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US$ underpinned again as another week closes

Friday 27 July 2018

The ECB meeting came and went largely as expected with Draghi remaining cautious on rate hikes anytime over the next 12 months. Another central bank caught between a rock and a hard place. Overall the US Dollar remains underpinned for the moment but with trade wars and Trump's bearish tones on interest rates never too far away.

GBPUSD has broken back down to post lows of 1.3090 after failing to hold above 1.3150 yesterday. Immediate support/buying interest now around 1.3080 then 1.3050,1.3035 and 1.3000 still.Sellers now poised around 1.3130 then 1.3150,1.3175-80 and 1.3200 with  1.3220-30 still the line in the sand behind that.Keep selling the rallies but respect the dip demand as I warned again yesterday. Still tightly bound in real terms.

EURGBP has remained on the back foot with Euro selling notable post-ECB but unable to break down far through the 0.8875 support area (GBPEUR resistance 1.1265)as we head into the usual month-end buying. Sellers still poised around 0.8900, 0.8930 and 0.8950 where a large option expiry today has already helped cap rallies this week. Buyers between 0.8870-80 still, 0.8850, 0.8830 and 0.8800.

The BOE meets on 2 August and the chances of a 0.25% rate hike are now priced in around 85% so if we do get that rise I do not anticipate too much of a rally once the algos have given it their usual shunt.Markets will of course look for clues to further hikes but I expect the usual caution. As I said earlier, Central Banks are caught between a rock and a very hard place right now.

EURUSD has fallen to 1.1635 post-ECB with large option contract expiries once again today at 1.1700 expected to cap rallies. More sellers lined up prior into 1.1680  with more into 1.1730.Buyers lined up around 1.1620 with more into 1.1600, 1.1580 and 1.1550 where more option expiries should provide support today should we get anywhere close.

USDJPY is still tightly bound with buyers now into 110.80, 110.50 then 110.30 and 110.00 still.Sellers poised around 111.25-30 with large option expiries in play there then 111.50 with larger interest between 111.80-112.00. USDCHF remains underpinned around 0.9920 but still finding sellers poised via EURCHF too.

AUDUSD has given up recent gains amid the general US% demand and has fallen back to post 0.7374. Buyers now at lining up at 0.7350, 0.7320 and 0.7300 still where a barrier option defence lays in wait. Immediate sell interest now at 0.7400 then 0.7430 and 0.7450. USDCAD has remained tightly bound after it's retreat this week. Sellers now into 1.3055 then 1.3100 and 1.3120 still with buyers poised around 1.3050, 1.3020 and 1.3000 then 1.2980 and 1.2960.

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

Active MSPFX clients please be advised that I am now away on vacation for two weeks so please contact your rate providers directly if you need to trade. I will be checking my emails from time to time should you have any questions meanwhile.

Have a good week-end out there one and all.

Interbank Rate 08.45 BST GBPUSD   1.3114 EURUSD   1.1653 EURGBP   0.8885 GBPEUR   1.1252 USDJPY   111.01 USDCAD   1.3055 USDCHF   0.9941 GBPAUD   1.7737 GBPCAD   1.7119 GBPCHF   1.3038 GBPZAR   17.2808 GBPHKD   10.1673 EURHKD   9.0360


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