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  • Writer's pictureMike Paterson

Risk sentiment firms and USD remains underpinned

Thursday 30 September 2021

Month-end USD demand and general increase in flows has continued to dominate this week and today brings any final transactions into/at the 4pm London fix. How much is left to do is always the question on the last day of the month but this morning USD remains underpinned helped by better risk tones. USDJPY buying has been notable all week as I've been highlighting with this month’s performance of Japanese equities over US the largest since April 2013.

Day 2 of the ECB Forum yesterday brought Powell, Lagarde, Bailey, Kuroda all chanting the "inflation is transitory" mantra which the market rightly ignored but continues to price in rate hikes even if the CBs plead otherwise. UK GDP out earlier came in above expectations but no one getting too excited by any data right now understandably given all the unknowns.

Amid all this market uncertainty I will repeat that patience and discipline in trading are key, as ever, and not being greedy.

GBPUSD: Another solid retreat yesterday as 1.3500 barrier gave way then acclerated through 1.3480 with more stops triggered too amid the general GBP selling and helped by GBPJPY supply and EURGBP demand again triggering further falls to test 1.3425-30. Pips duly banked from rally re-sells per ongoing strategy albeit some too early again but hey, still a good return. I remain a rally seller (only one of note yesterday though to 1.3540) while keeping an eye on EURGBP and GBPJPY as always. EURGBP: Good sell interest at 0.8650-60 capping yesterday's rally but the pair remains underpinned at 0.8615-20 still as I type. GBPJPY: Further falls into 149.80 amid the softer risk tones yesterday and general GBP decline but the month-end JPY supply and firmer risk plays helping to lift to 150.60 this morning.

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.

Will send this section out now as I'm conscious of time drifting on this morning.

EURUSD: 1.1650-60 finally gave way and now providing a cap amid the general USD demand but holding 1.1585 so far as I type. Some pips banked in the retreat albeit too early. The pair still finds itself in the middle of cross-flow action and variable risk plays. USDJPY: We've now been up to look at 112.00-05 amid the month-end demand I've been highlighing and firmer risk plays this morning and still looks underpinned for the moment. EURJPY: Holding 129.80 but unable to break back up through 130.00 amid all the cross and month-end flows. USDCHF: Now finding a base at 0.932 as EURUSD retreated again and with the SNB ever vigiliant as EURCHF holds 1.0820 again. EURCHF: Holding 1.0820 this time with SNB shadow ever present.

AUDUSD: 0.7220 finally broken in yesterday's retreat triggering stops through 0.7200 to test 0.7175 and struggling to hold gains above 0.7200 as I type. Large option support at 0.7200 still in play. USDCAD: Yesterday saw a good hold of 1.2660 on the softer risk/oil tones and CADJPY selling but 1.2780 capping rallies as firmer oil reverses the CADJPY plays. Option interest still casts a shadow too.

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

Interbank rates: 09.05 BST

GBPUSD 1.3435

EURUSD 1.1606

EURGBP 0.8638

GBPEUR 1.1574

GBPJPY 150.28

GBPCAD 1.7109

GBPZAR 20.3715

GBPHKD 10.4698

USDJPY 111.88

EURJPY 129.85

EURCHF 1.0832

EURHKD 9.0459

AUDUSD 0.7202

USDCAD 1.2722

USDCHF 0.9330

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