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  • Writer's pictureMike Paterson

Fragile risk tones as markets wait on Powell

Friday 27 August 2021

The awful situation in Afghanistan has been the elephant in the room all week as I've been warning and yesterday's attack on Kabul Airport should surprise no one as it raises the stakes a notch higher. Risk tones have been fragile for a while and this tragedy has seen equities wobble and JPY demand return.

Powell's speech today at a virtual Jackson Hole at ET 14.00 still the main market focus as far as CB policy is concerned but jury out on whether we get anything of note. As usual, don't try and second guess. The speech comes after trading hours anyhow so caution advised for any extended week-end positions as we will see some sort of gap on Asian opening if he says anything of note.

Patience and discipline in trading are key as ever and not being greedy.Some good two-way pips to be had so picking your moments and levels are more important than ever.

It's a public holiday here in the UK on Monday and I'm heading away this morning so my next update will be Tuesday.

GBPUSD: Good two-way pips to be had yesterday but the risk-off GBPJPY selling prevailed over this pair as I had been warning. Pips banked as we drop back through 1.3700 into 1.3680. I remain a rally seller while keeping an eye on EURGBP and GBPJPY as always.EURGBP: Now supported around 0.8570 as the GBPJPY selling sees GBPUSD retreat outstrip EURUSD. sellers poised next at 0.8600.GBPJPY: A good cap at 151.60 yesterday and post-Kabul attack we've seen a test of 150.50 amid the general JPY demand.

I remain a GBP rally seller across the pairs but being patient as ever. These are risk sentiment markets and ever fickle so good/tight position management essential.

EURUSD: Support at 1.1740 now with larger interest at 1.1700 amid some option interest there today and tomorrow.1.1775-80 proving a decent cap so far though with option interest of its own today. USDJPY: Another failure at 110.20-25 and now back below 110.00 on the general JPY demand. EURJPY: 129.80 resistance now and testing 129.20 amid the softer risk tones.USDCHF: Holding 0.9150 now as EURUSD caps but another failure into 0.9200. The SNB ever vigiliant amid softer risk tones. EURCHF: 1.0760 now providing support with SNB shadow ever present in anticipation of increased CHF demand.

AUDUSD: 0.7265 now proving decent resistance but holding 0.7220 and we continue to range tightly with AUDJPY risk flows in play. USDCAD: Still supported at 1.2580 and a decent rally yesterday amid the softer oil tones and CADJPY risk-off selling but finding sellers above 1.2720 now. CADJPY flows still very much in play amid the variable risk. Large option interest in play today if we rally again.

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

Interbank rates: 06.07 BST

GBPUSD 1.3697

EURUSD 1.1762

EURGBP 0.8587

GBPEUR 1.1643

GBPJPY 150.57

GBPCAD 1.7372

GBPHKD 10.6723

GBPZAR 20.4025

USDJPY 109.94

EURJPY 129.31

EURCHF 1.0778

EURHKD 9.1663

AUDUSD 0.7241

USDCAD 1.2683

USDCHF 0.9163

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