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  • Mike Paterson

Wobbly risk sentiment returns

Monday 22 August 2022

Greenback still underpinned overall as we start another week but risk sentiment has taken a knock over renewed/intensified fears over China's economy as they cut interest rates again with focus on the ailing property market through a bigger than expected cut to the 5-year rate

Equities are retreating a little this morning with oil and gold on their lows too as I type. Some JPY and CHF demand notable again on the softer risk tones helping to cap cross and core pairs. Jackson Hole symposium with Central Bank speakers at the end of the week casting a shadow still.

As always, don't over-analyse but be ready with your preferred levels/strategy, place orders and let the algos do the heavy work. Discipline is key as always but equally hesitation can often ruin a great idea.

GBPUSD: Capped now at 1.1850 and now testing 1.1785. Some pips banked again per ongoing strategy but keeping core shorts. I will stand poised for re-sells as we continue to range with patience a virtue still. EURGBP: Holding 0.8475 in the retreat now after capping at 0.8515 as core pairs both struggle around key levels. Two-way business still envisaged.

GBPJPY: Now capped around 162.50 on the softer risk tones but supported at 161.25 so far. The risk and USD jury remain out and we can expect some fragile price action still.

EURUSD: Testing parity again but some dip demand expected at this key level. Rally sellers including me still ever-poised.

USDJPY: Still underpinned and holding 136.75 so far after the softer risk retreat from 137.40. EURJPY: Capped into 138.00 but forming a base now around 136.60 on some core pair dip demand.Sellers poised still whenever sentiment turns as I've been warning.USDCHF: Capping above 0.9600 on the softer risk tones after holding 0.9580 with EURCHF in retreat but with the SNB ever vigilant. CHF demand still notable helped by rate hike expectations.EURCHF: 0.9640-50 support broken and now resistance with SNB smoothing in the extended retreat around 0.9580 but some inherent CHF demand still capping rallies too.

AUDUSD: Good support this time into 0.6860 after the cap at 0.6920. GBPAUD now holding 1.7100 after the break down through 1.7150 as GBPUSD retreat outstrips AUDUSD but dip demand in both for the moment. NZDUSD capping at 0.62220 this time and testing 0.6165 amid the firmer USD/softer risk tones but some dip demand as I type. GBPNZD holding around 1.9025 after failure above 1.9150 but rally sellers still poised. USDCAD: Supported at 1.2980 now amid the firmer USD tones/softer oil double whammy with some CADJPY supply notable again. Expecting some two-way business overall though still amid the fickle variables.

Woeful display from England's cricketers which I had gamely/stupidly battled through the tube strike to witness but much better from my mighty Shrimpers of Southend on Saturday and a well-deserved win.

Let's continue to be careful out there.

Interbank rates: 08.47 BST

GBPUSD 1.1800

EURUSD 1.0002

EURGBP 0.8478

GBPEUR 1.1795

GBPJPY 161.30

GBPCAD 1.5352

GBPCHF 1.1335

GBPZAR 20.1618

GBPHKD 9.1922

USDJPY 136.75

EURJPY 136.78

EURCHF 0.9600

AUDUSD 0.6889

NZDUSD 0.6192

USDCAD 1.3012

USDCHF 0.9597

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