
EURUSD: 1.1275-80 still providing support after a failure around 1.1320 this time amid the better-risk EUR supply. USDJPY: Finally capped at 116.33 and now looking to test decent support at 115.75-80 amid the general USD supply. EURJPY: 130.60-80 support now but sellers prevailing at 131.40 after the break up through 131.00 as USDJPY posted 116.33 highs. USDCHF: Support at 0.9160-70 now turned resistance after yesterday's move through amid some softer USD tones and EURCHF rally sellers lurking still but with the SNB shadow ever present. EURCHF: 1.0350-60 support now becomes resistance but equally 1.0250-30 still holding for the moment with SNB ever vigilant.
Offer: 1.0350, 1.0365, 1.0385, 1.0400, 1.0415-20
AUDUSD: Decent sopport coming in now at 0.7180-85 amid some usual dip demand and now a rally into 0.7250 on the generally softer USD tones. USDCAD: Support at 1.2720 now history and becomes resistance after another hold of 1.2660. Some CADJPY seliing being seen as oil retreats off its highs as does USDJPY.
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.50 GMT