• Mike Paterson

Wobbly risk tones greet the new week

Monday 20 December 2021

Equity, commodity markets and yields have had another wobble and that's helped to undermine risk appetite, bringing a return of JPY and CHF demand amid some softer USD tones generally. Increasing Omicron concerns raising alarm bells as I've been warning constantly and markets second-guessing Central Banks still.

All making my contrarian rally re-sells last week ever more prudent and I hope the steer has helped. As always, don't over-analyze or second-guess but keep your focus on price action in core and cross-pairs and identify recent ranges to see whether we hold or break and what levels present value for money. Last week before Xmas and we can expect some reduced liquidity/increased volatility.

Patience will invariably be a virtue but don't confuse patience with being stubborn. Let the algos do their work and have orders in or fingers poised to take advantage.

GBPUSD: Pips banked into the risk-off extended retreat that's now testing a previous support line around 1.3160-70. GBPUSD rally sellers, including me, ever poised while keeping one eye at least on the EURGBP and GBPJPY cross flows. EURGBP: A good hold of 0.8480 (1.1795) late on Friday and a solid rally to 0.8542 (1.1702) as I type amid the GBP weakness/risk-off EUR demand double whammy in Asia and this morning so far.Ranging still overall. GBPJPY: 151.00 support broken on Friday in the retreat from 151.50 and now testing 149.50 amid the softer risk tones and jusitfying my core pair shorts.

I remain a GBP rally seller across the pairs overall as my preferred trading side but being patient as ever. These markets are ever-fickle so good/tight position management essential.

EURUSD: 1.1230-40 now providing good support again after the extended retreat from 1.1320 but still impacted by some risk-off EUR demand. USDJPY: Capping again at 113.80 in rally off the 113.15-20 Friday lows

EURJPY: 127.50 support now but rallies capping into 128.00 so far. Mixed tones with risk-off EUR and JPY demand.

USDCHF: Support now at 0.9220 again with the SNB ever vigilant but failing above 0.9250 so far amid the risk-off CHF demand. I prefer to buy the dips still overall but not greedy in the rallies with sellers ever poised.

EURCHF: Back down testing 1.0380 as risk-off CHF demand prevails but tempered by EUR dip demand elsewhere and with SNB shadow lurking still.

AUDUSD: 0.7080 support after the retreat from 0.7150 this time helped by the risk-off AUDJPY selling and softer commodity prices. USDCAD: Solid base at 1.2780-00 and strong rally amid falling oil prices and risk-off CADJPY supply.

As we look at trading opportunities it's even more important not to over analyze but trade the price action with discipline and patience. I can help with this in my 1-2-1 sessions and now is the time, more than ever, to get on board with those if you haven't already done so. Contact me to take advantage of currently reduced prices.

Let's continue to be careful out there in all things. Staying safe must be our main priority still.

Interbank rates: 08.56 GMT

GBPUSD 1.3209

EURUSD 1.1260

EURGBP 0.8533

GBPEUR 1.1702

GBPJPY 149.55

USDJPY 113.46

EURJPY 127.82

EURCHF 1.0402

AUDUSD 0.7088

USDCAD 1.2926

USDCHF 0.9234

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