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  • Writer's pictureMike Paterson

US Dollar demand notable but not the whole story

Wednesday 29 September 2021

Yesterday in my update I noted some softer risk sentiment prevailing with equity markets and oil retreat notable in early European trading and that theme continued with USD demand notable overall and heavy losses for GBP not helped by month-end flows and the UK finding itself in disarray generally.

The month-end USD demand helped the general theme but with Fed talking heads adding little to the mix. Treasury yields have been variable and that continues as I type now. This afternoon brings a raft of CB speakers at Day 2 of the ECB Forum, with Lane chairing the panel from 15.30, then Powell, Lagarde, Bailey, Kuroda all up from 16.45-17.45 GMT. I expect more rock and hard place rhetoric and long-term inflation denial but we'll be poised as ever for any fallout.

Amid all this market uncertainty I will repeat that patience and discipline in trading are key, as ever, and not being greedy.

GBPUSD: A solid retreat yesterday as 1.3660 gave way then acclerated through 1.3600 where we saw stops triggered too amid the general GBP selling and helped by GBPJPY supply and EURGBP demand up through 0.8620 triggering further fall to 1.3530. Pips duly banked from rally re-sells per ongoing strategy albeit some too early but hey, still a good return. I remain a rally seller while keeping an eye on EURGBP and GBPJPY as always. Barrier option at 1.3500 preventing further falls below there this morning but equally we can't get back above 1.3550-60 either in the bounce. EURGBP: Good sell interest at 0.8560, 0.8580, 0.8600 and 0.8620 all taken out now by the GBP retreat and the pair looks underpinned still this morning after capping at 0.8642 so far. GBPJPY: That good support at 151.80 was soon history yesterday as softer risk tones and GBP sellers drove it down to 150.50 but since capping above 151.00 and testing 151.30 as I type. The month-end flows all in the mix

I remain a GBP rally seller across the pairs but being patient as ever. These are risk sentiment markets and ever fickle so good/tight position management essential.

EURUSD: 1.1700 still providing a cap amid the German election fall-out/softer risk tones and general USD demand but holding 1.1650-60 as I type. The pair still finds itself in the middle of cross-flow action and variable risk plays plus some ongoing option interest. USDJPY: We've now been up to look at 111.70 in Asia amid the month-end demand I've been highlighing but retreating back into 111.25 as I type amid some softer risk JPY demand. EURJPY: Failing at 130.40 this amid some general EUR supply and softer risk plays again and now testing 129.80.

USDCHF: Still finding a base at 0.9260 and now 0.9280 as EURUSD retreats again and with the SNB ever vigiliant as EURCHF holds 1.0820 in the latest retreat but sellers poised above 0.9300 again. EURCHF: Holding 1.0830 this time with SNB shadow ever present but rally sellers poised.

AUDUSD: A good hold at 0.7220 in yesterday's retreat but failing to hold gains above 0.7260 atm. USDCAD: Yesterday saw a good break and hold of 1.2640 on the softer risk/oil tones and CADJPY selling with that large option interest in the mix too. More in play today at 1.2620 should we venture down there.

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

Interbank rates: 08.33 BST

GBPUSD 1.3540

EURUSD 1.1668

EURGBP 0.8616

GBPEUR 1.1607

GBPJPY 150.75

GBPCAD 1.7163

GBPZAR 20.3323

GBPHKD 10.5398

USDJPY 111.31

EURJPY 129.86

EURCHF 1.0840

EURHKD 9.0806

AUDUSD 0.7257

USDCAD 1.2677

USDCHF 0.9293

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