Weak Yen grabbing the headlines
Thursday 20 February 2020
A mixed tone to risk sentiment amid ongoing Coronavirus concerns but it's the Yen that's stolen the headlines with a large sell move that caught traders, including me, by surprise. Lots of conjecture as to why we had such a strong move but guesses ranging from technical levels being broken on USDJPY/other JPY pairs and on general USD demand/softer Japanese data that prompted stops initially but then caused a perfect storm as Japanese funds bought USD debt with long TESLA/short JPY positions being taken too.
Also reports that Japanese-owned Seven & I Holdings Co., which controls convenience store operator 7-Eleven, is in exclusive talks to acquire US Marathon Petroleum Corp’s Speedway gas stations for about $22bln. Cash element unknown but potential options impact manifesting itself. Throw it all into the heady mix .
UK Retail Sales data came in stronger than expected earlier and we've seen some GBP demand understandably but it's not the whole story right now so sellers still poised. GBPUSD holding 1.2925-30 so far and in retreat again to look at 1.2880 as I type helped also by EURGBP rallying strongly as EURJPY demand outstripped GBPJPY buying.EURGBP found support around 0.8300 yesterday and has rallied to post 0.8387 (GBPEUR down to 1.1923).GBPJPY has rallied amid the weker Yen and better risk sentiment in this ever fickle world of FX and now posted fresh recent highs of 144.38.
I stay poised to sell GBP rallies and buy back in the dips as ever.Still ranging overall. Be ready with your entry/exit levels at the data release and let the algos do the work as ever.
Year-end Yen repatriation will continue to play out until March 31 and might be expected to temper further rallies but to what extent remains to be seen. Big moves like this are rare these days and generally find some correction/reversal but once again timing in trade placement will be crucial.USDJPY is finding support this morning above 111.50 and testing 112.00 (not seen since last April) as I type.EURJPY demand has certainly given EURUSD a firm base around 1.0780 but rally sellers still poised.EURUSD holding the next line of support at 1.0780 so far helped by the EURJPY and EURCHF demand. EUR rally sellers poised though. USDCHF continues to find support with EURCHF still holding around 1.0600 with the SNB casting a shadow still.
AUDUSD has retreated to 2009 lows of 0.6622 after wobbly jobs data and amid the general USD demand. AUDJPY buying notable of course but doing little to stem the falls. Large option expiry interest at 0.6700 today now seems a distance away and unlikely to be in play now after capping at 0.6697. Seems the sell-side prevailing as it did yesterday too.USDCAD found support again, this time into 1.3200 and has bounced up above 1.3250 amid the general USD demand.
Fickle Forex markets ever prevailing so be ready to jump on moves with your entry/exit levels and orders as always.
Have a good day out there one and all.
Interbank rates: 09.55 GMT