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  • Writer's pictureMike Paterson

US Dollar demand and better risk sentiment greet the new month

Tuesday 1 October 2019

A new month underway and the final flows/moves of the old one saw equities and the Greenback in demand and help some risk-on sentiment prevail. It all remains variable and fragile so we'll best take one day at a time rather than read anything into it for the month ahead. Manufacturing PMI data today across the globe but not prime movers at this time.

GBPUSD had a spike through 1.2330 yesterday triggering stops to post 1.2346 but failed to break back up through 1.2350 and we've duly retreated to post 1.2261 this morning before bouncing amid all the Brexit/Johnson headlines.EURGBP has duly retreated but accelerated to test 0.8830 (GBPEUR up to 1.1325) as the month-end demand came to and end and EURUSD broke lower finally through 1.0900. GBPJPY saw some good two-way business again but has rallied to 133.30 on the better risk/softer Yen impact after holding 132.50 yet again.

I will continue to rally-sell GBP as my preferred strategy overall too amid the ongoing uncertainty/indecision including Brexit/political fallout but happy to buy back in the dips as always.Rinse and repeat.Still no reason to change my view any time soon as the current madness plays out but caution as ever is appropriate. Just ignore the noise, identify the trading ranges, and let the algos do the work.

EURUSD finally took out the large barrier option interest at 1.0900 with the softer German CPI and GDP forecasts helping along with the general USD demand plus an attack on the 1.0900 vanilla option expiries . More behind that at 1.0875 helped to contain range as per my tweet but we've failed to get back through the pivotal 1.0925-30 and fallen back to 1.0880.

USDJPY indeed found support again at 107.70-75 where I noted some support/demand yesterday and has enjoyed the ride higher to 108.43 helped by the general USD demand and risk-on Yen supply. USDCHF has also made the most of the USD demand/better risk combo to test 1.000 with EURCHF also finding dip buyers again.

AUDUSD remains on the back foot after the RBA duly cut rates by 0.25% and offered little by way of comforting tones. I warned yesterday that the risk may well be to the upside initially with markets already pricing in a cut and dovish tones and so it proved but the spike into 0.6780 was duly slapped and we've since tested 0.6700 support. USDCAD STILL has good two-way pips to be had within 1.3200-1.3300 amid the variable oil/USD/risk sentiment.USD demand negated by CADJPY buying/firmer oil.

Fickle Forex markets ever prevailing so be ready with your entry/exit levels and orders as always.

Have a good day out there one and all.

Interbank Rate 08.35 BST

GBPUSD   1.2297

EURGBP   0.8851

EURUSD   1.0886

GBPEUR   1.1286

GBPAUD   1.8339

GBPCAD   1.6302

GBPJPY   133.29

GBPZAR   18.7111

GBPHKD   9.5339

USDJPY   108.40

USDZAR   15.2217

EURJPY   118.01

EURCHF   1.0884

EURHKD   8.4476

AUDUSD   0.6704

USDCAD   1.3259

USDCHF   0.9997

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