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  • Mike Paterson

US Dollar demand notable again

Thursday 4 March 2021

Yesterday's UK Budget delivered few surprises and we saw the Pound generally non-plussed by the whole affair. Lots more help being provided until September which suggests they're not exactly confident of their own end-June projections for total release from lockdown. A little reality-check overall I reckon therefore.

Elsewhere we've seen some variable risk sentiment and USD demand with JPY and CHF funding-ccy selling still notable as equities remain underpinned yet fragile to a turn lower still. Yesterday's 4PM London fix once again saw some good GBP and EUR demand as I warned in this update so we'll keep an eye on that again today. Fed's Powell speaking at 17.05 GMT which brings with it some expectation/hope of bond yield discussion but in reality may prove a little different. We'll remain prepared though.

As always we need to focus on price action and value for money in our FX entry and exit levels. Discipline and patience needed more than ever in these ever fickle/fragile times.

GBPUSD has traded tightly 1.3920-80 amid all the variables since that spike above 1.4000 yesterday morning. EURGBP found support at 0.8620 helped by those option contracts rolling off but equally duly found rally sellers into 0.8660 this time where I noted sellers yesterday. GBPJPY continues to find a base at 149.00 cap with JPY supply still notable and USDJPY rallying through 107.00 but failing into 149.80.

I remain poised to sell GBP into rallies as a jobbing preference but respecting dip demand still with price action ever fickle. Equally a case still for going long in the dips therefore as we continue to range but I still feel the recent rally somewhat over-cooked. Patience and not getting greedy remain key.

USDJPY has found dip demand at 106.80 this time amid some further JPY supply on the crosses and now testing 107.30. while EURJPY found a base at 128.80 again but now failing at 129.30.EURUSD failed above 1.2100 amid the softer risk/firmer USD tones but holding 1.2020 so far on the retreat. USDCHF has broken up through 0.9200 as EURUSD retreats and supported by EURCHF being underpinned still and now up through 1.1100 with the SNB ever-watchful/giving a helping hand.

AUDUSD found support at 0.7750 again amid AUDJPY demand and made progress higher to test 0.7810 this time before failing as sentiment turned lower and USD demand kicked in again.USDCAD rallied from 1.2600 before failing at 1.2680 this time but finding support now at 1.2630 amid firmer USD/softer risk tones.

Let's continue to be careful out there in all things. Staying safe must be our main priority still.

Interbank rates: 08.37 GMT

GBPUSD 1.3930

EURUSD 1.2038

EURGBP 0.8640

GBPEUR 1.1572

GBPAUD 1.7867

GBPCAD 1.7622

GBPJPY 149.47

GBPZAR 20.9985

GBPHKD 10.7999

USDJPY 107.28

USDZAR 15.0792

EURJPY 129.13

EURCHF 1.1112

EURHKD 9.3328

AUDUSD 0.7797

USDCAD 1.2647

USDCHF 0.9232

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