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  • Mike Paterson

US Dollar undermined by more cautious Fed talk

Monday 19 November 2018


Friday saw a few comments out from the US Federal Reserve expressing growth concerns and with Vice-Chair Clarida suggesting that interest rates were approaching neutrality. Cue markets and traders re-assessing the rate of further/additional tightening and we've since seen the Greenback under pressure.

GBPUSD was already beginning to steady having found support at the 1.2780 that I mentioned on Friday, to now post rebound-highs of 1.2882 as I type with Brexit still very much in focus but with no further fallout this morning we've seen traders/algos covering some more short positions.Immediate offers now around 1.2885, 1.2900, 1.2920 and 1.2950 then larger around 1.2980-00.Bids/demand building at 1.2850,1.2820, 1.2800 and 1.2780 with more buyers/support at 1.2750, 1.2720 then larger at 1.2700 still. I remain GBP bearish overall and happy to jump on rallies then buy back in the dips while remaining core short, a strategy that continues to work well. The latest storm may have passed but the risk of another one arriving soon remains high.

EURGBP popped 0.8880-85 and had a look above 0.8900 to post 0.8909 (GBPEUR lows of 1.1225) but has drifted back again to 0.8870 (1.1274) this morning. Buyers poised around 0.8850, 0.8830, 0.8800 and 0.8780 still with sellers now at 0.8900, 0.8920 and 0.8950 still.

EURUSD remains underpinned helped now by the softer USD$ sentiment and we've now been up to 1.1425 this morning.Immediate bids/support now at 1.1400,1.1380, 1.1350 1 1.1320-30 and 1.1300 still with sellers at 1.1430, 1.1450, 1.1475-80 and larger at 1.1500.

USDJPY has had another wobble lower to 112.61 on the Fed comments but has found dip-demand again helped by risk-on Yen supply with equities enjoying a relief rally on the Fed's more dovish tones and we've been back up to 112.88 since.Immediate sell interest now at 113.00 then 113.20, 113.50, 113.65 and 113.80-00 still. I remain a rally seller buying back in the dips. The net short GBPJPY position at good levels enables me to job with greater comfort and flexibility.

USDCHF has fallen back from 1.0080 to post 0.9988 and currently on its lows but also finding some demand on the risk-on tones and the prevailing EURCHF dip buying again with bids/support now around 1.1380 and 1.1350.Sellers poised around 1.1430 then 1.1450, 1.1480 and 1.1500 still. USDCHF bids now at 0.9980, then 0.9960, 0.9930 and 0.9900 with sellers around 1.0020 then 1.0050, 1.0080 and 1.0100 again. I'm happy to trade both sides of the price action at the moment.

AUDUSD has enjoyed the softer US$ and taken full advantage to finally blow through 0.7300 and post highs of 0.7337. Decent bids/support now between 0.7300-10 then 0.7280 and 0.7250 still which held so well in recent sessions with sellers lurking around 0.7335 then 0.7350 and 0.7380-00. USDCAD has had a mixed time of it initially falling from 1.13180 to 1.3130 but has found some decent demand and been tightly bound since. Bids now nearby at 1.3150, 1.3120-30 and 1.3100 with sellers poised around 1.3180, 1.3200 and 1.3230 still.

Fickle Forex markets ever prevailing so get your orders in to take full advantage of these moves.

Saturday saw the currently no so mighty Shrimpers returning to league matters and failing dismally losing 2-1 to yet another late goal and leaving the pitch with 10 men. Let's hope the prevailing problems, albeit not helped by an extensive injury list, can be ironed out soon.

Congrats to England's cricketers on a first series win in Sri Lanka for 17 years, and to the Irish rugby union team who finally got one over the Aussies.

Have a good week out there one and all.

Twitter: @MSPFX and @MikePatersonFX

Interbank Rate 07.25 GMT

GBPUSD 1.2841

EURUSD 1.1409

EURGBP 0.8883

GBPEUR 1.1253

USDJPY 112.70

USDCAD 1.3167

USDCHF 0.9995

GBPAUD 1.7548

GBPCAD 1.6902

GBPCHF 1.2831

GBPHKD 9.9557

EURHKD 8.8886

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