Variable risk prevailing as another week closes
Friday 24 January 2020
Risk sentiment continues to be flaky as concerns remain over increasing numbers/spread of Coronavirus cases as the long Chinese New Year holiday period gets under way. We've seen JPY and CHF demand and reversals with a similar variable picture in equities, oil and gold.
Today's UK flash PMI data at 09.30 GMT came out better than expected but jury remains out on next week's BOE rate decision. I still say they will hold off and keep their powder dry for more needed times ahead.
GBPUSD held 1.3180 post-data and fell back below 1.3130 and EURGBP has broken down further to test 0.8385 but there's GBP buyers still lurking.EURGBP has also found some support after some better EZ PMI data this morning. A reminder that we still have month-end EURGBP demand from the Bundesbank to consider even with the UK due to Brexit on 31 Jan.GBPJPY found a base around 143.30 again and has now rallied to 144.48 as I type as the Pound rallies and USDJPY holds 109.50 and better risk sentiment prevails but still seeing good two-way business.
I stay poised to sell GBP rallies overall and buy back in the dips as ever but continue to see some good two-way business as we continue in these tight ranges and the BOE rate-cut conjecture continues. It's not so much about whether they will or not but as much about how much the market has in factored in by next Thursday.
EURUSD has remained on the back foot with the ECB yesterday offering little to help the hawks and is still tightly bound as cross-play interest provides both sellers and buyers still but finding some support from that EZ PMI data.USDJPY yesterday fell to test the 109.30 bids/support on the wobbly risk move but has held well to post 109.63 as I type. EURJPY has also broken down through 121.00 but similarly dip buyers on core pairs remain poised to help contain ranges amid the variable risk plays. USDCHF has held 0.9680 as EURUSD falls but with EURCHF on the backfoot still and testing 1.0700.
AUDUSD has fallen back amid the Chinese/regional coronavirus concerns after the failure to break up through 0.6880 post-jobs data. USDCAD has also retreated after failing above 1.3160 and we've seen a steady move down to look at 1.3120 as I type.
Fickle Forex markets ever prevailing so be ready with your entry/exit levels and orders as always.
No football for the soggy Shrimpers or me tomorrow so a welcome break from the current turmoil going on including lots of conjecture on players being shipped out to save costs/provide cash. In truth we've needed to trim our wage bill for many years but being held hostage now by current circumstances and a Chairman who has thought he can be a CEO too. Sadly not.
England's cricketers are patiently waiting in the rain in SA so at least I'm not enduring sun-envy too!
Have a good day/weekend one and all.
Interbank rates: 08.33 GMT