Wobbly risk tones return but jury still out
Monday 16th May
Soggier than even expected data out of China earlier plus PBOC adding liquidity has put the skids under Friday's better risk tones but recovering some poise as I type in these ever-fickle markets.
Equities and oil are currently off their lows and gold below 1800 again after capping into 1820. ECB's Villeroy has told markets this morning to expect a "decisive June meeting and active Summer" adding they will carefully monitor exchange rate movements for inflation impact and that's put a floor under EUR pairs for the moment. BOE Governor Bailey and MPC members Ramsden,Haskel and Saunder testify to UK lawmakers on the latest Mon Pol report today at 14.15 GMT.
For new and older subscribers alike I repeat my view that it's still a case of not over-analysing but keeping your focus on price action in core and cross-pairs.Continue to identify ranges and what levels present value for money. Algos will continue to knee-jerk price action on the variable headlines versus natural flows. Discipline is key as ever.
GBPUSD: Holding 1.2150 on Friday but eqully capping at 1.2300 since as the two-way business continues. Some pips banked/re-sells made along the way and keeping core shorts and I remain poised to sell rallies as ever. EURGBP: Another solid retreat amid the wobbly risk in Asia and breaking down through the strong 0.8500 support area but holding 0.8470 and now testing 0.8520 again. I still expect dip demand to continue albeit rally sellers poised amid the uncertainty. GBPJPY: Friday's firmer risk tones saw an attempt on 159.00 but falling back since as the uncertainty continues albeit supported at 157.50 as core pairs find some dip demand again.
EURUSD: A solid hold of 1.0350 and getting a lift back up through 1.0400 courtesy of Villeroy comments. I remain a rally seller as my preferred side. USDJPY: 128.50 still providing support with sellers at 129.50-60 help[ing to cap along with the uncertain risk tones. EURJPY: Support/bids coming in at 133.75 and now 134.75-80 being tested amid the general EUR demand post-Villeroy. Sellers will remain poised. USDCHF: Good support now at 1.0000 and another test of 1.0050-60 currently amid some firmer USD sentiment with EURCHF dip demand helping to underpin too. SNB will still not be far away with EURCHF sellers poised as the uncertainty continues. EURCHF: 1.0400 support now with the SNB keeping an eye on it all and a helping hand from Villeroy and now back up through 1.0430. More sellers poised 1.0480-00
AUDUSD: Holding 0.7870 in the retreat post-China data and now testing 0.6920 amid some AUDJPY demand returning. I prefer rally-sell side still but never greedy. GBPAUD back down around 1.7700 as I type after failing at 1.7800 as AUDUSD rally outstrips GBPUSD. NZDUSD supported around 0.6220-30 still but capped at 0.6330. GBPNZD testing support into 1.9500 as I type after failing at 1.9600-50.USDCAD: A solid retreat to 1.2900 on Friday better risk tones and capping at 1.2975-80 since as some CADJPY demand returns after the risk wobble in Asia.
Another league season over for the mighty Shrimpers of Southend and lots of reasons to head into the next campaign with some increased confidence. Yesterday also gave club legend John White the chance to take a deserved bow ahead of his testimonial game next week-end.
Let's continue to be careful out there in all things. Have a good week everyone.
Interbank rates: 08.18 BST