Friday 5 February 2021
The Bank of England MPC yesterday disappointed the uber-doves and left interest rates on hold but with a market caught short we've seen some decent gains for the Pound even though the BOE didn't tell us anything really new. More a case of some upbeat tones based on the vaccine rollout and pushing negative interest rate possibility further out albeit still not off the agenda.
Risk sentiment remains firm overall as equities and oil maintain push higher again. Today sees the latest US NFP jobs/wages report at 13.30 GMT and while it doesn't mean as much as prev-COVID uncertainty we can still expect the algos to react if wide of the mark, a fairly big mark/range at that.
USD demand notable still overall but some selling/profit-taking seen this morning but once again the Forex jury remains out amid all the noise so keep playing what's in front of you and don't over analyze.
GBPUSD yesterday based at 1.3567 prior to BOE and was quickly rallying to test 1.3700 again before falling back into the 1.3650 pivotal area and we're posting highs of 1.3706 as I type helped by EURGBP breaking down through 0.8750. EURGBP failed above 0.8835 again and was soon back in retreat after the BOE announcements testing 0.8780 (1.1390) before finding support at 0.8750 (GBPEUR sellers 1.1430) only for that finally to break too and post 0.8738 (1.1445) amid some general EUR supply as well as the GBP demand. GBPJPY found a decent base at 142.80 as GBP and risk sentiment firmed and now hit heady highs into 144.50 with USDJPY still underpinned.
I still have a naturally bearish stance on GBP overall and remain poised to sell into rallies but respecting dip demand still with price action ever fickle. Equally a case still for going long in the dips therefore as we continue to range. Patience and not getting greedy remain key.
USDJPY has now found a base at 105.30 after 105.65 highs with rallies still tempered by ongoing year-end JPY repatriation by corporates.EURJPY held 126.10 but equally capped at 126.50 amid the general EUR supply.
EURUSD yesterday capped at the strong 1.2000 area but so far holding 1.1950 in the retreat where we also have some barrier option interest per my mention here yesterday. Cross-pair flows still in evidence too. USDCHF has held above 0.9000 this time amid the soggy EURUSD action and with the SNB ever watchful with EURCHF holding 1.0800 per my tweets but failing into 0.9050 on its latest rally this morning.
AUDUSD failed at 0.7650 yesterday amid the general USD demand but found support at 0.7580 this time in the retreat and now back up to 0.7615.USDCAD found a good cap this time at the higher 1.2850 as oil price rallied further and now looking at 1.2780 as I type.
England's cricketers getting off to a great start in India, albeit on a good track and I have to keep believing that my football team might bring equal joy tomorrow back at the hallowed Roots Hall.
Let's continue to be careful out there in all things. Staying safe must be our main priority still. Have a good week-end.
Interbank rates: 08.45 GMT