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  • Writer's pictureMike Paterson

Happy clappy brigade back in town

Tuesday 4 October 2022

New month, new (final) Quarter and renewed optimism in the markets despite there being a very dangerous geopolitical and economic back story still playing out. Strange times, but with much focus still on CBs and their battle between inflation and recession it would seem equities loving the more dovish tones on interest rate expectations.

JPY weakness still evident with USDJPY and USDCHF underpinned still despite general USD supply elsewhere. CAD demand notable as oil rallies further.AUD also higher with ASX jumping on the less than expected 0.25% rte hike. UK political backstory remains very fragile and Ukraine remains the main elephant in the room as we remain in myopic times.

GBPUSD: Been up to look at 1.1430 this morning helped by the better risk GBPJPY demand and reports that the UK OBR report will be published earlier than the original 23 Nov date which suggests to markets that it will back government tax cut/borrowing plans. Cross flows still having a big impact too but I don't think the UK is out of this particular mess just yet. EURGBP: 0.8750 now a good cap for this pair as we see GBP strength continue and a few wobbles come back into the Eurozone. 0.8662 technical support broken this morning but back up through now and I expect more two-way business to come. GBPJPY: Another solid rally from 162.00 this time as core pairs both found good dip demand amid the better risk tones as JPY weakness remains a theme.

EURUSD: 0.9850 resistance now finally broken after yesterday's hold of 0.9750 again amid softer USD tones and better risk sentiment but 0.9900 proving a step too far for the rally so far. Cross flows, risk, Ukraine and ECB conjecture all in the frame still quite apart from USD flows. USDJPY: 144.20-145.20 covers it for the moment with better-risk JPY supply tempering USD losses and BOJ intervention concerns. More two-way action expected. EURJPY: Underpinned at 142.00 now helped by the better risk tones and core pair dip demand but sellers poised around 143.00. USDCHF: Now holding 0.9850 amid some CHF weakness on the better risk tones but sellers prevailing at 0.9950 amid USD supply. EURCHF underpinned with SNB keeping an eye on matters still. EURCHF: A good base at 0.9650 still then 0.9700 with SNB still casting its shadow to add to general CHF weakness in these ever fickle times.

AUDUSD: Staging a decent rally from 0.6450 post RBA dovish 0.25% rate hike but that helped ASX equity index have best day since 2020 and all amid some better risk AUDJPY/AUDCHF demand but capping into 0.6550. NZDUSD holding 0.5650 then 0.5680 after better risk rally to 0.5760 as the two-way business continues. USDCAD: Support coming in at 1.3565 after the softer USD/firmer oil double whammy retreat from 1.3780.

Let's continue to be careful out there.

Interbank rates: 08.20 BST

GBPUSD 1.1400

EURUSD 0.9885

EURGBP 0.8667

GBPEUR 1.1534

GBPJPY 164.83

GBPCAD 1.5449

GBPCHF 1.1233

GBPZAR 20.1780

GBPHKD 8.8650

USDJPY 144.60

EURJPY 142.89

EURCHF 0.9758

EURHKD 7.6860

AUDUSD 0.6540

NZDUSD 0.5750

USDCAD 1.3579

USDCHF 0.9880

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