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  • Writer's pictureMike Paterson

Markets still in second-guessing mode

Thursday 6 December 2018

Brexit,US-China trade talks, potential US Fed interest rate policy shift and now the arrest in Canada of the CFO of Chinese company Huawei are all part of the messy mix that continues to play out across financial markets.

GBPUSD has been back up to 1.2798 and down again to test 1.2700 with a lot of flick-flacking in between as Brexit and risk-sentiment generally continue to impact. UK services PMI data yesterday came in weaker than expected and although brushed aside still needs to be included in the mix.This morning PM May has not ruled out delaying next week's Meaningful Vote scheduled for Tuesday.

Immediate offers/sellers around 1.2730 are currently being tested then more lined up at 1.2750-60 again then 1.2780,1.2800,1.2820 and 1.2850 still. Bids/demand building now into 1.2700 and 1.2680 then 1.2650,1.2630 and 1.2600 still.I remain GBP bearish overall and happy to jump on rallies then buy back in the dips while remaining core short, a strategy that continues to work well.

EURGBP remains underpinned but tightly bound amid all the fun and games . Buy interest around 0.8900, 0.8880, 0.8850 with sellers now at 0.8920-30 then 0.8950 still.

EURUSD fell further to lows of 1.1312 only to bounce but fail above 1.1350.Immediate demand/support now around 1.1320 again then 1.1300 and 1.1280 with sellers poised into 1.1360 then 1.1380 and 1.1400.

USDJPY fell to 112.60 on that Huawei-led risk wobble before some positive US-China trade tones saw a lift back to test 113.20 before once again falling as I type. Bids now at 112.75-80, and still building around 112.50 then 112.30 and 112.00 with sellers between 113.20-30 still and 113.50. I remain a rally seller buying back in the dips with decent 2-way business to be had.

USDCHF has also rallied before capping with EURCHF underpinned still but also failing to break higher out of recent range. Sellers remain poised on both even if the SNB will still look to "smooth" the declines.Bids/support at 1.1280 with USDCHF demand building between 0.9950-60 then 0.9920-30. Sellers poised at 1.130 then 1.1350-60 still with USDCHF supply at 1.0000 and 1.0020 still. I'm happy to trade both sides of the price action at the moment in these tight ranges.

AUDUSD has found itself on the back foot helped by more soggy Aussie data and posted new recent lows of 0.7218.Decent bids still at 0.7200 then 0.7180 but the large option expiry interest tomorrow that I've previously highlighted should keep the range relatively contained  Sellers now into 0.7250 0.7280 and 0.7300 USDCAD rallied strongly to 1.3398 from 1.3285 as the BOC left interest rates on hold before falling back only to bounce again and post 1.3427 on softer oil and the Huawei arrest implications given that it took place on Canadian soil.Buyers now building at 1.3400 then 1.3370 and 1.3350 with sellers poised at 1.3450 and 1.3500.

Fickle Forex markets ever prevailing so get your orders in to take full advantage of these moves.

Have a good day one and all.

Interbank Rate 08.13 GBPUSD   1.2710 EURUSD   1.1326 EURGBP   0.8910 GBPEUR   1.1221 USDJPY   113.05 USDCAD   1.3409 USDCHF   0.9983 GBPAUD   1.7593 GBPCAD   1.7046 GBPCHF   1.2697 GBPHKD   9.8541 EURHKD   8.7813

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