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  • Mike Paterson

US Dollar demand returns while oil surges.

Wednesday 2 March 2022

Firmer US Dollar notable in the past 24 hours but with softer risk tones overall helping to temper the rallies in both USDJPY and USDCHF per my tweets yesterday. Cross pairs though are in retreat with the Euro feeling some particular local pressure amid sales of European asset classes and reduced expectations of ECB rate hikes despite the rally in oil and gas prices. EURUSD has posted lows not seen since May 2020.

Gold and Oil remain underpinned as I've been warning and now tested $1950 again with Brent posting fresh highs of $112.50 and WTI $110.00. Meanwhile conjecture over Central Bank rate hikes continues particularly now in these increasingly fragile times and ongoing inflationary price rises in oil. Opec+ meet today but not expected to throw any lifelines at this time.

GBPUSD: 1.3300 now broken as the retreat continues to 1.3271 with rallies limited amid the mixed risk tones as I warned yesterday. EURGBP: Clinging on to support around 0.8320 again after the latest rally duly failed into 0.8360. Euro pressure may yet provide a clean break lower but rally sellers will remain poised regardless.

GBPJPY: Finding support at 154.00 in past 24 hours but risk still fragile and failing at 154.60 still. Caution

EURUSD: A reported barrier option at 1.1100 now history as the general EUR weakness continues amid renewed USD demand. Lows of 1.1060 so far.USDJPY: Finally made its way back above 115.00 amid the USD demand but for much the day was capped by the risk-off JPY buying per my tweets.EURJPY: Sellers still prevailing and now testing 127.30 as risk and the Euro generally remain fragile. USDCHF: Sellers still poised amid the fragile backdrop and CHF demand as I've been warning so I hope the steer has helped. SNB will be keeping a close eye as always but will judge their time as market forces prevail. EURCHF: The retreat continues as risk-off CHF demand/EUR weakness double whammy prevails and now testing 1.0150 SNB still keeping a close watch but can't hold out against combined market forces.

AUDUSD: Good support still at 0.7240 amid some general commodity ccy demand but failing at the 0.7280-00 area again.NZD still has support at 0.6740-50 after a failure at 0.6780. GBPAUD and GBPNZD both remain on the back foot. USDCAD: A rally failure at 1.2750 and now 1.2720-30 capping helped by commodity ccy demand with oil prices surging but falls tempered by USD demand generally. Good two-way business still expected.

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

Interbank rates: 08.25 GMT

GBPUSD 1.3295

EURUSD 1.1097

EURGBP 0.8346

GBPEUR 1.1980

GBPJPY 153.20

GBPCAD 1.6904

GBPCHF 1.2201

GBPZAR 20.6018

GBPHKD 10.3567

USDJPY 115.20

EURJPY 127.83

EURCHF 1.0194

EURHKD 8.6451

AUDUSD 0.7253

USDCAD 1.2712

USDCHF 0.9188

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