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  • Mike Paterson

Up and down we go again

Wednesday 18 May 2022

Yet another fickle 24 hours of variable risk with equities, gold and oil underpinned but equally rally sellers remining poised amid all the geopolitical and economic uncertainty.

This morning's UK inflation data made for painful reading but equally markets spent yesterday factoring in rate hike acceleration (wrongly in my humble opinion) so we've seen the Pound head back down again since the data release amid the reality of what yesterday's jobs/wages report and this morning's CPI/RPI will do to the UK economy. Not pretty.

Anyhow, for new and older readers alike I repeat my view that it's still a case of not over-analysing but keeping your focus on price action in core and cross-pairs.Continue to identify ranges and what levels present value for money. Algos will continue to knee-jerk price action on the variable headlines versus natural flows. Discipline is key as ever.

GBPUSD: Yesterday's rally through 1.2450 triggered a few more stops along the way to test 1.2500 but that was a step too far and re-sells placed around 1.2480 per my tweet/s. This morning's retreat into 1.2400 helped by EURGBP rally to test 0.8485 after holding 0.8400 yesterday. I remain poised to sell rallies but timing as ever is crucial. EURGBP: Yesterday's solid retreat duly held around 0.8400 with that o.8420-25 option interest helping along with hawkish ECB talk. More two-way business to continue as markets/algos over react. GBPJPY: Yesterday up up and away. This morning down down deeper and down as GBP and risk sentiment take another hit/reality check. Suffice to say great two-way business whatever your bias.

EURUSD: 1.0480 broken yesterday then posting 1.0560 before retreating courtesy of softer risk tone EURJPY supply but tempered by the EURGBP demand this time in a reversal of yesterday's scenario. I remain a rally seller as my preferred side. USDJPY: Tight range still amid the variable risk and USD tones. I like the cheeky rally-sell when momentum fades but good two-way business for the moment. EURJPY: Capped at 136.75 and noew testing 135.75 in the retreat. Up and down we continue to go.

USDCHF: Support at 0.9930 now with the SNB never far away and testing 0.9980 as EURUSD retreats with EURCHF underpinned too.

EURCHF: 1.0425-30 support now with the SNB keeping an eye on it all but sellers still poised 1.0480-00

AUDUSD: Holding 0.6990 in the latest retreats but equally failing 0.7030-50 still amid some AUDJPY supply returning again.. GBPAUD has 1.7800 still capping per yesterday's mention and now testing 1.7675 as GBPUSD retreat outstrips AUDUSD. NZDUSD also in retreat amid softer risk tones/underpinned USD but tightly bound after yesterday's 0.6375 cap. GBPNZD testing support into 1.9500 again amid the GBP sell-off this morning. USDCAD: A further hold of 1.2800 and now testing 1.2850 on softer risk tone CADJPY supply and oil off its highs. Still expecting demand into 1.2750 where we have large option interest in next 48 hours too.

Let's continue to be careful out there in all things.

Interbank rates: 08.43 BST

GBPUSD 1.2415

EURUSD 1.0518

EURGBP 0.8478

GBPEUR 1.1787

GBPJPY 160.30

GBPCAD 1.5922

GBPCHF 1.2340

GBPZAR 19.7683

GBPHKD 9.6596

USDJPY 129.30

EURJPY 135.99

EURCHF 1.0488

EURHKD 8.1951

AUDUSD 0.7010

USDCAD 1.2836

USDCHF 0.9975

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