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  • Mike Paterson

Wobbly risk tones as another week gets underway

Monday 22 February 2021

A little wobble in equities and oil again amid rising US bond yields brought some USD demand earlier this morning (albeit fading now as I type) and we're seeing some fragile risk tones still as the European session gets fully underway.

The Pound remains underpinned with market expectations that the COVID vaccine rollout will help economic recovery that much sooner but I remain cynical about just how quickly this can happen in an economy that relies on a 80%+ contribution from the services sector. Today we get the long-awaited lockdown easing terms from Boris,firstly to Parliament from 15.30 GMT then a 19.00 GMT presser but from early leaks his latest plans will be erring on the side of caution, and some. No immediate economic fix coming any time soon but markets will ultimately decide on how this might pan out for the Pound, not simple observers like me who feel a reality check is required. Then again the UK could continue to be the best of a bad bunch for a while longer yet, if only on mis-placed expectation.

Also on the calendar today is a speech from ECB head Lagarde at 14.30 GMT.

The Forex jury is ever-fickle amid all the noise and sentiment can turn quickly as I keep repeating and we continue to see some good two-way business again so keep playing the price action in front of you, pick your entry/exit levels carefully and don't over analyze or assume anything. Oh, and don't get greedy still...!

GBPUSD finally broke up through 1.4000 on Friday amid some general USD selling but it was a very muted response given all the hype as I noted on Twitter. A further move higher in Asia has capped at 1.4050 and we've been back to 1.3980 this morning before bouncing.EURGBP found a cap at 0.8680 and fell below 0.8650 again as GBPUSD broke higher on Friday and sellers remain poised albeit with the pair still holding 0.8630 for the moment. GBPJPY found a decent base at 147.50 but capping at 148.30 atm with some softer risk bringing JPY demand and USDJPY in retreat.

I remain poised to sell into rallies as a jobbing preference but respecting dip demand still with price action ever fickle. Equally a case still for going long in the dips therefore as we continue to range. Patience and not getting greedy remain key.

USDJPY has capped at 105.85 after holding 105.30 again while EURJPY still has dip demand at 127.60 but 128.30 proving a step too far this time after breaking 128.00. EURUSD has been ranging 1.2075-1.2150 again helped by the variable USD tones and cross-pair flows. USDCHF is looking underpinned again amid reflation trade plays (CHF as a funding currency) with EURCHF also underpinned amid the SNB ever watchful/helpful.

AUDUSD found support at 0.7800 and 0.7850 this time and cleared 0.7900 as USD selling prevails and metal prices keep lending support. USDCAD has capped at the pivotal 1.2660 area but equally holding 1.2580 amid the variable USD, risk and oil tones.

Shocking goal-keeping error on Saturday denied the mighty Shrimpers a dserved point. Grrrrrrrr. Such moments could be season defining and sadly we're getting more than our fair share.

Let's continue to be careful out there in all things though. Staying safe must be our main priority still. Have a good week one and all.

Interbank rates: 08.35 GMT

GBPUSD 1.3994

EURUSD 1.2096

EURGBP 0.8645

GBPEUR 1.1565

GBPAUD 1.7797

GBPCAD 1.7704

GBPJPY 148.08

GBPZAR 20.8015

GBPHKD 10.8542

USDJPY 105.80

USDZAR 14.8362

EURJPY 127.98

EURCHF 1.0905

EURHKD 9.3854

AUDUSD 0.7864

USDCAD 1.2648

USDCHF 0.9014

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