US Dollar demand notable as yields rise again
Friday 12 March 2021
Happy 70th Birthday to my dear friend and colleague, Les Castell.
The ECB came and went with minimal impact, the only real change being the added "the Governing Council expects purchases under the PEPP over the next quarter to be conducted at a significantly higher pace than during the first months of this year." They have reiterated though that the amount stays the same essentally and should not be taken as further stimulus. They also repeated they are monitoring the EUR rate very carefully but they differ on whether bond yields need to be completely unwound.
Market focus remains on bond yields generally though especially those across the pond with US 10-year yields up to 1.61% this morning and putting a bid under the Greenback and sending Gold back down towards $1700.
As always the FX jury remains out still so we need to focus on price action and value for money in our entry and exit levels. Discipline and patience needed more than ever in these ever fickle/fragile times.
GBPUSD finally broke up through 1.3960 as USD sentiment turned lower yesterday but has capped around 1.4000 again in a reverse move on the USD renewed demand and now testing 1.3920 support again as I type. EURGBP still ranging 0.8550-0.8580 as core pairs react in tandem to the USD tones by and large but we shouldn't get complacent on a break-out. GBPJPY has found a new base NOW around 151.50 with USDJPY and risk both underpinned still but failing around 152.20 this time so far with rally sellers on core pairs both poised still.
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 at these lower levels. Patience, entry/exit level and not getting greedy remain key.
USDJPY found support at 108.60 and has made steady gains through 108.80-00 amid the firmer USD and risk tones but equally failing into 109.20 again as I type but still looking underpinned overall for the moment.EURJPY found a higher base at 129.60 then 129.80 on the better risk sentiment but now finding a good cap at 130.30. EURUSD is testing 1.1925-30 as I type where we also have large option interest today after the steady fall from 1.1980 amid renewed USD demand. USDCHF found support at 0.9240 this time as EURUSD retreated but with EURCHF holding that 1.1050-60 line and rallying back above 1.1100 with the SNB ever watchful/helpful.
AUDUSD found a decent base at 0.7730 helped by that large expiry interest between 0.7710-25 but failing at 0.7800.and now we retreat back to from where we came and ranging still. USDCAD failed at 1.2600 this time amid softer USD and firmer oil tones but since finding support at 1.2520 amid the firmer USD in this session.
Southend remain at home tomorrow versus Stevenage in what is another must-win game. They all are now.
Let's continue to be careful out there in all things. Staying safe must be our main priority still. Have a good week-end everyone.
Interbank rates: 08.36 GMT