US Dollar demand as risk-on sentiment returns
Tuesday 5 November 2019
Equity and bond markets continue to look ok and with some positive tones out of the US-China trade talks and demand for EM currencies it's risk-on sentiment prevailing again for the moment. Nothing really new of note but we know how fickle these markets are so we'll continue to go with the flow and trade the still tight-ranges.
GBPUSD failed above 1.2925 and has fallen back down to post 1.2877 but contained by some GBPJPY risk-on demand and that large (GBP1.5bln) option expiry interest today at 1.2900 of which £1.3bln are calls. A few offers now at 1.2900 then larger at 1.2925-30.EURGBP offers at 0.8650-60 still holding rallies but 0.8620 now equally a decent base as both core pairs fall amid the USD demand.GBPJPY also continues to see good two-way trading but currently underpinned again with some risk-on demand.
I will continue to rally-sell GBP as my preferred strategy overall too amid the ongoing Brexit/Election uncertainty but always happy to buy back in the dips still. A decent case for GBP longs again in the dips if this tight range continues so take your pick. In essence the general uncertainty and can kicking continues and for me that's still Pound negative. UK Services PMI data came in slightly better than expected and has helped provide additional support on the lows but rallies still limited.
EURUSD has fallen back to post 1.1112 amid USD demand but also supported a little by the EURJPY buying.
USDJPY has rallied on the better risk/USD tones but still faces a challenge to get through decent offers/sell interest at 109.00.USDCHF has posted fresh recent highs of 0.9908 as EURUSD falls and remains underpinned although still subject the variable risk and USD tones.
AUDUSD has found a little support from some risk-on AUDJPY demand but the pair has large (A$1.55bln) in expiries at 0.6900 today to keep range contained. The RBA left rates on hold as expected and kept their recent upbeat tones which also helped push the pair up from 0.6880 to test the 0.6925-30 offers.USDCAD has found itself still on the back foot amid the USD demand and firmer oil price tones.
Fickle Forex markets ever prevailing so be ready with your entry/exit levels and orders as always.
Don't forget I offer 1-2-1 mentoring if there's areas of trading this latest volatility, or how to make best use of the order boards and expiries, that you might need some further help with. I develop your powers of trading discipline and psychology all learned in my 38 years in FX, including 20 as a market maker.
Have a good day out there one and all.
Interbank Rate 08.32 GMT