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  • Writer's pictureMike Paterson

Greenback still in favour but jury remains out as markets wait on Powell

Wednesday 10 July 2019

The jury remains out on the extent/arrival of US Fed rate cuts and that uncertainty is still playing out as we wait on Chairman Powell's testimony to Congress at 14.00GMT today but the US Dollar remains underpinned for the moment. Throw in the ongoing general global fragility/ongoing trade talk concerns et al and we remain in cautious mode.

GBPUSD has broken down through strong 1.2480-85 support to trigger more selling and test technical support around 1.2440-45 ahead of reported barrier option interest at 1.2400 but rallies have been minimal.

EURGBP continues to find dip demand with EURUSD also still supported in the dips and has finally broken up through those 0.8980-85 offers to post 0.9010 (GBPEUR down to 1.1097). GBPJPY sellers remain poised still but equally seeing some dip demand around 135.50 again for the moment as USDJPY remains underpinned.

I remain GBP bearish overall still and will continue to rally-sell as my preferred strategy amid all the uncertainty/indecision including Brexit/political fallout but happy to buy back in the dips as always.

EURUSD is still finding the expected support into 1.1200 but similarly finding rally sellers amid the general USD demand.USDJPY remains underpinned still with the general USD demand but fragile risk continues to help cap rallies and has a few option expiries again today at 109.00 ( yes my same words/highlights as yesterday!). USDCHF remains underpinned but also capped by some general CHF demand/EURCHF supply so both pairs remain tightly bound.

AUDUSD has had another wobble amid the USD demand after a good expiry battle yesterday around 0.6925 with those large options rolling off that I highlighted. We've also seen some strong NZDUSD selling on an order through 0.6600 and triggering stops down to 0.6565. Very large option expiry interest today at 0.6610 should help keep range contained prior.

USDCAD continues to enjoy the USD demand but tempered by firmer oil prices which has helped cap the rally into 1.3150. BOC make their latest interest rate decision at 14.00 GMT followed by a presser at 14.15 GMT. No change expected to rate and caution will be the buzzword.

Fickle Forex markets ever prevailing so be ready with your entry/exit levels and orders as always. Let's see what Mr Powell delivers and keep in mind that as he stands up the BOC will be announcing and options will be rolling off to add to the heady mix.

Have a good day out there one and all.

Interbank Rate 08.25 BST

GBPUSD   1.2454

EURUSD   1.1214

EURGBP   0.9004

GBPEUR   1.1105

GBPAUD   1.8000

GBPCAD   1.6346

GBPJPY   135.69

GBPZAR   17.6814

GBPHKD   9.6603

USDJPY   108.95

USDZAR   14.1866

EURJPY   122.18

EURCHF   1.1132

EURHKD   8.6990

AUDUSD   0.6918

USDCAD   1.3126

USDCHF   0.9926

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