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  • Writer's pictureMike Paterson

All change as softer risk and USD tones return

Wednesday 27 October 2021

Softer risk and USD sentiment prevailing this morning in the ever-fickle world of Forex with the latest decisions from the BOC (today) then BOJ and ECB tomorrow in focus. JPY and CHF demand notable again but equities and oil remain underpinned overall but Gold back below 1800.

I warned yesterday that the preliminary estimate of month-end FX hedge rebalancing points to slightly above average USD selling this week so keep that in mind still as today is month-end Spot date dealing day.

UK Autumn Budget2021 and Financial Statement today from around 11.30 GMT. Much has been leaked already and should be a snooze-fest for markets but they and the BOE will be keeping an eye on just how much cash Fin Min Sunak throws into the system.

For FX markets focus on the price action and decide what presents value or doesn't, and if in doubt, keep out. Be aware of those rising support lines and/or falling resistance levels. Forex is not rocket science but it is ever-fickle so you have to stay in control of you/your trades as much as you can.

GBPUSD: The roller-coaster ride continues as yesterday brought a rally to 1.3834 only to retreat back to test 1.3750 and some pips banked in the retreat per my tweet. Still seeing softer tones this morning helped by some GBPJPY supply and EURGBP demand.I remain a rally seller overall but still respecting the ongoing dip demand as we continue to range while keeping an eye on EURGBP and GBPJPY as always. EURGBP: The extended retreat and test of 0.8400 helped to underpin GBPUSD initially yesterday but the reverse has since been true per my tweets. Sellers poised between those old marks of 0.8440-60. GBPJPY: That good support at 156.50 now history this morning on the renewed core pair supply but dip demand expected as we continue to range overall.

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

EURUSD: 1.1600 gave way after that decent option interest rolled off per my tweets but holding 1.1580 with expiries between 1.1600-15 today. Some pips banked from rally re-sells per onging strategy while the pair remain in the middle of cross-flow action. ECB tomorrow casting a shadow. USDJPY: Finding good support around 113.65 and pips banked in the latest retreat from 114.20-25 amid the renewed JPY demand. EURJPY: Support line at 132.00 also now gone with rally sellers ever poised again as the picture remains murky and the Euro finds supply in the bounces. ECB tomorrow casting a shadow. USDCHF: 0.9180 has broken briefly amid the renewed CHF demand and USD supply but the next support area 0.9160 with the SNB ever vigilant but equally sellers remain poised as EURCHF struggles to get back over 1.0680 now. EURCHF: That 1.0660 support now gone and breaking 1.0650 as I type but with the SNB ever vigilant. Sellers in the rallies still though. ECB tomorrow casting a shadow.

AUDUSD: 0.7480 still providing good support after another rally above 0.7520 helped by stronger CPI data but AUDJPY supply helping to push back dwon this morning. USDCAD: upport now at 1.2380 line amid the CADJPY selling and oil prices off their highs. Also large option interest tomorrow at 1.2375. 1.2400 resistance now broken but sellers poised still.

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

Interbank rates: 08.37 BST

GBPUSD 1.3764

EURUSD 1.1608

EURGBP 0.8433

GBPEUR 1.1856

GBPJPY 156.62

GBPCAD 1.7051

GBPZAR 20.5896

GBPHKD 10.7034

USDJPY 113.80

EURJPY 132.11

EURCHF 1.0652

EURHKD 9.0279

AUDUSD 0.7520

USDCAD 1.2394

USDCHF 0.9176

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