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  • Mike Paterson

Two-way trading continues

Wednesday 7 December 2022

Xmas is coming and so are a few Central Banks, starting today with the Bank of Canada, but it seems that markets are pre-occupied by the US Fed next Wednesday and jumping on hot coals still.

Liquidity is notably thinner and we're seeing some increased degree of volatility, not least of which yesterday's sharp GBP rally into the 4pm London fix only to reverse and more by the end of the day. USDJPY still making its mind up too as is the Greenback overall as traders second-guess the Fed. Equities have had another wobble and oil has fallen further but gold is co solidating a little. China announce more COVID relaxtion measures but analysts out on whether that's a positive or negative for sentiment and the globl economy at large.Geopolitical risk in Ukraine still lurking too.

GBPUSD: Was range trading still until we saw that surge into the 4pm London fix from the 1.2150 base to look at 1.2270 only to fall all the way back just as fast and break down through 1.2150 before holding 1.2100. Great two-way business whatever your bias .I remain poised to re=sell. Rapid fix moves can invariably be faded. EURGBP: Fell to test the old support line of 0.8580 amid the GBP demand but now back up through 0.8630 in the reverse move.I expect the two-way business to continue as jury remains out on both currencies and outlook. GBPJPY: A good cap at 167.30 in yesterday's GBPUSD-led rally but equally holding 166.00 again as core pairs both find dip demand and equity markets rally off their lows.

EURUSD: A decent hold at 1.0440 this time after the retreat from 1.0520-25 again but capping aobve 1.0480 as I type.Should still see some mixed business and I remain a rally seller overall as my preferred side. USDJPY: A solid hold of 136.00 then 136.50 again yesterday as USD demand returned and now testing 137.60. I expect more two-way business into FOMC and I prefer the rally -sell side still.EURJPY: Holding 143.00 still and now testing 144.00-10 again as we continue to range. USDCHF: Still struggling to take full advantage of the returning USD demand and capping at 0.9430-50 again after the 0.9380 hold with traders still looking at SNB tightening/hawkish tones next week. EURCHF ranging tightly for the moment. SNB ever-vigilant.EURCHF: A hold at 0.9840 in the extended retreat but capping at 0.9880 amid wobbly risk and hawkish SNB and we continue to range.

AUDUSD: Good support around the old 0.6660-80 area again but equally 0.6740 still providing good supply/res . NZDUSD still capped at the old support line of 0.6350 but holding 0.6300 again as the USD jury remains out. USDCAD: Up, up and away on the softer oil/firmer USD double whammy and now posting 1-month highs into 1.3700.after a good hold of 1.33630-50 this time.Expect some two-way business still overall as markets remain ever-fickle. BOC today with hike expectations at 50 bps.

Let's continue to be careful out there.

Interbank rates: 08.54 GMT

GBPUSD 1.2150

EURUSD 1.0472

EURGBP 0.8616

GBPEUR 1.1603

GBPJPY 167.12

GBPCAD 1.6645

GBPCHF 1.1426

GBPZAR 21.0233

GBPHKD 9.4648

USDJPY 137.58

EURJPY 144.00

EURCHF 0.9867

EURHKD 8.1595

AUDUSD 0.6689

NZDUSD 0.6330

USDCAD 1.3678

USDCHF 0.9430

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